29 August 01 
(Sunup Program to be aired 30 August 01)  

1.  The economy continues to be in the news this week.  Can you take a moment to bring us up to date?

–Consumer confidence has slipped.
–It is now at its lowest point in 4 months.
–Economic growth for the second quarter of this year is 0.2%, revised downward from the earlier 0.7% estimate.
–The good news is it is growing, if slowly.
–The bad news is it compares to 5.7% a year ago.
–Unemployment is creeping up to 4.5%, still relatively low.
–However that compares to 3.9% a year ago.
–The stock market this year has slipped 4-23%, depending on which index you check.

2.   Much of that was apparently what prompted the Fed to cut interest rates last week, wasn’t it?

–That’s right, although they were especially concerned with the worsening condition in the manufacturing sector.
--Last week’s decision by Fed to lower rates another quarter percent wasn’t seen as the last.
–Many experts are already predicting another cut at the October meeting.

3.   This dismal news about the economy seems to have come to a head in Washington this past week with news that the federal budget surplus has disappeared. Let’s talk a bit more about the budget surplus. 

–We noted last week that supporters of the 10-year tax cut (the larger Republican Bush proposal won) were relying on rosy economic predictions and huge budget surpluses. 
–Opponents of the larger tax cut (most Democrats) are now enjoying reports that they may have been right.
–The Administration last week admitted that, instead of the predicted $125 billion surplus, there is only $1 billion.
–The Congressional Budget Office this week reported it is even worse: there is apparently a budget deficit of perhaps $9 billion.
–So, in either case, there is no “new money” for expanding programs or new programs.
–And, if Congress accepts their own CBO estimate, unexpected spending cuts will be necessary or the Medicare and Social Security trust funds will have to be tapped.
–This leaves Bush and the Republicans in the awkward position of either admitting they erred or tapdancing around the problem with smoke and mirrors.
–While this is all on paper,  the fact is that economic predictions probably were too rosy.

4.   And how will this affect agriculture?

–If the estimates are accurate, and if we do begin to move back to tight budgets, there are at least 2 concerns.
–First, of course, is the increased competition among competing federal programs.
–The limited choices will be unpleasant:
–reduce existing programs and spending (defense? Education? Agriculture?)
–don’t respond to public demands for new programs (prescription drug benefits? highway funds? Foreign crises?)
–raid Social Security and Medicare trust funds
–If that’s the case, agriculture is going to have a much tougher time getting money out of Washington.
–As I said last week, this could become the major issue in the elections of 2002 and 2004.
–Another impact of tight federal budgets is that federal borrowing will increase, driving up interest rates for the private sector, including capital-intensive agriculture.

5.   Congress will return from summer break next week.  The Senate Ag Committee has been conducting field hearings.  What’s the message they’re getting from farmers?

 –Recall that the committee is playing catch up to the House Ag Committee who has already passed a version of the next farm bill.
–The Senate Ag Committee has conducted several field hearings in Michigan, Minnesota, Iowa and Georgia during their summer break.
–Not surprisingly to some, if a vote were taken at these meetings, the 1996 farm bill would fail, and a return to earlier farm programs would pass.
–While producers seem to favor production flexibility, many at the hearings want the Farmer Owned Reserve back, higher loan rates, targeting support so wealthy producers don’t get so much, limit EQIP to smaller producers, more support for energy-related production, and more conservation program support.
–The Senate Democrats are going to have a tough job coming up with a new farm bill that has a reasonable chance of compromise in conference.
–Some Senate Republicans are supporting Harkin on increased conservation spending, specifically to increase EQIP and bio-fuels support.
–Some House Republicans, however, are saying that, while they are not opposed to strengthening conservation programs, for example, it will have to come at the expense of other programs.
–This will play into the debate on the disappearing surplus.
–If Congress agrees it won’t raid the Social Security trust fund, there will not be additional money for agriculture.

6.   What can we expect when Congress reconvenes next week?

–The Ag Appropriations bill for fy 2002, along with the other spending bills will be in the spotlight.
–There’s likely to be some heated debate around key amendments:

(1)            Harkin may try to add the $2 billion he didn’t get in the emergency farm aid.
(2)            The Northeast Dairy Compact extension will be considered.
(3)            Aid to apple growers will also be discussed.

 –Another key issue will be the request to grant the President Trade Promotion Authority (TPA), formerly fast-track.
–This allows the Administration to negotiate trade agreements that Congress can’t modify or amend.
–10 former secretaries of ag have come out in support of TPA.
–With WTO’s new round and FTAA moving forward, this is seen as an important tool for the President.
–If there is no filibuster, TPA will likely pass. 
–If no vote is taken this year, it could get caught up in campaign rhetoric next year and go nowhere.
–Note that, if they meet the House targeted adjournment of 5 Oct, there’s only a month left in this Congressional session.

7.         Other policy-related news:

 a.         –USDA announced $9 million in loans/grants will go to 29 states for rural economic development.
             –Oklahoma is the second largest recipient state with $913,000.
             –Two grants will go to the Southern Oklahoma Rural Council, and 2 loans to Caddo Electric Cooperative.

 

b.         –The EPA plans to study agricultural air pollution, especially from CAFOs.
            –Some are predicting this will lead to Clean Air Act regulation of agriculture.

8.            Congress:

a.            Recent/Current:

–Senate Ag Committee continues hearings on next farm bill
–17 Aug, University of Georgia, Athens, GA.
–18 Aug, Tipton, Iowa.
–20 Aug, Stewartville, Minnesota

 

b.            Upcoming:

–Senate Ag Committee continues hearings on next farm bill
–other dates to be announced

 

c.            Congressional Calendar:

–When Congress returns from summer break 5 Sep, about 22 weekdays remain in this Congressional session, if the House target adjournment date is met. 

 

                    August 4 ‑ Sep 4                      Summer District Work Period

                    September 3                 Labor Day

                    September 18               Rosh Hashanah

                    September 27               Yom Kippur

                    October 5                                Target Adjournment

(for the House)

 

d.         Key issues for this session of 107th Congress include:

–completing/continuing progress on the next farm bill
--dealing w/Social Security, Medicare, Medicaid
–consider debt reduction & appropriations bills
–campaign finance reform
–education reform
–prescription assistance
–moratoria on mergers in agribusiness
–Endangered Species Act reform
–energy policy reform

–Trade Promotion Authority (TPA–formerly Trade Negotiating Authority TNA, formerly fast track authority FTA)

 

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