U.S. consumer prices soared 6.2 percent in past year, most since 1990

Prices for U.S. consumers jumped 6.2 percent in October compared with a year earlier as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990.

The year-over-year increase in the consumer price index exceeded the 5.4 percent rise in September, the Labor Department reported Wednesday. From September to October, prices jumped 0.9 percent, the highest month-over-month increase since June.

Inflation is eroding the strong gains in wages and salaries that have flowed to America’s workers in recent months, creating political headaches for the Biden administration and congressional Democrats and intensifying pressure on the Federal Reserve as it considers how fast to withdraw its efforts to boost the economy.

Job gains and pay raises have been much healthier during the pandemic recovery than they were after the Great Recession roughly a decade ago. But in contrast to the years that followed that downturn, inflation is now accelerating and diminishing Americans’ confidence in the economy, surveys have found.

Excluding the volatile food and energy categories, so-called core prices rose 0.6% in from September to October. Core prices are now up 4.6 percent compared with a year ago.

Energy costs soared 4.8 percent just from September to October, with gasoline, natural gas and heating oil surging for the same reason that many other commodities have grown more expensive: Demand has risen sharply as Americans are driving and flying more, but supplies haven’t kept up.

Economists still expect inflation to slow once supply bottlenecks are cleared and Americans shift more of their consumption back to pre-pandemic norms. As COVID-19 fades, consumers should spend more on travel, entertainment and other services and less on goods such as cars, furniture, and appliances, which would reduce pressure on supply chains.

But no one knows how long that might take. Higher inflation has persisted much longer than most economists had expected. And inflation is spreading well beyond items like appliances and new and used vehicles that are directly affected by the pandemic.

“The inflation overshoot will likely get worse before it gets better,” said Goldman Sachs economists in a research note Sunday.

For months, Federal Reserve Chair Jerome Powell had described inflation as “transitory,” a short-term phenomenon linked to labor and supply shortages resulting from the speed with which the economy rebounded from the pandemic recession. But last week, Powell acknowledged that higher prices could last well into next summer.

The Fed chair announced that the central bank will start reducing the monthly bond purchases it began last year as an emergency measure to boost the economy. Investors now expect the Fed to raise its benchmark interest rate twice next year from its record-low level near zero — much earlier than they had predicted a few months ago.

Many large companies are passing on the cost of higher pay to their customers, and in some cases, consumers are paying up rather than cutting back.

To attract workers, for example, McDonald’s boosted hourly pay 10 percent to 15 percent over the past year. To help cover those higher labor costs as well as more expensive food and paper, the company said last month that it raised prices 6 percent in the July-September quarter from a year earlier. Yet even so, company sales leapt 14 percent as virus restrictions eased.

Other companies have been more cautious. One of them, Wayfair, an online furniture retailer, said last week that its costs are rising as factories in Asia have shut down amid COVID outbreaks, ports are jammed, and labor costs have surged. But the company isn’t necessarily passing along all those higher costs.

“We are in a mass-oriented business where the average customer does not have an unlimited discretionary budget,” said Michael Fleisher, Wayfair’s chief financial officer. “Inflation is rampant across the economy, and there are competing demands for their time and wallet share.”

Source: https://www.politico.com/news/2021/11/10/consumer-prices-soar-520574
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Climate on track to devastate world’s poorest economies: Study

Some 65 nations will see GDP drop 20 percent by 2050 if temperatures rise, new report released at COP26 says.

Source: https://www.aljazeera.com/news/2021/11/8/climate-on-track-to-devastate-worlds-poorest-economies-study
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US Congress passes $1 trillion infrastructure bill

Package will fund the biggest upgrade of America’s roads, railways and other transportation infrastructure in decades.

