The debate over raising the debt ceiling is probably the next battleground in Washington. The Secretary of the Treasury has informed Congress that the current debt ceiling has been reached and unless Congress raises the ceiling within the next couple of months, the government will be unable to pay its bills.
It appears that the debate over the debt ceiling will be just as contentions as the recent efforts to avoid (temporarily) the fiscal cliff.
Republicans are going to demand spending cuts and Democrats say they won’t include spending cuts in the debt ceiling debate. But spending cuts have to be discussed at about the same time frame. Policymakers agreed on changes in taxes at the beginning of the month, but just delayed the automatic spending cuts for 2 months. Interestingly, the recently approved extension of the farm bill could be superseded by new laws that come out of this upcoming debate.
There were some key tax provisions that are very important to farmers included in the fiscal cliff bill passed last week.
While the calculations became more complicated most farmers will still be subject to a capital gains tax rate of 15 percent. High income farmers may see rates between 20 percent and 25 percent.
The Section 179 deduction will be $500,000 for both 2012 and 2013. At least the way the law is structured now, the deduction drops back to $25,000 in 2014. Farmers who invest in new assets can take advantage of 50 percent bonus depreciation. The assets must be new – not used.
The estate tax exemption for 2013 will be $5.25 million per person. The tax rates on estates larger than $5.25 million will be 40 percent, up from 35 percent in 2012. These tax incentives are designed to encourage investment, helping to support economic growth.
House Agriculture Committee Ranking Member Collin Peterson, D-Minn, wants assurances that a farm bill passed by the Agriculture Committee will be brought to a vote in the full House of Representatives. The bill passed by the Committee last year was never brought up for a vote, and Peterson says that without a guarantee that legislation will be debated by the full House, Democrats on the Committee won’t work on a new farm bill. Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., plans to begin work on a new farm bill very soon.
Senator Thad Cochran, R-Miss., has replaced Senator Pat Roberts, R-Kan., as ranking member of the Senate Agriculture Committee. This change could have significant implications for any farm bill developed by the Senate Agriculture Committee. Senator Cochran is a supporter of price-based safety net programs while Senator Roberts was a key player in the development of the “shallow loss” revenue based provisions approved by the Senate last year. Senator Cochran has seniority over Senator Roberts which allowed him to claim the seat on the committee.
Two new food safety rules have been proposed by the Food and Drug Administration. One would require food makers to develop a formal plan for preventing their products from causing foodborne illnesses. They would also have to develop plans to correct any problems that arise. The second rule would set “enforceable safety standards for the production and harvesting of produce on farms. The proposed rules are nearly 550 pages long and FDA will need additional funding to enforce the proposed rules. That may not happen in the current budget environment.
The Mississippi River will stay open – at least through mid-January, according to the Army Corps of Engineers. The Corps has been working to remove rock formations that could impede navigation on the River between St. Louis, Mo. and Cairo, Ill.
The Corps says enough rocks will be removed to sustain a 9-foot navigation channel. The Corps has also released water from some reservoirs upriver to help keep this critical transportation corridor open. However, it is not clear that the river will remain open after the middle of January.