The strength of the economy is always important to an industry like ours that depends directly on everyday people. When the prices of our product are setting records even most cattlemen didn’t expect to see this year, that strength is even more important.
So, the reconciliation bill that passed the House and is being debated in the Senate is critically important to the beef production chain. There has never been a bill so big and far reaching. Keeping the current tax rates, adding new deductions, increasing the small business deduction, granting 100% expensing for equipment and facilities from Jan. 20, and higher standard deduction are growth drivers. That growth could yield $8,000 to $13,000 per household, (per White House’s Stephen Miran), the most for middle incomes.
Only mandatory (entitlement) spending can be in the reconciliation bill. Much of the cost cutting in the bill from welfare, nutrition and Medicaid programs is from tightening up eligibility requirements that have been ignored, fraudulently circumvented or expanded by past administrations and Congress. Despite the howls of protest, Congress is planning to just slow the rate of growth for these programs, not slash benefits. Making the 40% of the able-bodied Medicaid recipients work, study or volunteer 20 hours a week is hardly cruel.
Despite some folks’ fear of increasing deficits, growing GDP and cutting spending should actually cut trillions from the deficit. Plus, the White House has begun sending over rescission bills to Congress. These bills will end certain programs and expenditures and require only a simple majority from both Houses.
Once the reconciliation bill gets through, maybe by July 4, the congressional Republicans plan bills to put into legislation fixes for the ridiculous and wasteful gems Elon Musk’s DOGE has uncovered so far.
The biggest fights in the Senate will be over state and local tax deduction limits (SALT) and how much of the Green New Deal environmental spending to retract from the budget as passed with the Inflation Reduction Act. There are Republican senators who want to raise the $40,000 SALT deduction and others who want to keep Green New Deal dollars flowing to their particular states.
There is a lot already done, and more remaining, in reducing the regulatory drag on the economy from the Environmental Protection Agency and Interior departments, which often restrict agriculture’s ability to operate.
There are critical things yet to be deal with, especially for the cattle business, like tariffs and market access. Like all things political, most countries will delay accepting new rules until deadline. Our key overseas export markets like Japan, South Korea and China have not finalized deals quickly, although there is reason to believe President Donald Trump’s team will secure lower tariffs and better access. Just as some businesses have said getting rid of environmental problems is as important, or more important, than tax reform, getting access to markets always closed to our beef could be important. It will be challenging for U.S. Trade Representative Jamieson Greer to gain access to the United Kingdom market, in negotiating that deal’s details. Getting them to accept normally produced American beef has been impossible. He knows that.
There are two other things that could gum things up. The screwworm problem moving out of southern Mexico and the necessity for closing the border to Mexican feeder cattle is a problem. It not only hampers feedyards that depend on a supply of those feeder cattle but it further crimps an already tight supply of cattle nationally. We hope that the Trump team’s fast recognition and action habit carries over to this problem. It is not an easy problem to deal with, given that the best methods of preventing migration have been indirect.
But just when southern ranchers in Texas, New Mexico and California have gotten much relief from illegal and cartel traffic through their ranches, now they have to watch for any evidence of insects invading any wound or orifice.
The other blip on the radar to watch is Robert F. Kennedy Junior’s campaign to change the American food supply. We were disturbed by media reports that cheeseburgers were on the “ultra processed” food list, not because of the burger or cheese, but because of the bun. This department bears watching.
The second half of 2025 could well exceed everyone’s wishes for America and the beef industry but much remains to be seen. The last two thoughts are sobering, but an economy beginning a great run from lower taxes, less regulation and continuing great demand would be a nice horse to ride. We just need more rain, more cattle. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
