Budget-Debt Talks Fail — billions in Ag funds at risk

Budget End-Game Still Unclear as Other Issues Fall to the Side
National Association of Wheat Growers

A deal to rein in the federal debt and raise the government’s borrowing limit just days before a projected default was elusive this week, with more proposals floated but no end in sight. Discussions continue between top leaders in Congress and President Barack Obama while most of the rest of Washington waits and wonders. The Gang of Six, a bipartisan group of Senators that was seeking to negotiate a long-term compromise on debt and deficit issues until it faltered in May, seemed to reconstitute this week, even issuing a proposal that gained relatively warm reception.

On Tuesday, the Republican-controlled House passed in a 234-190 vote a so-called “cut, cap and balance” bill, which would cap overall federal spending and require Congress to pass a balanced budget amendment to the Constitution before the debt ceiling could be raised. The legislation was denounced by Democrats and failed a procedural vote on Friday in the Democratic-controlled Senate.

Meanwhile, the agriculture community continues to work to express the importance of a strong farm safety net and other investments in ag-related programs. There is no solid figure of what could be cut from agriculture-area programs in an eventual deal, but numbers have been floated ranging from $10-11 billion, in the President’s debt commission report and the Gang of Six proposal, to $30 billion or more in debt talks led by Vice President Joe Biden and the House-passed budget resolution.

The timing of cuts is also causing serious uncertainly in agriculture policy making; House Agriculture Committee Chairman Frank Lucas (R-Okla.) said this week that if dramatic cuts are ordered for agriculture programs, the timeline for completion of the 2012 Farm Bill could be moved up from next year.

NAWG joined more than 30 other agriculture groups in writing the President and leaders in Congress this week calling for a long-term, comprehensive solution to the federal deficit that will establish budget certainty for federal efforts, like the farm bill

“Agriculture continues to lead our national economic recovery and contributes to domestic and global food security,” the groups told U.S. leaders.

“To ensure this role going forward, we need a rational long-term agreement on raising the debt ceiling that asks agriculture to only contribute reductions proportionate to its share of the federal budget. Doing so will provide the certainty needed to write a strong and effective farm bill.”

Saying that “[a]griculture is prepared to take a proportionate share of budget cuts provided everything is on the table” – and citing recent cuts of $6 billion in crop insurance funding as evidence – the groups called again for agriculture committees in the House and Senate to have control over what cuts are made to farm programs.

The letter sent this week is available directly at http://www.wheatworld.org/wp-content/uploads/budget-ag-groups-on-debt-ceiling-discussions-201107191.pdf.

While the budget discussions continue, practically all other priorities have temporarily fallen to the wayside.

It was all but confirmed this week that three long-pending free trade agreements, with Colombia, Panama and South Korea, will not be considered until after the August recess ends.

While not surprising considering the long delay in processing the agreements – they were signed up to four years ago – this is crushing to export-dependent industries, including the wheat industry.

For wheat, the Colombia agreement is particularly vital. A free trade agreement between Colombia and Canada is set to go into effect in mid-August, which would allow Canadian wheat to enter the South American country duty free – a benefit Argentinean wheat already enjoys.

U.S. Wheat Associates has estimated that passing the U.S.-Colombia FTA will help prevent lost sales of $100 million each year in that important and growing market.

The appropriations process also appears to be somewhat on hold. The federal government’s fiscal year ends Sept. 30, but the Senate has yet to pass a budget resolution, which provides guidance for appropriators.

For its part, the House has passed a budget resolution that is a non-starter in the Senate, and processed five of 12 appropriations bills, including an agriculture measure.

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