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Within 30 minutes January 3, Congress adjourned for the 112th session, and convened the 113th Congress, swearing in new members and electing leadership. Generally, there is a month or two between adjournment and a new Congress, but fiscal cliff negotiations dragged the last session out to the last minute.

 

Proving once again Congress loves a deadline, negotiators cobbled together an 11th-hour fix to avoid sending the nation's economy over the fiscal cliff, tacking on a nine-month extension of the 2008 Farm Bill and an extension of a congressional pay freeze for good measure. Both chambers approved the measure - the Senate on an 89-9 vote; the House cutting it closer on a 257-167 vote as fiscal conservative members said the bill did not contain enough spending cuts - and the President signed the bill January 2. The package could be considered a classic compromise as based upon reactions from both sides of the aisle, no one is happy with effectively kicking the fiscal cliff fix into the new Congress. While congressional action prevented the predicted dire economic impact of diving off the fiscal cliff, and Wall Street reacted positively, the action taken simply defers decisions on spending cuts, revenue increases and broader tax reform, all of which House Speaker John Boehner (R, OH) vows will be part of the House 2013 legislative agenda.  

 

The fiscal cliff law "permanently" extends the Bush era personal income tax rates on individuals making less than $400,000 and couples making less than $450,000. Income above those rates will be taxed at a new rate of 39.6%, up from 35%, along with an increase in the capital gains and dividend tax rates on the higher income from 15% to 20%. Included in the package is an adjustment to the federal estate tax, a major priority for farm and ranch groups. The maximum federal estate tax rate will increase from 35% to 40%, but exempts the first $5.12 million in estate value. Without this action, the estate tax would have reverted to the pre-2001 tax rate of 55% with just $1 million exempted. The deal also extends so-called "portability rules so the exemption can be passed to a surviving spouse. The alternative minimum tax (AMT) is "patched" permanently to prevent increased taxes being paid by millions of tax payers on 2012 income.  

 

Other tax adjustments include permanent extension of the child care tax credit; extension of adjustments in the earned income tax credit (EITC) and preserving the marriage tax penalty fix, along with several education-related credits preserved and extended. The spending cuts mandated by the 2011 Budget Control Act - nearly $1 trillion in savings over a decade by setting discretionary spending caps; $109 billion due in 2013, with half coming out of the military budget - are postponed through the end of February, 2013, partially replaced by a combination of spending cuts and revenue increases. Part of these savings is through adjustments/cuts in various health programs, including portions of Medicare. The bill also extends through the end of 2013 eligibility for expanded unemployment insurance benefits for laid-off workers, and reduces the maximum 99-week eligibility to 73 weeks. Lastly, a set of "extenders" - various tax credits which expired at the end of 2011 - were extended for the 2012 and 2013 tax years and include several energy-related tax credits, including the $1-per-gallon blenders tax credit for biodiesel and renewable diesel, as well as a credit of $1.01 per gallon on cellulosic biofuels, with the new inclusion of algae-based biofuels, and a small producer biodiesel tax credit of 10 cents per gallon.  

 

Also included is extension of the credit for alternative fuel vehicle refueling property; the research and development tax credit; 50% bonus depreciation rules on property placed in service before 2013; the ability of financial service companies and manufacturers with financing divisions to defer taxes on income earned overseas from active financing operations; the "new markets tax credit" for investment in community development; low-income housing tax credits, and the work opportunity tax credit. Controversial for their inclusion in the package are provisions allowing a seven-year recovery period for motor sports racetrack property in lieu of the existing 15-year period, and a special expensing rule for film and television production allowing expensing of the fist $15 million in production costs, or $20 million in "distressed areas."

WASHINGTON, Jan. 2, 2012 - Agriculture Secretary Tom Vilsack today issued the following statement on the Food, Farm and Jobs Bill:

 

"I am pleased that Congress passed needed middle class tax relief and continued unemployment insurance protection for 2 million unemployed Americans. However, while I am relieved that the agreement reached prevents a spike in the price of dairy and other commodities, I am disappointed Congress has been unable to pass a multi-year reauthorization of the Food, Farm and Jobs bill to give rural America the long-term certainty they need and deserve. I will continue to work with Congress to encourage passage of a reauthorized bill that includes a strong and defensible safety net for producers, expanded rural economic opportunity in the new bio-based economy, significant support for conserving our natural resources, increased commitment to important research, and support for safe and nutritious food for all Americans. I look forward to continuing the effort to get this critical work done."

