Ag Policy Update–13 Nov 02       

(Sunup Program to be aired 14 Nov 02)

 

1.        Congress is back in session just a week after a momentous election.  Who’s in charge and what’s likely to happen?

 

–No changes in the lame duck session for the House.

–The Republicans remain in leadership, with Hastert (IN) Speaker.

–Since Armey (TX) is retiring, Delay (TX) will become Majority Leader, and he will push more aggressively for a conservative agenda, more tax cuts, less social program spending.

–Pelosi (D-CA) will likely become Minority Leader, because Gephardt (D-MO) is stepping down from the leadership position, and she will be more liberal, and likely less cooperative with the GOP.

–There may be some shuffling of Republican chairs of committees.

–The bombshell that was dropped this week was Ag Committee Chair Combest (TX) announcing he will retire from Congress next May 2003 for personal family reasons.

–That makes the Ag Committee’s leadership uncertain on the Republican side of the House.

–The order of seniority is Boehner (OH), Goodlatte (VA), Pombo (CA), Nick Smith (MI), Terry Everett (AL) and Lucas (OK).

–However, we don’t know if Boehner will be jockeying for a position to chair another committee.

–While this moves Lucas closer to the leadership position, it does create some uncertainty over agenda and priorities for agricultural policy over the next 2 years.

2.     How about on the Senate side.  Any changes there?

 

–On the Senate side, the Demos remain in charge for the time being because the appointed Independent replacement for Wellstone of Minnesota has refused to caucus with the Republicans.

–However, as soon as the MO election is certified, incoming Republican Sen. Talent will replace defeated Demo Carnahan, and power will shift to the Republicans.

–Sen. Lott (R-MS) will replace Sen. Daschle (D-SD) perhaps as early as next week as Majority Leader, while Daschle will become Minority Leader.  

–That will shift leadership of the committees.  Here’s a rundown:

(1)    Cochran (R-MS) will chair the Ag Committee; he will also chair the Ag Appropriations Subcommittee

(2)    Stevens (R-AK) will chair Appropriations, and he is more moderate that some of the leadership.

(3)    Grassley (R-IA) will chair Finance, also somewhat more moderate.

(4)    Nickles (R-OK) will chair Budget, and he’ll likely be an ally of the House’s Delay in moving a more conservative budget agenda.

(5)    Domenici (R-NM) will chair Energy & Natural Resources.

(6)    McCain (R-AZ) will chair Commerce.

–With MS having leadership in both the full Senate, the Ag Committee, and the Ag Appropriations Subcommittee it is clear that cotton will have the inside track on policy, but Ag will also maintain a priority position of policy and budget concern.

3.     So, what business can the lame duck session get accomplished this year?

 

–It now looks like compromises are moving the Homeland Security bill forward, and it could be passed and to the President by next week.

–There will also be movement on the remaining 11 spending bills, although the priorities and sticking points are somewhat uncertain for the moment.

–Recall that, prior to the election, Congress passed the Defense and Military Construction spending bills, and sent them to the President for his signature.

–At that time, Congress also passed its sixth Continuing Resolution, funding federal spending through 22 Nov.

–Some action on spending bills may be delayed until the next session in January, but that will require another CR.

 

 

4.     So remind us what’s on the unfinished business list?

 

–The remaining 11 spending bills have to be at the top of the list, although Congress has yielded to Administration pressure and begun to move the Homeland Security bill forward.

–Until the Agriculture Appropriations bill is passed, no appropriated spending on new programs can occur.

–Perhaps one of the other key pieces of legislation for producers is disaster aid.

–As we’ve noted, the Senate passed an amendment to the Interior spending bill authorizing $5.9 billion in emergency aid for ag.

–The House has passed no such provision, but there are bills calling for $1-2 billion.

–Although farm groups have lobbied hard for this aid, the President is firmly against new money, and even the GOP House Speaker Hastert surprised many this past week by saying Congress would deal with this after the election only “if there’s a problem”.

–So, it’s not a done deal by any means. 

–Other important issues left unfinished include:

–Economic aid with the economy in a slump, including consideration of accelerating out-year tax breaks and making the elimination of the estate tax permanent

–Prescription drug benefits

–Energy reform policy

 

 

5.     You mentioned the economy.  Fed Chair Greenspan spoke to Congress yesterday about the economy.  Summarize his concerns and what that means for ag.

 

–He noted that the economy had “hit a soft patch”, which with the Fed’s decision last week to drop interest rates a half point are about as serious as he can get without sounding alarmist about a possible recession.

–He blames current woes on:

(1)    after effects of falling stock prices;

(2)    increasing fall out of corporate scandals;

(3)    growing geo-political risk related to Iraq.

–As I’ve noted in the past few weeks, however, there’s more to it than that:

–Leading Economic Indicators are down.

–Jobless numbers are up.

–The Federal budget deficit is worsening. 

–The Fed action will reduce the cost of some borrowed capital in the short run, but it also reduces the value of the wealth base.

–Also, it may improve consumer confidence which could strengthen demand for goods and services.

–Since most farm families now rely on off-farm income, this could bring some optimism.

 

 

6.        Other policy-related news/activities:

 

a.     Both the FTAA and WTO talks are moving forward.  Details will be outlined in the coming weeks.

 

b.     New farm program payments began this past week, with $685 million planned. 

Funds are being disbursed through the Direct and Counter-Cyclical programs and the Apple Marketing Loss Assistance program.

Cotton gets the lion’s share with about $430 million going for the first partial counter-cyclical payments.

Recall that, because of high market prices, no counter-cyclical payment will go to wheat, feed grains or soybeans.

c.     Election turnout rates and margins are coming out.  Details will be discussed in the coming weeks.

 

 

7.        Congress:

 

a.        Recent activity:

–Congress reconvened to conduct unfinished business  (12 Nov).

 

b.        Current/upcoming:

–Consideration of Homeland Security and spending bills, and change in Senate leadership likely next week.

 

c.        2002 Schedule:

 

–Uncertain beyond next week.

 

d.        Key issues:

–Bioterrorism & homeland security

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

–Emergency assistance for agriculture

–Most spending bills

–Response to economic slump

–Comprehensive energy legislation (& status of renewable fuel standards)

 

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