The Massachusetts special election that saw Republican Scott Brown chosen to fill the seat held for nearly half a century by Democrat Ted Kennedy was “a game changer” that will be good for American farmers, Mississippi Farm Bureau Federation members were told at their Winter Commodity Conference at Jackson, Miss.
“I don’t think it matters whether you’re a Republican or a Democrat — I think when you look at the Massachusetts election results you see a good outcome for producers around the country,” said Tara Smith, director of congressional relations for the American Farm Bureau Federation.
“A lot of people saw this election as a referendum on the Democrat agenda. Many see it as an omen for what’s going to happen in the November 2010 elections.
“This election just sent Democrats reeling — it was a huge loss for them, and there’s no way to put a positive spin on that loss. They had an agenda and a game plan laid out for the year and it has been turned upside-down. Now, they’re having to start with a pretty clean slate.”
Importantly, Smith said, the loss of the Democrats’ “super majority” in the Senate puts an entirely different slant on the Obama administration’s big ticket items of health care and climate change legislation.
“They no longer have the 60 votes they need to get a piece of legislation passed without appealing to any Republicans. Now, they’ve got to reach across the aisle for at least one vote for anything they do.”
Prior to the Brown election, Smith said, the president’s State of the Union address was expected to be “another lecture on health care and the need for the House and Senate to work together to get the legislation passed.
“Now, the focus is on the deficit and the economy. That’s a pretty big change that has left the White House scrambling to put together a new agenda for the president.”
A three-year freeze on non-security spending and other measures by the administration to reduce budget spending is likely to have an impact on ag programs, Smith said.
The freeze “actually covers only about 17 percent of the budget,” she said. “Some say that’s not going to be any savings at all, while the White House is saying there’s going to be $250 billion in savings from this plan over 10 years. We’ll have to wait and see how those numbers work out.
“But, I think one thing we can be certain about is that there’s a lot of money in the ag budget that’s going to be on the chopping block, and when the president’s budget becomes public Feb. 1, I think we’re going to see that.”
Smith noted that “the budget cuts we’re looking at won’t be to mandatory spending such as farm subsidies. What we’re keeping an eye on are discretionary spending items, such as ag research. That’s not to say the president won’t propose cuts similar to last year (no direct payments to farmers with gross sales greater than $500,000), but those types of cuts would require legislation and reopening the 2008 farm bill.”
For the hot button issue of health care legislation, the Massachusetts election “put that back to square 1,” Smith said, noting that Farm Bureau has opposed both the House and Senate bills.
“The Democrats are trying to see if they can salvage something — can they do some insurance reform? can they do some Medicare/Medicaid reform? — but I think most folks aren’t terribly optimistic that they’re going to get anything done. If they do manage to pass something, I don’t think it will be anything near the massive package that passed the House and Senate.”
A major concern for Farm Bureau in both the House and Senate health care bills, Smith said, has been the mandate that employers must purchase insurance, particularly for seasonal workers.
“Just having a mandate at all for health insurance gives Farm Bureau a lot of heartburn.”
The other legislation at the forefront of farmer concerns, climate change, also got a kick in the teeth by the Brown election, Smith said.
“We saw a climate change bill pass the House; we saw a bill get out of committee on the Senate side. Now, everyone is talking about how climate change is dead. This is something Farm Bureau opposes, so seeing it die is not causing us any concern — we’re pretty happy about that.
“There’s talk that maybe they can reinvent this issue as an energy bill, but as far as the idea of cap and trade, nobody seems to think they can get that accomplished.”
Sen. Lisa Murkowski, R-Alaska, is introducing a resolution of disapproval in the Senate that would block the Environmental Protection Agency from attempting to regulate greenhouse gases through the Clean Air Act, Smith said.
“The EPA was getting ready to try to regulate greenhouse gases on its own, just in case Congress couldn’t pass anything. At last count, Sen. Murkowski had 38 co-sponsors for her resolution to stop the EPA, and she only needs 50 votes.