 

The extension of most of the 2008 Farm Bill authorities included in the fiscal cliff package drew widespread shock and awe from most agriculture and input organizations that had campaigned hard for a new full five-year omnibus Farm Bill. However, the International Dairy Processors Assn. (IDFA) congratulated Congress and President Obama for its actions to avoid the fiscal cliff. IDFA strongly opposed the new dairy support programs pushed by the National Milk Producers Federation (NMPF) and included in a bipartisan package hammered together by the chairs of the respective ag committees. Jerry Kozak, NMPF president, told the Hagstrom Report this week the extension "amounts to shoving farmers over the dairy cliff without providing any safety net below." Bob Stallman, president of the American Farm Bureau Federation (AFBF) said the extension was little more than a stop gap measure, and said AFBF is "disappointed that Congress was unable or unwilling to roll a comprehensive five-year bill into the fiscal cliff package."

Sen. Thad Cochran (R, MS), a member of the Senate Agriculture Committee since 1979 and chair of the committee in 2003-2005, this week exercised his right of seniority and opted to take the ranking minority slot on the Senate ag panel. In a related announcement, Senate Minority Leader Mitch McConnell (R, KY) announced there will be nine GOP members on the ag committee, one less than in the last Congress. In response to Cochran's decision Sen. Pat Roberts (R, KS) said January 3 in a formal statement he will step aside as ranking member of the committee, pledging Cochran "my full support, and I will move his nomination when I bring the committee together for a vote...I expect it to be unanimous." Late January, 3, the full Republican side of the committee endorsed Cochran. The senior Mississippi Senator lost his ranking spot on the powerful Senate Appropriations Committee because he was term-limited under Senate rules. "Seniority is a well-respected and historic privilege in the U.S. Senate, and Sen. Cochran has my full support." Roberts said in a statement, "Rest assured I will remain a strong and vocal champion for agriculture as a senior member of the committee. I will retain my Finance Committee seat and as a senior member of this committee, I am able to affect trade policy, especially ag trade, tax reform and rural health care. No matter whether I hold the gavel, or whether I am the ranking member or whether I am a senior member, agriculture has always been a top priority of my efforts in public service. Nothing will change that."  

 

Both Cochran and Roberts will remain members of the Senate Rules Committee, with Roberts becoming ranking member of that panel. In his statement, Roberts pledged his support to help pass a five-year farm bill, action that was remarkably cooperative when Senate Agriculture Committee Chair Debbie Stabenow (D, MI) and Roberts went to work this year to fashion a bill eventually passed by the full Senate by a wide margin. That bill, however, angered southern crop producers who argue it favors large Midwest corn and soybean farmers, and Cochran's ascension to ranking member - along with his alliance with former committee chair Sen. Saxby Chambliss (R, GA) - means Stabenow will have to return to the drawing board, at least on the commodity title, when the committee takes up the Farm Bill again this month. The House Agriculture Committee-passed Farm Bill includes changes to the commodity title that include marketing loans and deficiency payments, a scheme much more friendly to southern producers and one Cochran would likely endorse.

 

Rep. John Boehner (R, OH) was reelected Speaker of the House for the 113th Congress this week, ending speculation he could lose the top House job over broad bipartisan disenchantment with the deal cut by House and Senate leaders to avoid the fiscal cliff. Needing 217 votes, Boehner received 220, House Minority Leader Nancy Pelosi (D, CA) received 192, and 15 members voted for themselves or outsiders, including three who voted for House Majority Leader Eric Cantor (R, VA). Cantor voted for Boehner. While Boehner lost 10 GOP votes, Pelosi lost five Democrat votes as the tally was completed just after the 113th Congress was sworn in yesterday afternoon. The defections were expected given how controversial the fiscal cliff vote was for both GOP and Democrat fiscal conservatives who wanted more spending cuts. The Speaker need not be a sitting member of Congress to be elected.

