05  September 01 
(Sunup Program to be aired 06 September 01)  

1.        Congress is back in session after their summer break.  What’s on the top of their agenda? 

–None of the 13 spending bills have yet made it to the President, and they need to be signed by 1 Oct.
–A month ago, we would have said that there would be few problems and all or most would be signed by the beginning of the new spending year in Washington.
–For the past few weeks,however, we’ve been discussing the news that the federal budget surplus has apparently disappeared.  
–That puts a whole new light on the issue, and political turmoil is growing under that light.

2.     Can you sift through the political rhetoric and briefly summarize the problem?

–There’s general agreement that the predicted $125 billion surplus is gone.
–So, 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.

3.     Let’s talk about why this is potentially a big deal.  We used to run deficits routinely, didn’t we? 

–That’s right, but we didn’t have this budget discipline that the Republican plan endorsed.
–Let’s take a moment to review what economists mean by “macro-economic policy”.
–When the economy takes a downturn, if we want government to intervene to halt it or lessen it, there are two general options:

(1)        monetary policy–that’s primarily the Fed reducing interest rates.
(2)        fiscal policy–that’s the federal government spending more money thru tax cuts or on new and existing programs.

–The dilemma is this:
(1)        We’ve had 9 months of monetary policy, & interest rates probably can’t go much lower.
(2)        We’ve passed a program of tax cuts, & have started that.
(3)        Neither of these actions have turned the economy around, although it may be too soon to see impacts.
(4)        The Bush tax cut budget plan limits federal spending.
(5)        In short, if we really are facing a serious economic downturn, we’re out of options.

 –Either Congress takes funds away from some programs to put into other programs that make have more of an impact, or we allow the economy to worsen, or the President and Congress break their promise to not use Social Security/Medicare trust funds.

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.        What else can we expect Congress to work on?

–The President’s energy bill will be considered.
–The request to grant the President Trade Promotion Authority (TPA), formerly fast-track may be discussed.
–This allows the Administration to negotiate trade agreements that Congress can’t modify or amend.
–Note that, if they meet the House targeted adjournment of 5 Oct, there’s only a month left in this Congressional session.
–Other issues may include:
–completing/continuing progress on the next farm bill
--dealing w/Social Security, Medicare, Medicaid
–campaign finance reform
–education reform
–prescription assistance
–moratoria on mergers in agribusiness
–Endangered Species Act reform

6.     You mentioned trade, some big news likely next week on WTO?

–That’s right.
–It was just reported this week that China’s membership will finally be approved 13 Sep.
–Taiwan’s membership will be okayed the next day.
–This could set the stage for a formal announcement this year.
–Regardless of how people feel about this decision, China is likely to be the world’s largest economy by 2025.
–For this reason alone, many believe it is better to bring them in to the disciplines of WTO.

7.        Other policy-related news:

a.     –USDA estimated US ag exports at $57 billion for fiscal year 02.
–This is about $3.5 billion higher than 01.
–Much of the increase is expected from increased sales of wheat and corn, good news for OK.

 b.     --USDA has distributed the emergency payments to producers through the AMTA payment system.
–Cottonseed payments to ginners began last week.

c.     –USDA is strengthening its oversight of federal crop insurance program through the Risk Management Agency and Farm Service Agency.
–Program abuse is now subject to penalties, & the policies and rates will be checked for statistical soundness by region.

8.        Congress:

a.        Recent/Current:

–Congress returned from summer break 5 Sep.

 

b.        Upcoming:

–Senate Ag Committee continues hearings on next farm bill

                –other dates to be announced

 

c.        Congressional Calendar:

–As of 10 Sep, about 19 weekdays remain in this Congressional session, if the House target adjournment date is met. 

 

                    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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