Source: https://www.aljazeera.com/news/2021/11/6/update-10-u-s-democrats-pass-1-trln-infrastructure-bill-ending-daylong-standoff
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Federal Reserve set to announce start of its withdrawal of emergency support for the economy

When the Federal Reserve wraps up its meeting today, the central bank is expected to announce that it will begin to wind down one of its biggest and most

Source: https://www.nbcnews.com/business/economy/federal-reserve-set-announce-withdrawal-emergency-support-economy-rcna4423
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Senate Democrats unveil new income tax for billionaires

Senate Democrats on Wednesday released a billionaires’ tax proposal, designed to help support President Biden’s social spending and climate change legislation.

Why it matters: Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, said the Billionaires Income Tax would raise “hundreds of billions of dollars” and would affect approximately 700 taxpayers who have more than $1 billion in assets or incomes of over $100 million a year.

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Details: “Under today’s tax system, [billionaires] don’t have to pay capital-gains taxes unless they sell their assets, and they can borrow against that wealth to finance their lifestyles,” the Wall Street Journal writes.

• The new plan would require billionaires to give the IRS a detailed account of how much the assets they own gained or lost each year.
• It will ensure“the wealthiest people in the country pay their fair share toward historic investments in child care, paid leave, and addressing the climate crisis,” said Wyden, who released the proposal.

The big picture: The unveiling of the plan comes as Biden and congressional leaders race to finish — and figure out how to pay for — their nearly $2 trillion social spending and climate package.

• The billionaire tax gained currency over the weekend because Sen. Kyrsten Sinema (D-Ariz.), a moderate and key negotiator, signaled her opposition to corporate, personal and capital gains tax hikes, Axios’ Hans Nichols writes.

Yes, but: Multiple Democrats in the House and Senate are skeptical of the billionaire tax proposal, including Sen. Joe Manchin (D-W.Va.), both for its implementation and its likelihood of getting tied up in the courts, reports Axios’ Alayna Treene.

• It would also fundamentally change the country’s tax system.

Of note: Senate leaders unveiled a separate plan to impose a 15% minimum book tax on corporations with more than $1 billion in profits.

Go deeper: Manchin waffles on billionaire tax

Source: https://www.axios.com/senate-democrats-billionaire-income-tax-8cd08775-b254-47ba-a80b-ad15805efbc6.html
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White House vows to treat climate change as “systemic” financial risk

A new White House report released Friday morning says climate change poses “systemic risks” to the U.S. financial system, and presents a “roadmap” to building a “climate-resilient” economy.

Why it matters: Top aides emphasized that framing to promote wide-ranging moves that will weave climate risk into many agencies’ new policies and regulations.

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Driving the news: The roadmap describes a series of existing and upcoming efforts, including …

• White House plans to consider the effects of climate change in long term budget forecasts.
• Department of Housing and Urban Development plans to weave climate risks into federally insured or guaranteed mortgages.
• Federal Emergency Management Agency plans to revise building standards in flood zones.
• Labor Department plans to ensure retirement fund managers can weigh climate change in investment decisions, reversing Trump-era policies.

The big picture: The report asserts that “U.S. financial markets and institutions face systemic risks from climate change.” Senior officials called the conclusion significant.

• “That term, systemic risk, carries a lot of weight,” Bharat Ramamurti, deputy director at the National Economic Council, told reporters Thursday night.
• “Its inclusion in this roadmap reflects our belief that because many financial models and investment portfolios still rely on out of date assumptions of climatic stability, climate change is already creating severe disruptions to our economic and financial system,” he said.

What we’re watching: The report is among multiple analyses and strategy documents called for under a May executive order on climate-related financial risk.

• A separate strategy later this year is expected to focus more heavily on federal oversight of how banks and other financial institutions address the topic.
• The May order tasks the Treasury Department, as head of the multi-agency Financial Stability Oversight Council, with crafting analysis on improving risk disclosures and stitching climate-related financial risks into regulation and supervision.

Source: https://www.axios.com/white-house-climate-change-systemic-risk-finance-caeac699-4f8d-460f-8d0f-d5ab691db1db.html
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Social Security checks to rise 5.9 percent, most in decades

About 64 million people who receive Social Security benefits will begin to receive a bigger check from the federal government in January.

