NCFB -

National Update

Last week's NCFB National Legislative Update focused on new developments regarding the process for considering health care reform legislation and two jobs bills that are pending in Congress. These three pieces of legislation remained in the congressional spotlight this week. Here's the latest as of Friday afternoon.

Health Care Reform Remains Top Priority

As I reported last week, the Democratic leadership in Congress is strongly committed to passing a health care reform bill. To illustrate the point, they have spent a significant amount of time this week devising a strategy to advance a health bill that contains the vast majority of their proposals as quickly as possible. The White House has kept the pressure up and has even set a March 18th deadline for sending the bill to the President's desk for a signature. Although I don't think achieving that deadline is possible, it is becoming clear that the Democratic leaders are serious about using the budget reconciliation process as their legislative mechanism for passing the bill.

You will recall from last week's report that the reconciliation process is a procedure designed for the swift consideration of budgetary issues. If a bill is considered under reconciliation it is protected against the 60-vote filibuster threshold; however, the scope of the legislation is limited to only matters relating to the budget. Thus, it is attractive to congressional leaders who have majority support for a bill, but lack enough votes to break a filibuster. In fact, the reconciliation process has been used on several occasions, most recently as a vehicle for welfare reform in the mid-1990s and the Bush tax cuts of 2001 and 2003.

As of this afternoon, the Democratic plan is for the House Budget Committee to take the first shot at drafting a reconciliation bill next Monday afternoon, assuming that the all important Congressional Budget Office (CBO) budget analysis is completed by then. After the House Budget Committee approves its version of the bill, the measure will then move to the House Rules Committee, which will do most of the heavy legislative work. Following the Rules Committee's consideration, the bill will go to the House Floor for a final vote in that chamber. If it is adopted there, the bill will move to the Senate. House Speaker Nancy Pelosi has said she would like to pass a reconciliation bill addressing health care issues and send it to the Senate by March 21st . As always, we'll watch this issue closely and oppose the bill if it conflicts with Farm Bureau policy.

Jobs Bills Move Closer to Final Passage

Last week I tried to explain Congress' work on two "jobs bills" by referring to the measures as "Jobs Bill 1" and "Jobs Bill 2." You'll recall that Jobs Bill 1 contained several small business expensing provisions while Jobs Bill 2 was much bigger and addressed several tax extensions issues and included language establishing an ad hoc emergency disaster program. Both bills moved closer to final passage this week.

Jobs Bill 1, which was amended and approved by the House last week, is expected to receive a final vote in the Senate on Monday. Meanwhile, the Senate considered Jobs Bill 2, also known as, H.R. 4213, the Tax Extenders Act of 2009, this week. After adopting several amendments, the Senate passed its version of H.R. 4213 by a 62-36 vote. Jobs Bill 2 contains a number of provisions supported by Farm Bureau. Rather than re-inventing the wheel, I'm providing a summary of the bill from American Farm Bureau about its specific provisions. The future of Jobs Bill 2 (H.R. 4213) is uncertain right now. A House-Senate conference committee is the usual process for negotiating differences between bills, but leaders in the chambers have not made definitive statements about how they plan to proceed with the bill at this time

American Farm Bureau Federation Summary of Farm Bureau Supported Provisions in H.R. 4213, the Tax Extenders Act of 2009
EMERGENCY DISASTER ASSISTANCE

A payment of 90 percent of a farmer's direct payment for 2009 (or direct payment under ACRE) if a farmer is:

In a primary disaster county (producers in contiguous counties are not eligible), AND
Can show at least a 5 percent loss in quantity or quality on at least one crop of economic significance on the farm.

$42 million in assistance for first handlers of cotton seed in primary disaster counties.
$25 million for grants to states to assist aquaculture producers for losses associated with increased feed costs.
$75 million in loans to poultry producers who suffered losses due to the bankruptcy of a poultry integrator. This assistance applies only to those producers who contracted with an integrator that filed for bankruptcy in December 2008 (Pilgrim's Pride).
$50 million for livestock producers who suffered grazing losses in 2009 and are not already covered under the Livestock Forage Disaster Program included in the 2008 farm bill.
$150 million for grants to states to assist specialty crop producers that face losses due to excessive rainfall in primary disaster counties for 2009. All grants provided to producers will be considered farm revenue for purposes of calculating SURE benefits.
$21 million to a sugar cane cooperative in Hawaii for assistance to maintain and develop employment.
$15 million for administrative costs to carry out these programs.

While this is the package that is currently included in H.R. 4213, we know that several changes have been requested prior to passage, including increased funding for specialty crops, expansion to include drought as an eligible disaster for specialty crops, increased funding for the livestock program, and removal of the crop insurance/NAP purchase requirement. It is also possible that language could be included to prevent diversified producers from receiving both a supplemental direct payment and assistance under the specialty crop program.

Note: All of the issues mentioned in the paragraph immediately above were addressed in an amendment offered by Sen. Blanche Lincoln (D-AR), the Chair of the Senate Agriculture Committee. Specifically, the amendment provided an additional $150 million for specialty crop producers, but these funds were limited to only those producers who suffered from drought. It also added $35 million to the Livestock Forage Program for those sustaining losses due to flooding that occurred between May and December 2009.

Farm Bureau supports the following one-year extension (through 2010) of tax provisions in the bill:

RENEWABLE FUEL TAX PROVISIONS - Extension of tax incentives for biodiesel and renewable diesel. The amendment would extend for one year (through 2010) the $1.00 per gallon blenders tax credit for biodiesel and the small agri-biodiesel producer credit of 10 cents per gallon. The bill would also extend for one year (through 2010) the $1.00 per gallon production tax credit for diesel fuel created from biomass.

Biomass Facilities. The amendment extends for one year, through 2010, the tax credit for electricity produced at open-loop biomass facilities.

FARM BUSINESS PROVISIONS - Extension of five-year depreciation for farming business machinery and equipment. The bill would extend for one year (through 2010) the provision that provides a five-year recovery period for certain machinery and equipment which is used in a farming business.

Extension of enhanced charitable deduction for contributions of food. The amendment would extend for one year (through 2010) the provision allowing businesses to claim an enhanced deduction for the contribution of food inventory.

Extension of provision encouraging contributions conservation easements. The bill would extend for one year (through 2010) the increased contribution limits and carryforward period for contributions of easements for conservation purposes.

INDIVIDUAL TAX PROVISIONS - Extension of the deduction of State and local general sales taxes. The bill would extend for one year (through 2010) the election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes.

Extension of the additional standard deduction for real property taxes. The bill would extend for one year (through 2010) the additional standard deduction for State and local real property taxes.

Extension of the above-the-line deduction for qualified tuition and related expenses. The bill would extend for one year (through 2010) the above-the-line tax deduction for qualified education expenses.

RURAL DEVELOPMENT PROVISIONS - Extension of railroad track maintenance credit. The bill would extend for one year (through 2010) the railroad track maintenance tax credit for short line railroads.

Extension of Tax Incentives for Renewal Communities. The bill extends for one year, through 2010, the designation of certain economically depressed areas as Renewal Communities eligible for temporary tax incentives.

Medicare Payments to Rural Providers. The bill extends several provisions which increase Medicare payments to rural hospitals and physicians.

OTHER PROVISIONS - Extension of special tax treatment of Unrelated Business Income Tax (UBIT) payments to tax exempt organizations. The bill would extend for one year (through 2010) the special rules for interest, rents, royalties and annuities received by a tax exempt entity from a controlled entity.