A $60-billion Senate-passed package of disaster aid to the victims of Superstorm Sandy, including $125 million in ag disaster assistance, died this week with the adjournment of the 112th Congress, but will move this month as a new bill in a new Congress. However, it won't move as a single legislative package, but a series of installments related to disaster relief, House and Senate leaders agreed this week. House Speaker John Boehner (R, OH), fresh off his media pummeling over the fiscal cliff agreement, took more body blows from New York and New Jersey politicians when he announced the House would not take up the Senate bill prior to adjournment. Nearly $10 billion - an extension of federal borrowing authority for the National Flood Insurance Program (NFIP) requested by the Federal Emergency Management Agency (FEMA) - will be voted on January 4 in the House, with the Senate expected to clear the measure for President Obama's signature shortly thereafter. The remaining $50 billion included in the old Senate bill will be voted on January 15, but the outlook for that package is uncertain. Fiscal conservatives in both chambers argue the Senate bill includes too many programs and spends too much on issues not related to natural disasters, including money for salmon fisheries in Alaska and a series of what one Republican Senator called "gimmes" designed to get GOP votes. They argue the Senate should have produced a bill with a $25-30-billion price tag. The House may split the package yet again, voting on $18-25 billion for immediate recovery needs - expected to pass, including more dollars for FEMA's emergency disaster relief fund - and then take up a $33-billion package of long-term "mitigation projects" so that areas can better withstand future storms. This latter package has a very iffy future.

WASHINGTON - EPA today released for public comment draft risk assessments, for particular uses, on five chemicals found in common household products. The draft risk assessments were developed as part of the agency's Toxic Substances Control Act (TSCA) Work Plan, which identified common chemicals for review over the coming years to assess any impacts on people's health and the environment. Following public comment, the agency will seek an independent, scientific peer review of the assessments before beginning to finalize them in the fall of 2013. "The draft risk assessments released today for public review and comment highlight the agency's ongoing commitment to ensure the safety of chemicals we encounter in our daily lives," said James J. Jones, acting assistant administrator of EPA's Office of Chemical Safety and Pollution Prevention. "The public and scientific peer review will ensure use of the best science to evaluate any impacts of these substances on people's health and the environment." The five assessments address the following chemical uses: methylene chloride or dichloromethane (DCM) and  n-methylpyrrolidone (NMP) in paint stripper products; trichloroethylene (TCE) as a degreaser and a spray-on protective coating; antimony trioxide (ATO) as a synergist in halogenated flame retardants; and 1,3,4,6,7,8-Hexahydro-4,6,6,7,8,8,-hexamethylcyclopenta-[γ]-2-benzopyran (HHCB) as a fragrance ingredient in commercial and consumer products. The draft assessments focus either on human health or ecological hazards for specific uses which are subject to regulation under TSCA. Three of the draft risk assessments- DCM, NMP, and TCE- indicate a potential concern for human health under specific exposure scenarios for particular uses. The preliminary assessments for ATO and HHCB indicate a low concern for ecological health. EPA recommends the public follow product label directions and take precautions that can reduce exposures, such as using the product outside or in an extremely well ventilated area and wearing protective equipment to reduce exposure. If EPA concludes in finalizing the risk assessments that there is a potential for concern, the agency will take action as appropriate to address possible risks. The draft assessments were undertaken as part of EPA's efforts to identify chemicals for review under the TSCA Work Plan, which EPA released in March 2012. At that time, EPA identified 83 chemicals as candidates for review over the coming years and outlined the data sources and other information the agency would use in the reviews. This initiative is part of EPA's comprehensive approach to enhance the current chemicals management program within the limits of existing TSCA authorities. EPA continues to support updating TSCA to strengthen and modernize the law. Additional information on the TSCA Work Plan effort and the specific draft risk assessments can be found at:  http://www.epa.gov/oppt/existingchemicals/pubs/workplans.html