Source: https://www.nbcnews.com/politics/white-house/social-security-checks-going-5-9-percent-highest-increase-decades-n1281414
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U.S. employers add a weak 194,000 jobs as Delta maintains hold

U.S. employers added just 194,000 jobs in September, a second straight tepid gain and evidence that the pandemic still has a grip on the economy with many companies struggling to fill millions of open jobs.

Friday’s report from the Labor Department also showed that the unemployment rate fell sharply to 4.8 percent from 5.2 percent in August.

The economy is showing some signs of emerging from the drag of the Delta variant of the coronavirus, with confirmed new Covid-19 infections declining, restaurant traffic picking up slightly and consumers eager to spend.

But new infections remained high as September began, and employers are still struggling to find workers because many people who lost jobs in the pandemic have yet to start looking again. Supply chain bottlenecks have also worsened, slowing factories, restraining homebuilders and emptying some store shelves.

Many economists still think that most of the roughly 3 million people who lost jobs and stopped looking for work since the pandemic struck will resume their searches as Covid wanes. It took years after the 2008-2009 recession, they note, for the proportion of people working or seeking work to return to pre-recession levels. The government doesn’t count people as unemployed unless they’re actively looking for jobs.

Some of the factors that have kept many jobless people on the sidelines may be starting to ease. According to a survey by the Census Bureau, for example, the number of people who aren’t working because they must stay home to care for a child declined by half in September compared with June. That figure had barely dropped last fall, when many schools remained closed and conducted virtual learning. The new census figures suggest that more parents, particularly mothers, might have rejoined the workforce last month as the school year began and their children returned to school.

In addition, an August survey by the job listings website Indeed found that the proportion of unemployed Americans who said they’d like to find a job once the school year began had more than doubled from just two months earlier.

Yet there are also signs that it might be too soon to expect a flood of parents to have rejoined the labor market. Lael Brainard, a member of the Fed’s Board of Governors, noted in a recent speech that Covid-19 outbreaks in late September caused 2,000 schools to close for an average of six days in 39 states.

Several enhanced unemployment benefits ended in early September, including a $300-a-week federal supplement as well as programs that, for the first time, covered gig workers and people who were jobless for six months or more. So far, the ending of those programs appears to have had only a small effect on the number of people seeking work.

Governors in about 25 states ended the $300 benefit before the nationwide expiration in September. Research by economists at Goldman Sachs found that unemployed people who were looking for work were much more likely to take jobs when their benefits ended. But the early cut-offs did not cause people on the sidelines to start searching again, Goldman concluded.

Another reason workers are scarce is a surge in retirements among older, more affluent workers whose home equity and stock portfolios have surged since the pandemic struck and who have managed to build up savings. Goldman Sachs estimates that about 1.5 million people have retired who wouldn’t have before the pandemic upended the economy. Many of these people will likely stay retired, economists expect.

In the meantime, fear of Covid continues to keep some would-be job seekers on the sidelines, notably those who previously worked in public-facing service jobs at restaurants, bars, hotels and retailers.

Source: https://www.politico.com/news/2021/10/08/september-jobs-report-gains-515662
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What’s behind the rising energy prices

Energy prices are climbing around the world amid a perfect storm of extreme weather, rising power demand, and supply constraints. It’s roiling markets overseas, with China and India facing electricity crises while a dozen power companies in the U.K. have gone belly-up.

Driving the news: Oil prices jumped again Monday after OPEC decided not to boost production beyond the modest increase that it had previously outlined.

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• Prices for both oil and natural gas have roughly doubled over the last year, and gasoline at U.S. pumps is up by about 50% on average.

Why it matters: Commodities like oil and gas operate in global markets, so the U.S. isn’t immune to the effects of rising prices.

• Just look at the Consumer Price Index, one major gauge of inflation — its latest reading in September showed energy costs up 25% compared to a year ago.

The big picture: Higher energy costs impact our economic recovery. Every dollar that goes to electric and heating bills is a dollar that isn’t spent on holiday shopping or going out to eat.

