By Emily Vaughan
Likely due to bipartisan concerns about America’s aging farm population, Obama promised in his Blueprint for Change to provide tax incentives that help new farmers. And despite a crowded presidential agenda, farmers advocacy groups are positioning themselves to capitalize whenever they become the next priority.
Last year’s Food, Conservation and Energy Act of 2008, commonly known as the Farm Bill, set federal farm policy effective until 2013. The law includes several loan programs for beginning farmers, but absent from the bill are any tax credits.
“The farm bill doesn’t usually deal with tax issues,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition. Despite the fact that tax changes were included in the Farm Bill, there wasn’t much push to establish tax credits for beginning farmers. “We weren’t really prepared to make a push,” said Chuck Hassebrook, executive director for the Center for Rural Affairs.
Instead, the Farm Bill expanded some loan programs for beginning farmers, including the federal Down Payment Loan Program, which provides capital to new farmers to buy land and equipment -- typically the biggest barrier to opening a new farm. Under the new bill, the interest rate was lowered and the loans are guaranteed by the Department of Agriculture. “The program has just really been going gangbusters in the last year,” Hoefner said. During the first 14 years of the program, about 3,000 loans were issued, but there have been close to 1,500 in the last year alone, he said.
The Farm Bill also included a pilot program that matches up to $6,000 in a farmer’s savings account if the money is used to buy farmland and livestock, make early mortgage payments, or pay for similar expenses.
Still, the success of the Farm Bill’s loan strategy hasn’t made Obama’s promise obsolete, advocates say. “Loans are important, but access to the money does not necessarily get you access to the land,” Hoefner said. “Policy needs to work comprehensively and the tax incentive side is part of that equation.”
By putting cash back in the hands of beginning farmers, the tax incentives are “of a bit more value to the young person who’s trying to make some of their initial investments before they take on any substantial debt to buy land,” Hassebrook said. CFRA is currently working on developing a bill on microenterprise tax credits for small farmers and businesses, which they hope to add to a congressional tax bill. The idea is to be prepared by the time another tax bill goes through Congress.
There are two types of potential tax credits at the federal level, Hoefner said: a federal equivalent of the state tax-supported first-time farmer loans (or “aggie bonds”) and capital gains tax breaks. Currently, an IRS tax ruling makes federal aggie bonds impossible, and there hasn’t been much political will to overrule it. Congress did not include any provisions for changing the ruling in last year’s Farm Bill. But “the White House and Treasury could make the change administratively,” Hoefner said. “The ball is very much in their court, should they want to begin to fulfill the campaign pledge.”
Capital gains tax breaks -- if targeted specifically to beginning farmers -- would also help, Hoefner says. Several bills proposing that have been introduced in the last decade, but none have gone far. Now, it’s not even at the top of NSAC’s agenda, let alone that of any legislators. Hoefner anticipates his organization will start pushing for it next year.
Tax credit programs for beginning farmers exist in two states: Iowa and Nebraska. Under these programs, landowners get a tax credit for renting agricultural assets such as land, livestock or equipment to beginning farmers. CFRA helped with the passage of both programs, which help connect new and retiring farmers, says Traci Bruckner, assistant director for rural policy at CFRA.
Obama is the first president to specifically outline tax credits for new farmers, Hoefner said, but he doubts anyone in the administration is paying attention to it with bigger issues looming. Bruckner calls Obama’s promise a “first step in the process.”
Even if advocacy groups are ready, there’s no guarantee that tax credits will become law, especially given the country’s other economic challenges “We’re facing big deficits right now,” Hassebrook said. “There’s not going to be an immediate opportunity to create new tax incentives, more likely than not. But a lot of the success in passing legislation involves getting ready and prepared so that, when there is an opportunity, you’re ready to go.”
According to foreclosure properties tracker RealtyTrac, the number of foreclosures in the U.S. has continued to rise since May. However, the administration has still established no moratorium on foreclosures.
As the agency responsible for overseeing Gulf Coast recovery approaches its expiration date, it's still housed within the Department of Homeland Security. The Office of the Federal Coordinator for Gulf Coast Rebuilding isn't a sure thing to be extended, either -- although DHS Secretary Janet Napolitano indicated its duties would still be fulfilled. "The president and I see this the same way, which is that the question is not so much the names of the offices of the organizational boxes, but getting people in who will work effectively with the community, " Napolitano told the New Orleans Times-Picayune.
Other federal officials working on the recovery in New Orleans, including Tony Russell at the FEMA Transitional Recovery Office and the "Decision Team" headed by Charles Axton in cooperation with the state of Louisiana, are also under the aegis of Homeland Security.
In a new brief defending the Defense of Marriage Act, the Justice Department erased the controversial tone that had once forced Obama to invite angry gay leaders to the White House for a reconciliatory reception. In their newest attempt at defending a law the administration opposes, lawyers now brand the policy as "discriminatory."
The department's first attempt at defending DOMA -- which it's required to do -- was filled with arguments against homosexuality that are often made by the religious right. It equated gay marriage to legalizing incest and pedophilia.
The resulting uproar in the gay community led Obama to grant some benefits to partners of gay federal employees. But when critics pointed out health care wasn't included, the White House hosted an event where Obama, flanked by the first lady, tried to explain his "duty to uphold existing law" but conceded "we must do so in a way that does not exacerbate old divides." He also had to make the case that health care benefits couldn’t be granted to spouses without an act of Congress.
The new brief drops the inflammatory arguments and reiterates several times the administration’s stance.
