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Farm Bill Part of Fiscal Cliff Negotiations

posted on December 7, 2012

While many thought Superstorm Sandy would have a major impact on U.S. unemployment figures - like the storm - the outcome was different than forecasters predicted.

According to the Labor Department, U.S. employers added 146,000 jobs in November. The numbers are on pace with October -- 50 percent higher than the market expected.

Though the number of jobs pushed unemployment down to 7.7 percent the figure is deceiving. While the unemployment rate dropped 2 percentage points the labor force fell by 350,000 people suggesting jobseekers had given up looking for work.

As some factories were hiring -- The Institute for Supply Management reported its manufacturing index snapped a two-month winning streak falling below growth-neutral at 49.5 – the lowest level in nearly three years. 

While the ISM index turned lower orders for factory goods increased by .8 staying on a slow but weak path to economic recovery. When the volatile transportation sector is taken out of the equation demand increased 1.3 percent.

And in the wake of a dismal November on Wall Street, U.S equities kicked-off December on a positive note as the Dow and S&P 500 rallied this week.

As job creation remains slow and steady, businesses appear to be anticipating a Congress that will manage to avoid falling off the fiscal cliff. Despite their cautious optimism, the political wrangling on Capitol Hill continues as the 2012 Farm Bill has become one of the ingredients being added to the political sausage.

Farm Bill Part of Fiscal Cliff Negotiations

As the clock winds down to the holiday season and closer to Washington’s self-imposed fiscal cliff, public posturing was apparent this past week.

Rep. Kevin McCarthy, R-California:  'We put an offer on the table. The president now has to engage."

House Speaker John Boehner, R-Ohio: "If the president doesn't agree with our proposal and our outline, I think he's got an obligation to send one to the congress."

President Obama, after rejecting the GOP's deep spending cuts earlier this week, told a national business group the next move is on the other side of the aisle and Republicans must accept higher tax rates on wealthier Americans.

President Obama: "We can probably solve this in about a week. It's not that tough. But we need that conceptual breakthrough."

Sen. Charles Grasley: “Broaden the tax base in a way we can all win and our country will win.”

The President also warned the GOP against another fight over the debt ceiling in hopes of greater leverage.

President Obama: "I want to send a very clear signal to people here. We are not going to play that game next year."

The fiscal cliff is not a game for farmers and ranchers who plan future seasons on future tax rates and federal farm policy.  The 2012 farm bill has languished in the U.S. House since June under a cloud of partisanship on issues like food stamps and crop insurance. But post-election movement could mean a vote is on the horizon.

Agriculture Secretary Tom Vilsack has conducted closed-door meetings amongst the farm bill’s top legislative players: The Senate’s Pat Roberts and Debbie Stabenow as well as Collin Peterson and Frank Lucas from the U.S. House.  The private sessions have reportedly made progress despite amplifying disagreement between Senate Democrats and House Republicans hungry for a $16 billion cut in the federal food stamp program.

The latest efforts appear to pin hopes of farm bill passage to the fiscal cliff talks.  Lawmakers have dangled farm spending cuts of $23 billion to $35 billion in front of fiscal dealmakers searching for a high-stakes compromise.

Still in dispute is the future role of America’s farm safety net and the Senate’s proposals known as “shallow loss” which would pay farmers in situations not covered by traditional crop insurance.

Cooperation between the House and Senate has rallied agreement on cutting conservation spending by $6 billion and crop subsidies by more than $13 billion, in part, by ending direct-payment subsidies currently paid regardless of need.  But lawmakers know the languishing farm bill hitches a ride on the fiscal cliff at its own peril.

Tags: budget deficit fiscal cliff Grassley Obama Vilsack