• And prices may go up further this winter. Bank of America analysts estimate Brent crude oil could hit $100 per barrel — a price not seen since 2014.

What happened: The current price trajectory is the result of supply moderating while demand heads skyward, Luke Tilley, chief economist at Wilmington Trust, tells Axios.

• On the demand side, the reopening of the global economy over the last year sent energy needs up around the world, he says.
• High demand led to natural gas shortages in Europe and China. That prompted some power companies to swap gas for oil — pushing up prices of both.

The supply side is more complicated.

• For one, oil production dropped off at the start of the pandemic when demand cratered for everything from airplane fuel to gasoline. U.S. independent producers are far more cautious about cranking the spigot open every time prices inch up, thanks to a recent wave of bankruptcies and investors demanding more focus on returns.
• OPEC isn’t raising supply significantly, in a bid to keep prices at profitable levels.
• And production has been more constrained because the world’s largest economies have made transitioning to more renewable power a top priority, says Phil Orlando, chief equity market strategist at Federated Hermes.

The impact: “All of those different moving pieces took U.S. energy production down by about 2 million barrels a day over the course of the last year, at a time when demand has surged based on the global reopening trade,” Orlando adds.

• Be smart: The climate-related pullback in production is driven by investors in energy companies, as well as public sentiment, as much as it is by governments.

Our thought bubble, via Felix Salmon: The effect of oil companies refusing to raise output in response to higher demand is functionally identical to the effect of a carbon tax. The longer fossil fuels remain pricey, the more attractive the development of renewable alternatives will be.

Source: https://www.axios.com/energy-prices-rising-crisis-fd8ce2f0-53d6-43b9-8ff8-93107e109722.html
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Alabama clears plan use COVID-19 relief funds to build prisons

Alabama Gov. Kay Ivey (R) on Friday signed legislation enabling the state to use COVID-19 relief funds to build prisons.”Folks, this is a pivotal moment for the trajectory of our state’s criminal justice system,” I…

Source: https://thehill.com/homenews/state-watch/575005-alabama-clears-plan-use-covid-19-relief-funds-to-build-prisons
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Manchin throws down gauntlet with progressives

Sen. Joe Manchin (D-W.Va.) is in the driver’s seat and letting liberal Democrats in the House and Senate know that he plans to set the terms for the budget reconciliation bill that they hope to use to enact President Bide…

Source: https://thehill.com/homenews/senate/574836-manchin-throws-down-gauntlet-with-progressives
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Powerball jackpot rises to $620 million, 10th largest in U.S. history

There have been 39 drawings in a row without a Powerball grand prize winner, dating back to the last time someone hit the jackpot on June 5.

Source: https://www.nbcnews.com/news/us-news/powerball-jackpot-rises-620-million-10th-largest-u-s-history-n1280546
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In deep red West Virginia, Biden’s $3.5tn spending proposal is immensely popular

Working-class people – even Trump voters – understand the Build Back Better plan will benefit them

Elizabeth Masters isn’t a natural Joe Biden supporter. A self-described conservative who lives in Parkersburg, in deeply Republican West Virginia, she said she registered to vote in the last election so she could cast a ballot for Donald Trump.

Masters says she doesn’t approve when people “just stand for a handout” – she doesn’t think the United States should be spending money on undocumented immigrants, for example – but says anything that will “help people that are trying to do for themselves, I’m all for it”.

Continue reading…

Source: https://www.theguardian.com/us-news/2021/sep/28/west-virginia-joe-biden-spending-plan-popular
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Puerto Rico’s new minimum wage: ‘Not enough, but a starting point’

Puerto Rico raised its minimum wage for the first time in over a decade. But the high cost of living is a challenge that keeps many families in poverty.

Source: https://www.nbcnews.com/news/latino/puerto-ricos-new-minimum-wage-not-enough-starting-point-rcna2183
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Massive savings “war chest” could drive growth as COVID relief ends

Economists expect the pace of economic growth to cool off now that government transfer payments like stimulus checks and emergency unemployment benefits are in the rearview mirror. But evidence suggests that the U.S. consumer is sitting on a lot of financial firepower that could be a key driver of growth in the quarters to come.

