House Democrats look to finish pulling together their $3.5 trillion tax and spending package this week, despite a fierce internal struggle over the taxes they need to pay for it and delays in finalizing $94 billion in agriculture provisions.
The House Ways and Means Committee has yet to release the draft text of the budget reconciliation package’s revenue measure amid concerns in the ag community that Democrats could include something like President Joe Biden’s proposal to start taxing capital gains at death, effectively nullifying the benefit of stepped-up basis for heirs.
The Wall Street Journal reported Sunday that a document that is circulating with the Democratic revenue options makes no reference to Biden's proposed transfer tax. Instead, the document includes such options as raising the corporate income tax from 21% to 26.5% and imposing a 3-percentage-point surtax on individual incomes exceeding $3 million.
The House Agriculture Committee spent nine hours Friday debating $66 billion in provisions that would increase spending on agricultural research, renewable energy, rural development and forestry. Votes on the measure and 30 amendments were postponed until Monday morning.
Some $28 billion in planned conservation spending was omitted from the committee’s measure because the cost estimates hadn’t been finalized. Those provisions are expected to be added to the package later, bringing the total agriculture spending to $94 billion.
The chairmen of the House Ways and Means Committee and Senate Finance Committee have said little publicly about what will be in the revenue section of the reconciliation package. Biden’s proposed transfer tax has met with strong opposition from many farm groups.
During Friday’s House Ag Committee's debate, several members, including Chairman David Scott, D-Ga., also raised concerns about Biden’s proposal. Scott said it would be “devastating” to farmers. Under Biden’s proposal, the tax liability would be deferred on farms as long as they stay in operation.
The National Farmers Union, which supports Democratic spending and policy priorities more frequently than many other ag groups, on Friday released a letter urging congressional leaders to preserve the benefit of stepped-up basis.
"Burdensome new tax liabilities may lead to the premature sale of family farms and ranches and contribute to a worrying trend toward greater farmland consolidation and corporate control of our food system,” the letter said.
Earlier in the week, nearly 330 ag groups sent a letter to the chairmen of the Ways and Means and Finance committees, urging them to preserve existing tax rules for inherited assets.
On Tuesday, the Ways and Means Committee will meet to consider several other portions of the reconciliation package, including its green energy provisions. They will include a new tax credit for sustainable aviation fuel that will range from $1.25 to $1.75 per gallon, depending on the carbon footprint of the product. The legislation also would extend the $1-a-gallon tax credit for biodiesel and renewable diesel to 2031.
The ultimate end game for the reconciliation package remains in doubt. One of several key House moderates, Rep. Jim Costa, D-Calif., said at the House Ag Committee meeting Friday that he wouldn't vote for a bill that can't pass the Senate. A key Democratic senator, Joe Manchin, D-W.Va., has reportedly told colleagues he won't support a package that exceeds $1 trillion to $1.5 trillion.
Manchin told CNN Sunday that he's warned Senate Majority Leader Charles Schumer, D-N.Y., that he won't support a $3.5 trillion bill. "He will not have my vote on $3.5 (trillion) and he knows that," Manchin said. He urged leaders to "pause" before passing another big spending package beyond the $1.9 trillion American Rescue Plan enacted in March.
Meanwhile, lawmakers also are bracing for a battle in coming days over an increase in the government’s debt ceiling, and they also will have to act this month to keep the government fully operational after the current fiscal year ends Sept. 30.
House Speaker Nancy Pelosi, D-Calif., told reporters last week that Democrats had several options for passing an increase in the debt limit, but said the issue wouldn’t be added to the budget reconciliation package. Senate Mitch McConnell, R-Ky., has insisted that the Senate GOP won’t support the increase.
In an analysis of the issue, Michael Best Strategies warned against underestimating the consequences of the debt-limit fight. “In 2011, a similar standoff over the debt ceiling triggered the biggest stock market crisis since the 2008 crash and led Congress to eventually pass the Budget Control Act,” which led to a system of automatic spending cuts.
House Democrats are expected to move a continuing resolution next week to keep the government funded into December so lawmakers can finish work on the 12 fiscal 2022 spending bills..
The White House has given Congress a list of immediate budget issues that should be addressed in the CR. The White House requests include authorizing a $150 million limit for direct lending under USDA’s Rural Microentrepreneur Assistance Program. The limit would ensure “that the program can continue to operate at needed levels,” the White House said.
Also this week, Agri-Pulse and Elanco Animal Health are co-sponsoring a summit Tuesday afternoon that will focus on the potential of animal protein to sustainably meet global nutrition needs.
The speakers at the conference, “Sustainable Solutions for Zero Hunger by 2030: A Vision for Animal Agriculture,” will include Agnes Kalibata, the UN special envoy for the UN Food Systems Summit; Deputy Agriculture Secretary Jewel Bronaugh, who has been leading the U.S. delegation in the UN summit; and Sen. John Boozman, the top Republican on the Senate Agriculture Committee.
Here is a list of agriculture- or rural-related events scheduled for this week in Washington and elsewhere (all times EDT):
Monday, Sept. 13
8 a.m. - House Agriculture Committee meeting to finish action on its budget reconciliation provisions.
11 a.m. - House Energy and Commerce Committee meeting to consider its budget reconciliation provisions.
4 p.m. - USDA releases weekly Crop Progress report.
Tuesday, Sept. 14
9 a.m. - House Ways and Means Committee meeting to consider some of its budget reconciliation provisions, including green energy incentives.
10 a.m. - House Transportation and Infrastructure Committee meeting to consider its budget reconciliation provisions.
Noon - Sustainable Solutions for Zero Hunger by 2030: A Vision for Animal Agriculture summit.
Wednesday, Sept. 15
9:30 a.m. - Senate Agriculture Committee hearing on milk pricing, 301 Russell.
9:30 a.m. - Senate Environment and Public Works Committee meeting to consider nominees, including Jeffrey Prieto to be EPA general counsel and Michael Connor to be assistant secretary of the Army for public works, 406 Dirksen.
Thursday, Sept. 16
8:30 a.m. - USDA releases Weekly Export Sales report.
Friday, Sept. 17
For more news, go to: www.Agri-Pulse.com
