With the Aug. 2 deadline fast approaching, President Barack Obama and congressional leaders reached a deal to raise the $14.3 trillion debt ceiling by $2.4 trillion over the weekend. This increase will raise the debt ceiling through 2012 and into the spring of 2013. The agreement requires a two step process. The first step would increase the debt ceiling by $900 billion immediately. This would be accompanied by immediate spending cuts of over $900 billion over 10 years. The cuts would be via specific caps on appropriations by each fiscal year from 2012 through 2021. The second step would include the formation of a 12-member special congressional committee (three Democrats and three Republicans from both the Senate and the House), which would recommend specific savings of $1.5 trillion. Both federal programs and revenues may be considered by the committee. The committee is to report to Congress by Nov. 23. Congress would need to pass the recommendations by Dec. 23. If the committee fails to reach an agreement or Congress fails to implement the recommendations from the special committee, then a series of triggers kick in. The triggers include automatic spending cuts through spending “sequesters” with 50% of the cuts from defense and 50% from non-defense discretionary and mandatory programs. Medicaid, unemployment insurance and Social Security would be exempt from sequesters. Congress is to also vote on the balanced-budget amendment, which likely will not pass. Efforts are now being made by leaders in Congress to round up the necessary votes for passage. The House of Representatives will have the most difficulty in passing the agreement with concerns being raised by both Tea Party members and liberals. The continuous debit limit debate has stalled action on almost all other legislation.
End Ethanol Support Now – Congressman Wally Herger (R-CA) has introduced H.R. 2307, the “Ethanol Subsidy Repeal Act.” The legislation would immediately repeal the blender’s tax credit (Volumetric Ethanol Excise Tax Credit or VEETC) and the tariff on imported ethanol. In a letter to members of the House of Representatives, Herger said, “Ethanol subsidies distort the economy by diverting corn away from feedstock, raising costs for farmers and ranchers and, ultimately, food prices for consumers who can least afford it.” Similar legislation passed the Senate this summer.
P. Scott Shearer