Why it matters: U.S. consumer spending is massive, representing about 70% of GDP.

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What they’re saying: “Sustainability of US consumer spending as stimulus support wanes has been questioned by some investors,” Dubravko Lakos-Bujas, JPMorgan head of U.S. equity strategy, wrote in a research note Wednesday.

• “We disagree with this negative narrative which underestimates the robustness of consumer balance sheets and more pointedly the savings war chest in place to support future spending.”

By the numbers: During much of the pandemic, personal incomes far outpaced spending. Incomes were boosted by fiscal stimulus while spending was depressed amid lockdowns.

• When adjusting for how much consumers typically save, the excess savings accumulated during the pandemic amounts to around $2.4 trillion.
• “These significant ‘excess’ savings should more than buffer headwinds that consumers may face from decreasing government stimulus payments and rising consumer prices,” Lakos-Bujas argued.

Yes, but: This estimate doesn’t account for how much money was used for paying down mortgages, paying off student loans, or even funding a brokerage account.

• “I’m leery of thinking about this as though it were some giant piggy bank just waiting to fuel some bacchanalian spending spree once we get past the worst of the pandemic,” Wells Fargo senior economist Tim Quinlan tells Axios.

The bottom line: The average consumer has some combination of extra cash and lower debt.

Source: https://www.axios.com/consumer-spending-stimulus-covid-pandemic-4cd45230-3e1f-492f-ba8a-158986db707f.html
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Biden looks to climate to sell economic agenda

President Biden is trying to return the focus to his economic agenda as the White House ratchets up its messaging effort on the massive spending package that’s now being subject to a messy fight in Congress….

Source: https://thehill.com/homenews/administration/572084-biden-looks-to-climate-to-sell-economic-agenda
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House Democrats will consider $2.9T in tax hikes — mostly on the wealthy and corporations

House Democrats will consider as much as $2.9 trillion in tax hikes for the next 10 years — mostly on the extremely wealthy and corporate America — as they scramble for ways to pay for President Biden’s $3.5 trillion infrastructure and social spending plan.

Why it matters: A draft proposal from the Ways and Means Committee, which ricocheted across Washington Sunday night, previews epic fall fights between Democrats and some of the best-armed lobbies in America.

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Driving the news: The summary, first reported by The Washington Post, includes a top personal rate of 39.6%, up from 37%, which would raise $170 billion over 10 years.

• Democrats are looking to raise $1 trillion from the wealthiest Americans and $900 billion from corporate America.
• While President Biden has defined the “rich” as any individual or household that makes more than $400,000, the Democratic plan draws the line for individuals at $400,000; households at $425,000; and married couples at $450,000. 

By the numbers: The top capital gains rate would increase to 25% from 20% — raising some $123 billion.

• Changes to what qualifies as investment income, some of which is already subject to 3.8% Obamacare tax, would make the effective capital gains rate 28.3%, raising $252 billion. 
• Accelerating the end of the $24 million estate tax exemption would bring in another $50 billion.
• Imposing an additional 3% tax on Americans who make more than $5 million would raise $127 billion.
• Expanded restrictions on carried interest impacting how private equity firms compensate employees could bring another $14 billion.
• The pharmaceutical industry could be forced to foot $700 billion of new spending by negotiating rates directly with Medicare.

Add these provisions and others up and you get to $2.9 trillion.

• Then the plan counts $600 billion from so-called dynamic scoring, based on an assumption that the proposed policy changes will accelerate economic growth and therefore revenues. That’s how Democrats could get to $3.5 trillion, at least on paper.

The big picture: While the menu gives Democratic lawmakers options, it also forces them to take sides on everything from a 3% surcharge on the uber-rich to a 26.5% corporate tax rate.

