The Congressional Budget Office predicts that the federal budget deficit for the current fiscal year will be record large at nearly $1.5 trillion. That means the government needs to borrow about 40 cents of every dollar it spends! The national debt has now passed $14 trillion and the debt ceiling of $14.3 trillion is looming in the next few months. Almost everyone agrees that current deficits are unsustainable, but reducing the deficits will be very difficult. As an example, the tax bill passed just before the end of the last session of Congress added almost $400 billion to this year’s deficit.

Congress has decided to pass another “continuing resolution” to fund government operations beyond the end of the current bill on March 4th. Earlier, members of Congress were talking about passing appropriations bills. Republican leaders in the House of Representatives have indicated that they will try to include significant spending cuts in this piece of legislation. The continuing resolution is “must-pass” legislation so some agreement between the House and the Senate will be required before the March 4th deadline.

As expected, the EPA has approved the use of 15% ethanol blends for cars and light trucks made after 2000. In theory, E-15 can now be used in about 55% of all cars and light trucks in use. However, EPA still hasn’t even decided on what pump labels will be required and a lot of infrastructure investment will be needed before E-15 is readily available. The new EPA decision will almost certainly be challenged in court and several suits are still pending over EPA’s decision to allow the use of E-15 in cars made after 2006. Current ethanol use is near 13 billion gallons and the mandated use for ethanol is 15 billion gallons by 2015. For blenders to use more than 15 billion gallons, ethanol will have to provide blenders with an economic incentive; probably without the benefit of the 45 cent per gallon blender’s tax credit.

A bill that would increase the number of ethanol-fueled vehicles on the roads and provide government aid for pipelines and pumps to dispense ethanol has been introduced by a bipartisan group of farm-state senators. The bill would require half of the new cars and light trucks made in the U.S. in 2014 and 2015 to be flex-fuel vehicles. After 2015, 90% of the vehicles would have to be flex-fuel capable. The bill would also require fuel distributers to install blending pumps and would provide grants to smaller distributors to help defray the costs of the new pumps, tanks and related equipment. However, with Congress focusing on cutting spending, approval of the money that would be needed for this legislation is unlikely.

There were not many agriculture-related issues in the president’s State-of-the-Union speech this week. Obama did call on Congress to pass the South Korea Free Trade Agreement, but did not include the Colombia or Panama agreements. He also set a goal of deploying high-speed wireless internet access for 98% of the country (and thus most of rural America) by 2016. The president also said he thinks the estate tax exemptions and rates should return to 2009 levels, once the current rates expire in 2012.

Farmers may need pesticide application permits in less than three months when new EPA rules take effect. The EPA rules may affect about 365,000 pesticide applicators nationwide and some 5.6 million pesticide applications. Officials in 44 states are developing programs in accordance with the EPA rules. Most state officials say farmers who apply pesticides to row crops will not need permits, but farmers who apply pesticides that inadvertently escape into lakes and rivers could face legal liability. Regulations may vary from state to state adding to the uncertainty over what exactly will be required. The EPA rule goes into effect on April 9.