“Just as a reality check, nothing of this sort is ever going to pass the House and the president would never sign it — but I think it shows how the mood on Capitol Hill has changed about issues like this.”
The situation concerning estate tax law is “confusion and chaos,” Smith said. Congress and the administration “just don’t know what they’re going to do on this issue.”
While the estate tax law expired Dec. 31, 2009, “nobody’s turning cartwheels,” she said, because it was replaced by a capital gains tax that is 15 percent of the increase in the value of the asset since it was originally purchased.
Smith cited an example of what’s at stake: “My grandfather bought some farmland in Illinois in 1976 for just under $1,000 per acre. It’s worth $5,500 to $6,000 per acre now. If he were, God forbid, to pass away this year and the land had to be sold by the family, it would take $700 an acre just to pay taxes.
“So, while the estate tax is gone for this year, there’s something else to replace it.”
There is talk, Smith said, that the Democrats want to reinstate the tax retroactively, while opponents “are yelling and screaming about whether that’s constitutional and threatening court action, so those things are going to have to be worked out.
“The expiration is only for this year, and once we get into 2011 we’re back to a $1 million exemption with a 55 percent top tax rate.
“Farm Bureau will continue to push for solutions. We support reducing the capital gains tax and getting rid of the estate tax. It’s now a matter of putting the pieces together and trying to figure out how we’re going to move forward.”
Legislation has been introduced that would reduce farmers’ ability to use antibiotics in animal operations, Smith said, and, “We’ve seen the administration take a position that quite frankly frightens us. At first, they seemed to be OK with farmers using antibiotics as they currently do, but a few months ago they took a turn that left us concerned.”
Antibiotic use is also causing trade complications for U.S. poultry and animal products with Russia and other countries — “one more excuse for them to erect trade barriers” — and “it’s an issue we’re going hear a lot about over the next year. It’s basically an education issue, and frankly, agriculture hasn’t done the best job of educating the public on why we use antibiotics, what it means, what it does to the animal, and why it’s important.”
Smith said the Department of Justice and the USDA have announced they’re going to take a look at competition in the agriculture sector.
“They’ve outlined a few areas specifically that they’re going to look at — one is livestock and poultry; others are feed, dairy, and transportation.”
A comment period has been opened, she said, to allow producers and others to say what they think about competition in the agriculture industry. The USDA will hold five workshops during the year, in Iowa, Alabama, Wisconsin, Colorado, and Washington, D.C.
The one at Normal, Ala., just outside Huntsville, will focus on poultry, while other livestock issues will be the focus of the Colorado workshop.
Farm Bureau remains “hopeful,” Smith said, about disaster legislation that Blanche Lincoln, D-Ark, Thad Cochran, and Roger Wicker, both R-Miss., introduced in the Senate, with similar legislation in the House.
“Farm Bureau is still fighting for this legislation. They’re still trying to find something they can attach it to and get it through quickly. Ag disaster legislation isn’t one of those things you can pass all by itself — we just don’t have enough farm state legislators to do that. There’s talk about attaching it to legislation that would extend unemployment benefits.
Smith said a lot of Farm Bureau’s initial concerns with the legislation “have been addressed — things like being sure our peanut producers and specialty crop producers are covered for all kinds of losses, not just drought and flooding losses.
“I think there are still going to be some cost issues, that we’re probably not going to get as much money as we wanted out of that piece of legislation, and that we’re going to have to see some cuts somewhere.
“Farm Bureau continues to fight to be sure we get something out to the farmers who were hit pretty hard this past year. We’re encouraging the legislators to take quality losses into consideration as well as quantity losses.
“Rep. Marion Berry, D-Ark., has said he puts chances of ad hoc disaster legislation at 40 percent, and cautions farmers not to hold out too much hope for it.”
Smith said Sen. Blanche Lincoln, chairman of the Senate Agriculture Committee “has gone to Harry Reid [D-Nev., and Senate majority leader] every day to tell him how much farmers need this legislation.”