Continuing Resolution & Disaster Assistance
The federal fiscal year ends on Sept. 30 and with the annual appropriations bills uncompleted, Congress had to pass a Continuing Resolution (CR) to keep the government functioning. The CR, signed by President Joe Biden at the nth hour on Sept. 30, will run through Dec. 3, which includes $10 billion for agriculture disaster assistance to cover losses in 2020 and 2021 due to drought, hurricanes, wildfires, etc. The disaster assitance is expected to be administered by the U.S. Department of Agriculture using a similar structure as the WHIP+ program for losses in 2018 and 2019.
The federal government is also approaching the statutory debt limit and action will be needed to suspend or increase the limit to prevent default on government obligations and financial market impacts. While debt limit increases have been passed by both parties when they were in control of Congress, the exercise has become a political football.
Bipartisan Infrastructure Package
Sept. 27 is the agreed upon date that the House was to vote on the bipartisan infrastructure package passed by the Senate. However, the moderate and progressive factions of the House Democrat Caucus are not yet in agreement on the larger reconciliation package that progressives believe should be enacted in conjunction with the infrastructure bill. Leadership may need to postpone the vote on the infrastructure package.
Democrat Leadership and the White House are trying to get the moderate and progressive factions of the House Democrat Caucus to an agreement that enables passage of the bipartisan infrastructure bill and eventually, the larger reconciliation package. Progressives don’t want to support the infrastructure bill until the larger reconciliation package is also passed (or agreed to). Moderates don’t want the reconciliation package scaled down. The bipartisan infrastructure bill would provide significant additional funding for roads, bridges, ports, waterways, and rural broadband.
Progressive Democrats want to enact a reconciliation package of “human infrastructure” programs and policies that total $3.5 trillion. Included would be significant funding for agriculture research and conservation programs, which would also increase the baseline spending for the next farm bill. However, moderates believe the package should be much smaller. Democrats have no votes to spare in the Senate and only a three-vote margin in the House. Neither faction has blinked so far. House and Senate leaders and President Biden are trying to negotiate among the different factions to get to agreement on a reconciliation package and pass the bipartisan infrastructure bill.
The proposed package would be offset with revenues from changes in tax policies, including increases in the top rates for individuals and changes to capital gains and corporate tax rates. On Sept. 8, the U.S. Canola Association signed a letter to Congress regarding the need to preserve stepped-up basis, like-kind exchanges, the Sec. 199A small business deduction and current estate tax exemption levels for farms. The letter was signed by 327 national, regional and state trade associations. In a positive sign, the proposal unveiled by the House Ways & Means Committee preserved stepped-up basis and like-kind exchanges. However, the Senate has not yet released its proposed changes.
$3 Billion in New Assistance Programs
On Sept. 29, Agriculture Secretary Tom Vilsack announced the U.S. Department of Agriculture (USDA) will provide $3 billion to address challenges and costs associated with drought, African Swine Fever, market disruptions for agricultural commodities and school food supply chain issues. The support will be made available via the Commodity Credit Corporation (CCC). Specifically, funds will be used to provide:
- $500 million to support drought recovery and encourage the adoption of water-smart management practices
- Up to $500 million to prevent the spread of African Swine Fever via robust expansion and coordination of monitoring, surveillance, prevention, quarantine and eradication activities through USDA’s Animal and Plant Health Inspection Service.
- $500 million to provide relief from agricultural market disruption, such as increased transportation challenges (trucking and shipping container costs, port demurrage fees, etc.), availability and cost of certain materials, and other near-term obstacles related to the marketing and distribution of certain commodities.
- Up to $1.5 billion to provide assistance to help schools respond to supply chain disruptions.
Climate-Smart Agriculture and Forestry Partnership Initiative
Secretary Vilsack also announced a new initiative to finance the deployment of climate-smart farming and forestry practices to aid in the marketing of climate-smart agricultural commodities. The USDA will support a set of pilot projects that provide incentives to implement climate-smart conservation practices on working lands and to quantify and monitor the carbon and greenhouse gas benefits associated with those practices. The pilots could rely on the CCC’s specific power to aid in expansion or development of new and additional markets. The USDA published a Request for Information seeking public comment and input on design of the new initiative.
Tom Hance is a policy expert at Gordley Associates in Washington, D.C.