• There’a already a raging argument over the top line spending figure, with Sen. Joe Manchin (D-W.Va) settling between $1 trillion and $1.5 trillion, and Sen. Bernie Sanders (I-Vt.) calling anything short of $3.5 “totally unacceptable.”
• Substantive policy differences between the House and the Senate could become as important, with Sen. Mark Warner (D-Va.) threatening to vote against the budget package Sunday night over homeownership concerns.

Source: https://www.axios.com/democrats-tax-increases-wealthy-5de1ce55-a92e-433a-8481-bfddcd23f1a8.html
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The Article Was Written/Published By: Hans Nichols

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There’s no such thing as an independent central bank

The skirmish over Jay Powell’s future as Fed chair provides a glimpse of a much bigger fight — one that could mark the beginning of the end of the modern era of independent central banking.

Why it matters: Powell epitomizes the way in which central banks, working alongside the government, took on the role of rescuing the economy from the shock of the pandemic. Now some lawmakers want to keep the relationship much closer than it has been in recent decades, to harness some of the power only central banks have.

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The big picture: Central banks (the Federal Reserve, in particular) have never been more important, or more powerful.

• The other side: Central banks have also never been as constrained in their range of possible actions. The natural interest rate is close to zero, which means that their main policy tool — the ability to set interest rates — also has to remain near zero.

Driving the news: Left-wing members of Congress have asked President Biden to replace Powell as Fed chair, saying that they want a “whole of government approach” to eliminating climate risk.

Between the lines: The letter clearly considers the central bank to be part of the government, rather than an independent agency working within a relatively narrow mandate.

• The letter makes clear that central bank decisions are unavoidably political, especially when it comes to the issue of climate change. The Fed is either going to pursue a zero-carbon agenda or it isn’t, and either way, it’s going to upset certain politicians.
• The EU implicitly capitulated to the reality of a political central bank when it appointed a politician, rather than an economist, to lead the European Central Bank.

Powell has a strong case that he stayed comfortably within the Fed’s narrow mandates. Still, many of his programs were unprecedented, meaning the Fed is vulnerable to charges of mission creep.

• The debate over Powell’s renomination is really a debate over the degree to which Fed mission creep is something to be embraced and extended, rather than accepted only as a necessary evil.

The bottom line: Congressional gridlock means that the official terms of the Fed’s mandate aren’t going to change any time soon.

• Unofficially, however, it has already been moving toward a greater emphasis on tackling inequality, which is nowhere in the mandate. If Biden is serious about the importance of the zero-carbon agenda, it makes sense that he’d want someone sympathetic to that view at the helm of the Fed.

Source: https://www.axios.com/jerome-powell-independent-central-bank-5957d7b5-bf51-4f35-b276-ec69e4d5345a.html
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The Article Was Written/Published By: Felix Salmon

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A program that pays farmers not to farm isn’t saving the planet

President Joe Biden wants to combat climate change by paying more farmers not to farm. But he’s already finding it’s hard to make that work.

His Agriculture Department is far behind its goal for enrolling new land in one program that has that goal, with participation being the lowest it’s been in more than three decades.

Even though the USDA this summer more than doubled key incentive payments for the program that encourages farmers and ranchers to leave land idle, high commodity prices are keeping it more worthwhile for growers to raise crops.

On top of that, the plan, known as the Conservation Reserve Program, takes land out of production for only 10 to 15 years — so those acres could release carbon into the atmosphere if the land is planted again and thus cancel out its environmental benefit.

The slow pace of enrollment and the temporary nature of the program raise questions about whether it will ever contribute significantly to efforts to reduce carbon emissions. It also shows how difficult it is for government programs to voluntarily draw in the farm industry to combat pollution.

“I guess my bottom line is, it’s not a great climate solution,” said agriculture and environment consultant Ferd Hoefner, who was the founding policy director for the nonprofit National Sustainable Agriculture Coalition.

Zach Ducheneaux, administrator of USDA’s Farm Service Agency, which oversees the conservation program, acknowledges that participation this year has been lower than hoped for, but he is still optimistic that the additional money the administration is providing will spur more landowners to join.

