Congress managed to pass a continuing resolution this week before adjourning until after the election. The CR was needed to keep the government running past the end of this month. In theory, Congress is supposed to pass 12 appropriations bills to fund the various departments of the government before the fiscal year ends on September 30. The House approved seven of the bills, but the Senate did not pass a single one. The continuing resolution essentially continues current programs for the next six months. Most USDA programs, including food stamps, will be continued at current levels through March 27, 2013.

Congress did not take any action on the farm bill or on the disaster aid program for livestock producers. The expiration of the 2008 farm bill is expected to have a relatively modest impact, at least over the next few months. Most programs, including crop insurance, the Conservation Reserve Program and food stamps, will continue and farmers will receive direct payment checks in October. Farm bills seldom get completed on time. The 2002 farm bill expired September 30, 2007 but the 2008 farm bill wasn’t approved until May 2008. However, Congress will probably need to approve at least a short- term extension of the 2008 bill in the lame-duck session after the election.

The general consensus is that the amount of money available for farm programs will decline regardless of whether the new farm bill is approved in the lame-duck session or with a new Congress in 2013. Congress faces huge budget cutting challenges as the sequestration deadline approaches. If the bill is delayed into next year, the Congressional Budget Office will generate a new budget baseline that will likely be significantly lower than the one that was used when the current farm bill proposals were developed. With USDA forecasting record net farm income for 2012, some in Congress will try to find ways to cut farm program costs by even more than the $23 billion in the Senate bill or the $35 billion in the House Agriculture Committee bill voted on this year.

The farm sector might actually fare better under the sequestration that will begin in January if Congress does not act. A report from the Office of Management and Budget (OMB) indicates that the actual reductions in agriculture department funding would be about $8 billion over 10 years, far less than under either the House or the Senate proposed farm bills. About $4.6 billion would be cut from commodity programs, $2.8 billion from conservation programs and very small amounts from food and nutrition programs. In the report OMB exempts nearly all of the crop insurance subsidies from automatic cuts, a decision that lowers the total agriculture department cuts by about $6 billion.

The Congressional Research Service released a study that finds almost no relationship between reducing the highest federal income tax rates and stronger economic growth. CRS looked for a relationship between the gradual reduction in tax rates among the high income people and things like the savings rates, productivity growth and per capita GDP. (The top tax rate paid by high income people declined from about 94% in 1945 to about 35% in 2007.)

A November 1 deadline is fast approaching for EPA and environmental groups to reach a settlement on a lawsuit that could have huge implications for agriculture. Several environmental groups sued EPA back in January 2011 charging that EPA violated the Endangered Species Act when approving some 300 pesticides. The settlement talks have been underway since May 2011. Depending on the outcome of the settlement talks or the outcome of the court case the pesticides could be removed from the market while EPA studied the effects on some 200 endangered species, a process that could take years. Several groups are acting as interveners in the settlement talks to try to protect the interests of the agriculture sector.