In a New York Times Op-Ed, Treasury Secretary Jacob Lew made a plea for more government and higher taxes. Of course, those words were not his title.
Instead, Lew disguised his message by labeling it Lessons From a Crisis.
Let's take a look at some details.
Lew: Without question, the government shutdown and the debt ceiling impasse have led to economic hardship in every corner of the country. While we do not yet know the exact magnitude of the damage, these events have generated unnecessary headwinds for the economy. We should never again take this country to the point of near-default in order to exact political gain. We can start by hammering out a budget agreement that builds on the progress we have already made to lower our budget deficits.
Mish translation: Without question, we can start by raising taxes.
Lew: This is an opportunity to improve our nation’s long-term fiscal health, and it should be achieved through a comprehensive package that shrinks our deficits, protects Medicare and Social Security for those who rely on it, and expands our economy well into the future.
Mish translation: This is a welcome opportunity to raise taxes and throw more money at Medicare and Social Security.
Lew: That means closing wasteful tax loopholes and making targeted investments to improve our education system, increase domestic energy production, and expand our manufacturing base.
Mish translation: Let's raise taxes and target more money for education.
Lew: We must come together to fix the blunt spending cuts known as sequestration, once and for all. These indiscriminate, across-the-board cuts, which went into effect earlier this year, were intended to be so mutually disagreeable that they would force Congress to find agreement on a balanced package of deficit reduction measures.
Mish Translation: Let's roll back the miniscule cuts in the projected increase in government spending. To do that, we need a balanced package of tax hikes.
Lew: Congress should pass comprehensive immigration reform.
Mish Translation: Illegal immigrants are here to stay, and welcome. They vote Democratic, don't they?
Lew: Another piece of bipartisan legislation that has passed the Senate, but not the House of Representatives, is the farm bill. Getting this bill signed into law is not only important for America’s farmers and protecting America’s most vulnerable children, it is important for our economy.
Mish translation: Whoa! Don't cut food stamps.
Ready to Rumble Over the Farm Bill
Few realize this, but the biggest component of the farm bill is food stamps. Please consider Ready to Rumble Over the Farm Bill
The first meeting of the House and Senate conference committee on the farm bill promises to be the biggest spectacle in American agricultural and nutrition policy in decades.
House Agriculture Committee Chairman Frank Lucas, R-Okla., who will chair the conference, would have preferred to hold the meeting this week. But the Senate, exhausted from the negotiations to end the government shutdown, is taking the week off, so the meeting is expected to take place the week of Oct. 28.
The biggest difference between the Senate and House bills is that the Senate bill retains the 1938 and 1949 farm laws as the basis for agricultural programs while the House bill would make the 2013 commodity title permanent law. Lucas wrote the change out of fear that it will be even harder to pass a farm bill in five years, but with most farm groups and Democrats opposed to it he will have a hard time prevailing.
Beyond permanent law, there are five flash points in the bill. Here is a guide to those issues and to the role that conferees may play in them:
Nutrition: This is the big kahuna of the farm bill. The Senate bill cuts only $4 billion over 10 years from food stamps—officially the Supplemental Nutrition Assistance Program—while the House bill would cut $39 billion through a series of provisions that Democrats say will lead to increased hunger. House Speaker John Boehner, R-Ohio, appointed Rep. Steve Southerland, R-Fla.—who has made food stamps his main issue and wrote the amendment to which the Democrats object the most—to the conference committee even though he doesn't serve on Agriculture.
Senate conferees are expected to oppose a big cut to food stamps, but two Republican senators who have been strong supporters of food stamps over the years—Cochran and Pat Roberts of Kansas—now face tea-party primary opposition and could feel forced to support bigger cuts. Roberts, who saved the structure of the food stamp program in the 1996 welfare-reform negotiations, has called for big food-stamp cuts this year while Cochran, whose state of Mississippi has one of the highest levels of food-stamp beneficiaries, has remained a steadfast advocate for it.
Lucas has said the size of the food-stamp cut will have to come from "on high," meaning Boehner, Senate Majority Leader Harry Reid, D-Nev., and President Obama.
Crop insurance: Costing about $9 billion per year, this program has become the pillar of the farm safety net and the biggest target outside food stamps for budget savings. The Senate farm bill contains a provision that would reduce crop-insurance subsidies by 15 percentage points for farmers who make more than $750,000 a year. Written by Senate Majority Whip Dick Durbin, D-Ill., and Sen. Tom Coburn, R-Okla., it was adopted on the Senate floor over the objections of the Senate Agriculture Committee.
The House bill does not call for a premium subsidy reduction, but last week the House adopted a resolution sponsored by Budget Committee Chairman Paul Ryan, R-Wis., to agree to the Durbin-Coburn amendment. Few if any members of the conference committee are likely to support Durbin-Coburn or other cuts and payment limits on crop insurance but are under pressure to come up with budget savings.
Commodity title: With both bills eliminating the $5 billion in annual direct payments that crop farmers have been getting whether prices are high or low, there will be a battle over the structure of a new commodity program. The centerpiece of the Senate bill is a program to pay farmers for "shallow losses" that crop insurance doesn't cover, although this year the Senate bill makes concessions to rice and peanut farmers who wanted an increase in target prices. The House bill is target-price-based, but includes a shallow-loss program. Lucas and Peterson are big advocates of target prices and the issue is whether Senate conferees from the South urge adoption of the House commodity title and how hard Northerners fight for their program.
Dairy: The Senate farm bill contains a new Dairy Security Act favored by dairy farmers and developed into legislation by Peterson. The House Agriculture Committee passed the measure, but it was amended on the House floor to take out what dairy farmers call a market stabilization program and dairy processors call supply management.
The sponsors of the House amendment—former House Agriculture Chairman Bob Goodlatte, R-Va., and Rep. David Scott, R-Ga.—were kept off the conference committee but Boehner so dislikes supply management he has labeled it communist and Peterson has said he worries that Boehner's enlargement of the conference committee to 17 Republicans and 12 Democrats could mean it will be difficult for the House to concede to the Senate on the issue.
Farm Bill Predictions
Mish Alternative Food Stamp Proposal
My proposal will not only lower the cost of the food stamp program, the resultant healthier diets would lower Medicaid and Medicare costs as well.
Moreover, my proposal would give people a strong incentive to get off the food stamp program without intrusive, costly big-brother ideas like drug testing which cannot possibly work for the simple reason that anyone who fails will steal to get food rather than starve.
Mike "Mish" Shedlock
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Thursday April 24th, 2014 | John Ransom