“Our position at the Farm Service Agency is that we have to start to talk about working lands and conservation in the same breath,” Ducheneaux said in an interview.

The added incentives the USDA has introduced “definitely made the program more attractive than it was last year,” said Cristel Zoebisch, policy specialist at the National Sustainable Agriculture Coalition.

But she noted that high commodity prices this year could be more lucrative than any additional money the Biden administration is offering. “It’s a trend that we’ve seen time and time again that whenever commodity prices are good, CRP enrollments go down,” Zoebisch said.

The Biden administration aims to enroll 4 million new acres in 2021 but only 2.8 million have been added so far.

Even last week, when the USDA announced the low enrollment, it touted the added benefits to the environment from the program. By participating in the decades-old initiative, USDA noted that farmers agree to undertake conservation measures such as planting trees or grass that prevent soil erosion, improve water quality or provide habitat for wildlife. In exchange, FSA pays farmers rent for the 10 to 15 years the land is enrolled and shares in the costs of making the conservation changes.

But it’s not clear how USDA measures whether the program is a good conservation effort. Ducheneaux said that the department relies on independent analysis from universities and environmental nonprofits to help quantify the program’s success.

USDA asserts the program has prevented more than 12 million tons of carbon dioxide from entering the atmosphere. Still, that’s a pittance compared with how much of the greenhouse gas the USDA said the ag industry releases each year (698 million metric tons in 2018).

Environmentalists praise certain aspects of the program, which doles out about $2 billion each year to farmers and ranchers. For instance, they have commended other conservation benefits that come from sign-ups, such as improved water quality.

Currently, there are nearly 21 million acres of farmland enrolled in CRP, but the program can enroll up to 25 million acres this year. Ducheneaux attributed the lower enrollment to the fact the program had been cut and ignored for years, even in times when commodity prices were suffering and farmers could have benefited from the added revenue.

“As it was being implemented in the past, folks weren’t being drawn to it,” Ducheneaux said. “The incentives clearly weren’t enough to get folks to even step out of the volatile commodity markets and engage in these conservation practices.”

The program also has supporters including many members of Congress and powerful ag interests that prefer voluntary incentives over mandatory regulations to slash emissions.

Rep. Cheri Bustos (D-Ill.), a House Agriculture Committee member, is among them and noted that CRP isn’t the only tool the Biden administration will use to fight climate change.

“This is a complex problem, and we have got to basically be able to look at what we’re going to be able to do together,” Bustos said. “Bring farmers to the table and figure out how we’re gonna have the most comprehensive approach possible.”

Bustos, who has 10,000 family farms in her Northwest Illinois district, also said she hoped the added financial incentives the administration has introduced will draw in more farmers.

“We can be part of the solution. We want to be part of the solution,” Bustos said. “But we’ve got to connect all those dots as far as being financially healthy, and being able to make a living and helping the environment.”

The American Farm Bureau Federation, the large farm lobby, also backs CRP, because it can help farmers and ranchers stay profitable.

Regions battling wildfires, extreme temperatures and drought such as the Pacific Northwest and the broader Western U.S. might have higher rates of enrollment this year, said Shelby Myers, an economist at the Farm Bureau.

Environmental groups, like the Theodore Roosevelt Conservation Partnership, are also backing the administration’s efforts to attract more farmers to the program.

But some conservationists are worried that FSA will take land that scores low on the environmental benefits index to meet the goal of enrolling more acres, simply to prove that the program fares better under Biden than it did under former President Donald Trump.

The quality of land enrolled in the program is a constant worry, Zoebisch said. She added that taking in land that scores low would be a waste of taxpayer dollars.

“There’s definitely a benefit to having certain parts of agricultural fields taken out of production and protected with permanent grasses and cover,” Zoebisch said. “But we also don’t want to be just allowing any land into the CRP general sign-up. We want it to be of high environmental benefit.”

Source: https://www.politico.com/news/2021/08/29/usda-farmers-conservation-program-507028
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