Congress will face a couple of pressing issues when they return to work later this month. The U.S. government is nearing the $15.2 trillion debt ceiling and the ceiling will need to be raised.
While Congress will need to vote on the matter, the result is a foregone conclusion. According to the deficit and debt agreement reached last summer, the only way the president’s request to increase the debt ceiling can be denied is for both Houses of Congress to pass resolutions disapproving the request and for the president to sign these resolutions.
Congress probably won’t pass the resolutions and the president would almost certainly veto them if they were passed. What a system!
The other pressing matter for Congress is the full-year extension of the payroll tax cut and unemployment benefits that the House and Senate were unable to agree on right before Christmas. Almost everyone wants the tax cut and unemployment benefits to continue. The dispute is over how to pay for them. The funding problem will still make it difficult for Congress to get these passed before the current extension expires in February.
Crop insurance helped to keep many farmers in business in 2011 because of the numerous weather related disasters last year. About $8 billion in claims was paid out before the end of 2011, with more claims still to be processed. More than $2 billion was paid to farmers in Texas alone to compensate for drought related crop losses. Most farm groups support maintaining and strengthening crop insurance when Congress drafts the next farm bill.
California’s low-carbon fuel standard (LCFS) violates the commerce clause of the U.S. constitution according to a recent U.S. District Court ruling. That court issued an injunction halting enforcement of the law. Under the LCFS, corn-based ethanol from the Midwest is considered to have generated higher greenhouse gas emissions than ethanol produced in California. Therefore, California refiners and ethanol blenders had to buy credits when bringing in Midwestern ethanol. The court ruling should allow for increased use of Midwest-produced ethanol in California’s huge 1.5 billion gallon biofuels market.
Congress failed to extend tax incentives for cellulosic ethanol, biodiesel and other “advanced” biofuels before adjourning in December. The total Renewable Fuels Standard requirement for 2012 is put at 15.2 billion gallons. One billion gallons is to come from biomass-based biodiesel, two billion from advanced biofuels and 8.65 million gallons from cellulosic biofuels. Two years ago, Congress called for 500 million gallons of cellulosic biofuels by 2012. (The $1.01 per gallon tax credit for cellulosic ethanol production expired at the end of 2011.)
Congressional Agriculture Committees hope to get a new farm law passed by summer since the 2008 Farm Bill expires this year. But, it will be difficult for Congress to meet that schedule. One reason is that Congress will be in session less than normal in 2012. It’s an election year, so recess breaks have already been scheduled for February, April, May, July and August.
At the same time, Congress will need to tackle appropriations bills for fiscal 2013 and many in Congress want to change the make-up of automatic spending cuts that kick in next year. For example, if the size of the automatic cuts to defense spending is reduced (as many in Congress want) the amount of money available for farm programs will probably get smaller. And, with the elections looming in November, the gridlock that characterized Congress in 2011 will probably continue in 2012.
The U.S., Canada and Mexico have agreed to delay the likely appeal proceedings in their dispute over the U.S. Country of Origin Labeling law (COOL). The WTO has ruled that COOL violates world trade rules and normally the parties would have 60 days to appeal the ruling. The deadline for filing an appeal has been delayed until March 23. The U.S. is expected to appeal the ruling before the new deadline.