"With respect to the merits, this Administration does not support DOMA as a matter of policy, believes that it is discriminatory, and supports its repeal," it states. "Consistent with the rule of law, however, the Department of Justice has long followed the practice of defending federal statutes as long as reasonable arguments can be made in support of their constitutionality, even if the department disagrees with a particular statute as a policy matter, as it does here."
And in case that wasn't clear enough, Obama issued an official statement separating himself from the department's former tack: "This brief makes clear… that my Administration believes that the Act is discriminatory and should be repealed by Congress."
President Obama nominated Regina M. Benjamin as U.S. surgeon general. White House spokesman Reid Cherlin said that Benjamin "supports the president's position on reproductive health issues." Cherlin also said that Benjamin is committed to reducing the number of unintended pregnancies.
The House-passed Waxman-Markey bill contains several provisions mandating more energy efficient buildings. By 2010, buildings would be required to improve their efficiency by 30 percent, and by 2016, 50 percent. Households could receive $3,000 to help make their residences 20 percent more energy efficient.
By ZACK HALE
As lawmakers agitate over a mounting federal budget deficit, PAYGO is making headlines again. But the version recently introduced in Congress at the behest of the Obama administration contains gaping loopholes that would allow the federal government to continue to spend freely.
In fact, some analysts say the proposed PAYGO rules will actually deepen the deficit.
The bill, which was written mostly by the White House, has been touted by Democrats as a return to fiscal responsibility after eight years of profligate deficit spending by the Bush administration.
House Speaker Nancy Pelosi, D-Calif., has said of the pending legislation: “We will have a PAYGO that will work, that will reduce the deficit and will take us down in terms of the national debt and, therefore, the interest on the federal debt.” Florida Rep. Allen Boyd, a member of the fiscally conservative Blue Dog Democrats, said, “Congress does not have the self discipline to be fiscally responsible if there are not tools in place to make it do so.”
However, the bill bears little resemblance to the PAYGO rules Obama promised on the campaign trail, which he said would ensure that “new spending or tax cuts are paid for by spending cuts or new revenue elsewhere.”
For starters, congressional discretionary spending would remain unfettered; that amounts to about 40 percent of the federal budget. The spending constraints would apply only to expansion of entitlement programs like Medicare, Medicaid and Social Security.
The bill would also afford the government enough leeway to extend the Bush tax cuts, stanch the growth of the alternative minimum tax and stave off scheduled Medicare cuts.
This has led fiscal responsibility advocates like Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, to sound off.
“Talking about extending the tax cuts, fixing the [alternative minimum tax], dropping the Medicare patch -- all without paying for them -- really just leaves you with PAYGO around the margins,” MacGuineas said.
An economic outlook by William Gale and Alan Auerbach for the more left-leaning Brookings Institution said, “Reinstatement of PAYGO rules, as proposed by the administration, would exempt most of the major causes of fiscal deterioration over the next decade.”
Brian Riedl, a government spending expert at the conservative Heritage Foundation who has written extensively about PAYGO, is even more dubious of the bill, which he says is nothing more than political posturing.
PAYGO “is merely a talking point that allows lawmakers to pretend they’re being fiscally responsible without actually lifting a finger to be fiscally responsible,” Riedl said. “The idea that PAYGO will make a dent in the federal budget is ridiculous.”
Overall, it is estimated that these PAYGO exemptions would tack $3.5 trillion onto the deficit over the next decade. This will raise interest rates, create massive debt interest costs and ultimately worsen the economy, Riedl said.
And for budget hawks, that’s the real problem with sidestepping PAYGO.
“It is nothing short of completely negligent to add to the debt without a plan for bringing it back down,” MacGuineas said.
Obama kicked off Father's Day weekend by visiting several nonprofit organizations in the D.C. area, incuding Life Pieces to Masterpieces and the Latin American Youth Center, to spread his message of responsible fatherhood to young people. Later he hosted a town hall on fatherhood at the White House and opened a mentoring session for D.C.-area youth. In addition, this weekend's Parade magazine will feature an article about fatherhood penned by the president. The flurry of activity is the opening act for a series of forums on fatherhood to be held around the country by the White House Office of Faith-Based and Neighborhood Partnerships.
Sen. Evan Bayh, D-Ind., today introduced the Responsible Fatherhood and Healthy Families Act. Key points of Bayh's legislation include funding job training programs for parents and restoring money cut from federal child support enforcement. Rep. Danny Davis, D-Ill., introduced companion legislation in the House called the Julia Carson Responsible Fatherhood and Healthy Families Act.
By ZACK HALE
The sheer size of the $787 billion stimulus package, much of which will be channeled to private contractors for "shovel-ready" projects, might seem to render hollow Obama's campaign promise to cut federal contract spending by at least 10 percent. While it remains to be seen whether Obama will cut spending that much, the early numbers suggest outflows to federal contractors are on pace to match last year’s totals.
To be sure, stimulus funds have been disbursed slowly up to this point, making it difficult to predict how much money the federal government will award to private contractors (see chart of recently announced stimulus spending below). According to Recovery.gov, only about $36 billion was paid out through the end of May, just $1.8 billion of which was awarded in federal contracts.
Combined with regular spending, the federal government has so far this year written checks for $146 billion on slightly more than 1 million federal contracts (see chart below). That's less than half the total spent in 2008 and about 3 million fewer contracts, largely because most of the stimulus money is being spent on the state and local level. These numbers will change, however, as the pace of recovery spending increases -- Obama announced Monday that the federal government will pump money into public works projects during the summer in an effort to create or save 600,000 jobs.
Tracking progress on Obama's reform-minded pledge is even more difficult because his promise of greater transparency is moving as slowly as stimulus funds. Critics have complained that the administration has taken too long to post spending data on Recovery.gov.
