Ag Policy Blog

House Ag Committee Spars in Partisan Fight Over Budget Reconciliation Package

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The hearing room for the House Agriculture Committee in Washington, D.C. The committee held an on-line markup of nearly $66 billion in funding that will go into the House reconciliation package, known as the Build Back Better Act. Democrats on the committee agreed with Republicans that they oppose tax increases on farmers, but they would not vote with Republicans on those amendments. (DTN file photo)

OMAHA (DTN) -- With a rush from congressional committees to draft and vote their sections of the $3.5 trillion budget reconciliation bill -- dubbed the Build Back Better Act -- the House Agriculture Committee held a nine-hour meeting through remote livestream on Friday that was a mix of partisanship, frustration and comedy.

Chairman David Scott, D-Ga., on Saturday announced the committee will reconvene early Monday to hold roll call votes on 30 amendments from Republicans and vote on passage of the research, rural development and forestry provisions. At some point, the committee also will return to debate on and vote on $28 billion to boost conservation programs at USDA by focusing on climate-smart agriculture to add to the final package as well.

The committee will vote on sections of the bill that includes just under $66 billion in spending that includes $7.75 billion in agricultural research initiatives; $18 billion in rural development; and $40 billion in forestry programs.

On Friday, Democrats were in line with marching orders to reject any amendments to the bill. Republicans introduced several amendments looking to protect farmers from tax provisions expected in the reconciliation bill that will increase capital gains while reducing assets allowed to transfer to heirs' tax free, known as stepped-up basis.

Republican moves to block the tax provisions were ruled as "non-germane" because the Agriculture Committee does not deal with tax policy. GOP committee members introduced language to offer the "sense of the committee" that both parties oppose the tax changes. Democrats repeatedly said they agreed with the GOP effort, but they also unanimously repeatedly rejected the amendments in voice votes.

"Democrats and Republicans both agree this will be very damaging," Scott said.

The tax debate led to some heated exchanges. Republicans said the unanimous voting by Democrats reflected the committee mark up was just for show.

"The administration has problems an exemption to make sure farmers don't pay higher taxes, but they have steadfastly refused to offer a single scrap of technical explanation about how this exemption would work despite the extraordinary complexity we all know it would entail," said Rep. Glenn "GT" Thompson, R-Pa., ranking member of the committee.

The arguments over tax provisions went on for hours. "We are here to advocate for farmers," said Rep. Michelle Fischbach, R-Minn. "This is something we absolutely need to stand out on."

For more on stepped-up basis, see: What to Known About the Debate Over Stepped-up Basis and Capital Gains Taxes https://www.dtnpf.com/…

Republicans have nearly every major farm group in their camp opposing the tax plans for stepped-up basis. To underscore the opposition, the farm organization most closely aligned with Democratic priorities - the National Farmers Union - sent a letter on Friday to congressional leadership stressing that NFU opposes the potential changes. NFU stated the group commends congressional leaders for "working to secure historic investments" through the budget reconciliation, but not at the expense of those tax benefits for farmers.

"However, we also must reiterate and restate our deep concerns with the continued conversations about altering or eliminated long-standing tax provisions that are essential to the economic well-being of our members and small businesses in rural communities. NFU opposes elimination of the 'stepped-up basis' at death on the appreciation of assets, such as land, that family famers and ranchers rely on to produce the food, feed, fiber and fuel that all Americans depend on."

Republicans also introduced amendments to modify the $40 billion in forestry, such as removing the Biden plan in the bill for a Civilian Conservation Corps, as Republicans noted there are similar programs in the U.S. Forest Service Jobs Corps Program. Other amendments sought to aggressively remove dead timber from western forest fires. The amendments were repeatedly rejected.

"As I mentioned, the west is burning down, an area the size of Delaware is burning now," said Rep. Doug LaMalfa, R-Calif., adding dead trees will become the next source of fire and fuel. "So we can't be afraid of taking salvage timber out and doing something positive with it."

Rep. Dusty Johnson, R-S.D., also offered a plan to spend $75 million to boost foreign-disease protections to help protect the country against the possible introduction of African swine fever. Johnson noted if ASF showed up in the U.S., "it would stop our exports absolutely in the cold," with the U.S. exporting about $7.7 billion in pork exports. That amendment was rejected as well, though Rep. Jim Costas, D-Calif., agreed to hold a hearing on the issue.

Rep. Jim Hagedorn, R-Minn., also pushed an amendment to require USDA the $17 per head top off payments promised to pork producers in the final days of the Trump administration. USDA still has not released those promised payments to producers.

"We should be in a position to say it's finally time to make these payments to our livestock producers," Hagedorn said.

Democrats also blocked GOP proposals to reduce food-aid benefits such as Supplemental Nutrition Assistance Program (SNAP) aid. Republicans said there are millions of jobs out there available for people, leading to speeches about the value of work. Democrats counted the aid amounted to $1.19 increase a day for most people, and a great many SNAP recipients do work, but their pay is so low they qualify for assistance.

After heated discussions, and times when it seemed every one of the congressmen wanted to talk or were incapable of muting their computers with chatter behind them, the meeting wrapped up just after 9 p.m. Central on Friday evening.

BIOFUEL MEASURES

Separately, different groups are highlighting provisions in the Build Back Better Act that benefit their industries. The National Biodiesel Board, for instance, highlighted a proposed extension of the biodiesel and renewable diesel blenders tax credit through 2031 in the House Ways & Means Committee portion of the bill.

"The biodiesel tax credit continues to be extremely successful in expanding consumer access to these clean, low-carbon fuels while driving economic growth and job creation," said Kurt Novarik, NBB's vice president of federal affairs.

Politico also reported Friday that Ways & Means also will include a tax credit to help boost sustainable aviation fuel. The credit would start at $1.50 a gallon for blenders that supply fuel with at least 50% lower emissions than petroleum-based jet fuel. That comes after the Biden administration had announced a goal on Thursday to reach at least 3 billion gallons of sustainable aviation fuels by 2030. The biofuels industry sees a major expansion of renewable aviation fuels as a potential boon for the industry going forward.

"Ethanol has a decades-long proven track record for reducing greenhouse gas emissions from motor vehicles, and we are confident that ethanol will play a central role in cleaning up aviation fuels as well," said Geoff Cooper, president and CEO of the Renewable Fuels Association after the Biden administration announcement.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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