US to introduce on-line database on government spending

A searchable database that tracks federal spending by the United States government will come on-line by 2008, following legislation passed in September. The Web-based search engine, which will include all federal funding to public and private organizations, has been hailed as a victory for transparency in government operations by a broad coalition of advocacy groups.

For each entity receiving federal funding, the database will show the amount of money received in the last 10 years and an itemized breakdown of each transaction. Users should be able to search a particular company (say Archer Daniels Midland or Boeing) and be shown all grants, contracts, subcontracts, loans, awards and other forms of financial assistance paid out to it by the federal government.

Initially, the database will cover data for the 2006 and 2007 fiscal years. By 2009, the data will stretch back to 1999.

The bill mandating the new on-line database was introduced by two Senators, Democrat Barack Obama of Illinois and Republican Tom Coburn of Oklahoma. Two senators who had anonymously placed a hold on the legislation, Republican Ted Stevens of Alaska and Democrat Robert Byrd of West Virginia, acquiesced after they were revealed by bloggers.

President George Bush signed the Federal Funding Accountability and Transparency Act into law on 26 September 2006.

"We applaud Congress and the President for working together on this common-sense legislation," said Andrew Moylan, the government affairs manager of the National Tax Payers Union (NTU), an organization that helped promote the bill.

OMB Watch, a non-profit organization dedicated to government accountability, stresses that the database must be user-friendly. "While the enactment of this bill is certainly a victory for transparency and access to information for the American people, it does not guarantee the online database will be easy to use and accessible for novice users and analysts alike," said OMB Watch in a statement.

Modernizing America's Farm and Food Policy: Vision for a New Direction

The Institute for International Economics, of the Chicago Council for Global Affairs, has called on the US Congress to reform trade distorting agricultural subsidies, in a report authored by a group of influential policy makers and economists.

Agricultural policy under the current US farm bill may be popular among agricultural producers, but has worked against smaller farmers by promoting consolidation and higher land prices, states the report, which urges Congress to move ahead with subsidy reform despite stalled talks at the WTO. That reform includes bringing an end to countercyclical payments, loan deficiency payments and marketing loans.

"The Farm Bill budget will likely be a smaller, zero-sum game in 2007," said Robert Thompson, the former USDA Assistant Secretary for Economics, and one of the authors of the report. "Now more than ever, spending decisions must be driven by investments in the future of US agriculture, the real needs of rural America, the national economy, public health and the environment."

However, while concrete discussion of next year's farm bill will come after the November mid-term election, there is a growing belief that it will look very much like the 2002 farm bill. With the Doha Round of trade talks in limbo, an agreement that would lock the US into agricultural subsidy reform before the new farm bill is passed is growing increasingly unlikely.

Moreover, the mood in Washington is likely to be timid, as the outcome of US election is expected to be tight. "This would suggest that changes to the Farm Bill for 2007 will probably be relatively small," notes a recent report by Purdue University, Agriculture Outlook 2007.

The Purdue University report predicts that the other big story in 2007 will be the continued growth of the biofuels industry, spurred by government policies and high oil prices. On top of federal legislation mandating the use of biofuels as a fuel additive, states are increasingly playing a role by passing their own renewable energy standards, notes the report. In Minnesota, for example, gasoline must be 20% renewable by 2015.

Yet, as some skeptics have pointed out, the growth of the ethanol industry in the US will soon meet natural limits, particularly ethanol derived from corn feed. "It is clear that the ethanol industry cannot continue to grow on the use of the corn seed as a feedstock source for more than a few more years without hitting huge constraints including extreme competition of corn use for food," says the report.

The Chicago Council on Global Affairs also discusses the growing role that biofuels are playing in the US agricultural sector. It calls on the federal government to subsidize research on biofuels, but recommends that the industry be weaned off support as it matures: "Federal support programs must insist that ... companies benefiting from biofuel subsidies and import restrictions develop business models that ultimately accommodate a scaling back of such federal support to levels consistent with those given to other fuel production sectors."

European Commission proposes extending biofuel subsidies to accession states

The European Commission has moved to extend biofuel subsidies to eight accession states that are currently ineligible under the Common Agricultural Policy (CAP). The so-called energy crop premium, introduced in 2003, provides 45 euros per hectare for land dedicated to energy crops. According to the EC, the scheme is designed to encourage farmers to produce crops for energy rather than food.

Under a proposal announced on 22 September 2006, eight of the 10 new member states (The Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland and Slovakia) will become eligible for the energy crop subsidy. The maximum area which can benefit from the subsidy would rise from 1.5 million hectares to 2 million hectares, according to the EC. These countries would also be allowed to subsidize up to 50% of the costs incurred in establishing energy crops on new land.

The European Commission has actively promoted biofuels in recent years, under a plan to meet 5.75% of its overall transport fuel supply with biofuels by 2010.

Meanwhile, the French government announced in September that it intends to promote home-grown biofuels for the production of E85, a blend of 15% gasoline and 85% ethanol. France will block cheaper imports from countries such as Brazil, in favour of domestically produced product, said the French Agriculture Minister, Dominique Bussereau. "We must protect ourselves," said Mr. Bussereau, as reported by Dow Jones. "We must prevent such product from landing on our market."