U.S. Budget Week: GOP Farm Bill Chaos is Bad Omen for Debt Hike

Published Jun 21, 2013. By John Shaw. In Market News International.
US Budget Week: GOP Farm Bill Chaos Is Bad Omen For Debt Hike

--House Republican Leaders Falter Again On Legislative Strategy --House Speaker Boehner Says Obama Will Have To Negotiate On Debt Hike --Partisan Divisions Remain On Overall FY'14 Budget And 12 Spending Bills

WASHINGTON (MNI) - While the politics of farm legislation in the U.S. are politically charged and highly specific, the striking failure of House Republican leaders to pass a $740 billion five-year farm bill this week may be a bad omen for their ability to secure the votes needed to pass a debt ceiling increase later this year.

The House rejected Thursday a five-year farm bill crafted by the House Republican leadership on a 195 to 234 vote. In the vote, 171 Republicans supported the bill and 62 voted against it. Among Democrats, 172 opposed the bill and only 24 supported it.

House Democrats said the bill cut critical programs too deeply while some House GOP conservatives said the bill was too profligate.

During a sharp exchange on the House floor after the vote, House Majority Leader Eric Cantor scorched Democrats for killing the bill, saying Democrats choose "partisanship over progress." House Minority Whip Steny Hoyer responded by arguing that GOP leaders turned a typically bipartisan bill into a partisan one.

At a briefing following the vote, House Minority Leader Nancy Pelosi called it "amateur hour" by the House Republican leadership.

Budget experts say the House vote on the farm bill is a troubling omen as key fiscal issues loom later this year. Congress is expected to need to pass debt ceiling legislation this fall. Additionally, Congress will need to pass a bill funding the government for the 2014 fiscal year that begins October 1.

"The farm bill vote augurs badly for more important bills that are coming down the pike, including immigration and the debt ceiling," says Bill Frenzel, a former Republican congressman who is now a guest scholar at the Brookings Institution.

"I'm not convinced this shows the Republican leadership is that bad. Maybe it's the followership that's the real problem. The farm vote sure looks like a revolt of the (House Republican) caucus. And that is something that Speaker Boehner and his leadership team can't feel good about," Frenzel said.

Bob Bixby, executive director of the Concord Coalition, said the defeat of the farm bill is troubling because the bill is often passed on a large bipartisan vote. Additionally, he said the failure of the House GOP leadership raises questions about their legislative acumen.

"The farm bill is a major bill and the majority party is not supposed to bring up a major bill unless it's confident that it can pass it. This level of miscalculation should not occur," he said.

"There is a pattern of House Republican leaders not being able to deliver on critical votes and this has to be of concern for anyone who has to negotiate with them," Bixby added.

On the matter of the debt ceiling, House Speaker John Boehner said Thursday in an interview with CNBC that President Barack Obama will have to negotiate with Republicans on increasing the debt ceiling, despite Obama's protestations that he will never negotiate again over the debt ceiling.

"Get over it," Boehner said in reference to the president's debt ceiling stance.

Obama has said he is willing to discuss additional deficit reduction, but only in a separate negotiation.

Bixby said Obama's insistence the debt ceiling be discussed separately from deficit reduction is largely a semantic distinction.

"You can say the two negotiations are separate if you want. Or you can say you're not really negotiating. But the fact is the president and Congress need to find an accommodation on the debt ceiling. I think that's a negotiation," Bixby said.

Last week, Boehner told a tax conference he will revive his 2011 debt ceiling formula this fall and require "cuts and reforms" in key spending programs that are equivalent to the increase in the debt ceiling.

Boehner said he views the debt ceiling debate as "another opportunity to have a real conversation" about long-term fiscal challenges, adding that Social Security, Medicare and Medicaid reform need to be "dealt with in an honest way."

The Congressional Budget Office said last week it expects Congress will need to pass legislation to increase the statutory debt ceiling by "sometime in October or November of this year."

But the CBO added that precisely estimating when a debt ceiling increase will be needed is very hard to do. "Given the magnitude of the government's daily cash flows and uncertainty about the size of certain key transactions over the next few months, being precise about the date on which the Treasury will exhaust its extraordinary measures and lose its authority to borrow additional funds is difficult."

Another area of looming conflict this fall pertains to the FY'14 budget.

The House and Senate passed very different FY'14 budget resolutions in March. Budget resolutions set broad spending and revenue goals and make deficit estimates. They are non-binding congressional blueprints but can be used to generate binding legislation which achieve the fiscal goals set out in the resolutions.

The Senate approved a budget drafted by Senate Budget Committee Chairman Murray, a Democrat, while the House approved a budget by the House Budget Committee Chairman Paul Ryan, a Republican.

The two budgets differ on whether Congress should balance the federal budget within a decade, as the House GOP budget seeks to do. They also differ on how to cut deficits, with the House Republican budget saying that deficit cutting should come from economic growth and spending cuts while the Senate Democratic plan argues that the deficit should be reduced by growth and an equal mix of spending cuts and tax increases.

Of pressing relevance, the two competing budgets differ on what the overall spending level for discretionary programs should be for FY'14. The House budget calls for an overall FY'14 discretionary spending level of $967 billion while the Senate budget allocates $1.058 trillion - a $91 billion difference.

The Senate Appropriations Committee voted this week to support the $1.058 trillion level supported by House Democrats and Obama. The Senate Appropriations panel also allocated funds for the 12 annual spending bills.

Obama has said overall discretionary spending number needs to be resolved before Congress considers the 12 annual spending bills for FY'14.

--MNI Washington Bureau; tel: +1 202-371-2121; email: [email protected]