Obama Signs Spending, Tax Package

Legislation Includes Key Provisions for Agriculture, Biofuels Industry

The U.S. Senate on Friday passed the combined omnibus appropriations and tax extenders bill by a vote of 65 to 33. The House had passed the omnibus earlier Friday and passed the tax extenders bill on Thursday. President Barack Obama signed the bill on Friday. (DTN file photo by Nick Scalise)

OMAHA (DTN) -- President Barack Obama on Friday signed a massive 2016 tax and spending package that is chock-full of key provisions for farmers, equipment sellers, biofuel producers and other businesses.

The U.S. Senate on Friday passed the combined omnibus appropriations and tax extenders bill by a vote of 65 to 33. The House had passed the omnibus earlier Friday and passed the tax extenders bill on Thursday. The overwhelming margins on the bill were remarkable, considering the divisions in Congress and the rumors Thursday that both Republican and Democratic House members were dissatisfied with some of the provisions.

The legislation pairs a $1.14 trillion government-wide spending measure to fund every Cabinet agency through next September, and a $680 billion tax package extending dozens of breaks touching all sectors of the economy, making several of them permanent.


Before the final passage of the bill on Friday, farm groups earlier in the week declared the combination of the tax bill and spending bill as a mixed bag for agriculture.

The American Farm Bureau Federation stated the two bills have a lot of benefits for agriculture, especially in the area of tax relief.

"This tax extender package gives farmers and ranchers critical tools to help them reinvest in their businesses," said Bob Stallman, president of AFBF. "Tax provisions like Section 179 small business expensing and bonus deprecation free up cash flow for farmers and ranchers to put their money to work. New provisions will let our members make important upgrades that reduce costs, increase efficiency and help make their businesses sustainable for generations to come."

The tax bill includes a permanent expansion of Section 179 allowing small business owners to deduct up to $500,000 of equipment purchases with a phase out for companies that purchase more than $2 million worth of equipment. Section 179 deductions will also be indexed for inflation.

The bill also extends 50% bonus depreciation for businesses for property placed in service from 2015-17 and phases it down to 40% in 2018 and 30% in 2019.

Farm Bureau leaders were mostly disappointed Congress did not block EPA's the waters of the U.S. rule. Despite staunch opposition from Republicans who control both chambers of Congress, Democrats largely held the line on environmental issues such as the rule redefining waters of the U.S., as well as EPA's Clean Power Plan. In return, the oil industry won the right to begin exporting again. Stallman expressed frustration, given bipartisan complaints about WOTUS.

"The courts have already expressed serious legal concerns about the rule, and the U.S. Government Accountability Office has concluded that EPA broke the law with its covert propaganda campaign to drum up ill-informed support for it," Stallman said. "We remain committed to working with Congress to stop EPA and help America's landowners, businesses and state and local governments avoid years in court to overturn the rule. This measure undeniably resulted from an illegal and deceptive process. Defeating WOTUS remains a priority of Farm Bureau. We will explore all avenues to ditch the rule."


National Farmers Union and some livestock organizations lost the long, hard-fought battle over country-of-origin labeling. COOL was already in peril when a World Trade Organization panel ruled last week that Canada and Mexico could impose roughly $1 billion in retaliatory tariffs against U.S. goods. COOL has been controversial since it was included in the 2002 farm bill. NFU had argued the COOL was popular and Congress could still adopt a voluntary program.

"Congress had a solution to make COOL compliant with our World Trade Organization (WTO) obligations sitting on their desks for five months," said Roger Johnson, president of NFU. "Instead, they gave in to demands to completely remove most aspects of COOL for meat that provided meaningful information to the public. This is the type of legislative hocus pocus that has angered so many Americans."

Countering National Farmers Union was the National Cattlemen's Beef Association, meatpackers, the American Farm Bureau, American Soybean Association and National Corn Growers Association, along with the National Manufacturers Association. Most groups were far more worried about potentially $1 billion in retaliatory tariffs from Canada and Mexico.

"Soybean farmers are relieved to put COOL behind us," said American Soybean Association President Richard Wilkins, who raises both soybeans and beef cattle in Delaware. "This was an issue that impacted both feed grain and oilseed farmers, as well as livestock producers, and we're happy to see it come to a satisfactory conclusion that avoids retaliation from our valuable trading partners in Canada and Mexico."

Canadian officials indicated during a press conference Friday that while they were pleased with the legislation repealing COOL, they are continuing with scheduled meetings with WTO next week on possible retaliatory measures "as a precaution."


ASA also highlighted provisions related to water infrastructure projects. The bill increases funds by $1.3 billion more than the Obama administration requested for the construction, operation and maintenance of projects administered by the Army Corps of Engineers.

"Our transportation infrastructure is a significant advantage for American growers over our competitors in South America, and we are very pleased to see funding specifically designated to address the maintenance and improvement of that infrastructure," Wilkins said.

The Waterways Council said the bill included "record-level funding for the Corps and the Inland Waterways Trust Fund."

"Some things are worth the wait and this is certainly true for the FY '16 Omnibus Appropriations agreement that provides record-level funding for the Corps' Civil Works mission," said Mike Toohey, president and CEO of the Waterways Council.


The National Corn Growers Association declared the Omnibus bill fell short because of some of the key provisions left out. Chip Bowling, president of NCGA, said, "Congress placed great importance on further bolstering Big Oil at the expense of taking up issues of great importance for America's farm families. From failing to pre-empt the pending patchwork of state-level GMO labeling laws to refusing to prohibit funding of Water of the U.S. implementation, rural America will face a darker new year as the future grows even brighter for oil industry interests."

Opponents of labeling, such as the Center for Food Safety, the Environmental Working Group and Just Label It, claimed victory on the issue.

But the Coalition for a Safe Affordable Food Supply, an industry group, said that without action, food companies will face expenses early in the year as they prepare for Vermont's law requiring the labeling of genetically modified foods, which will go into effect next summer.

The funding bill also contains a provision that says the Food and Drug Administration cannot allow sales of genetically modified salmon until it implements a labeling regime for that product, which is still in the developmental stages.

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

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