Fiscal cliff: It isn't just taxes and spending on the table

The threat of big tax increases and spending cuts has meant great business for the airlines.

All kinds of people have been visiting Washington recently to lobby about the "fiscal cliff" — the automatic spending cuts and tax increases that will occur next year if Congress does not agree on a financial plan.

They include Gov. Mark Dayton, who had a chance to tell President Barack Obama this week what areas he thought should be spared if big spending cuts happen.

"Health care would be my number one and education number two but that's where the money is so realistically, something's going to happen," Dayton said.

But there are many other policy issues that are important to Minnesota that could get wrapped into any agreement that comes out of the talks. That explains why many of the visitors to the nation's capitol have narrower interests.

They include members of the Twin Cities medical device trade group LifeScience Alley, who went to Washington to argue that a tax on medical devices set to kick in Jan. 1 should be repealed.

"It's really critical for Minnesota that the device tax be part of the fiscal cliff negotiations," said Shaye Mandle, the group's vice president of government and affiliate relations.

Mandle argues the tax will harm the medical device industry and eventually lead to job losses in the state.

U.S. Rep. Erik Paulsen, a Republican who represents the Third District, agrees that the tax should be repealed. If that doesn't happen by the end of the year, he said, Congress should delay implementing the tax and then eliminate it when working on a permanent tax overhaul next year.

"If we can stop it, if we can delay it, anything we can do is a positive move forward," Paulsen said.

That's not the only health care-related issue lawmakers are getting pressure on. Another is the Sustainable Growth Rate formula for Medicare.

Congress decided 15 years ago to trim what it would pay doctors and hospitals for seeing Medicare patients. Those cuts were unpopular with the medical profession, which has lobbied successfully to stop them from taking effect every year. If Congress doesn't act by New Year's Eve, doctors and hospitals will see their payments cut by 27 percent.

Lawrence Massa, CEO of the Minnesota Hospitals Association, is crossing his fingers that a fix for this issue will be part of the fiscal cliff talks.

"If we're going to solve this problem and move forward it seems to us that fixing the sustainable growth rate problem longer term needs to be part of that solution," Massa said.

It's not just health care issues that are on the minds of many as they tick the remaining days of the year off the calendar. Agricultural interests are waiting to see if Congress will be able to pass a farm bill to overhaul crop insurance and other farm subsidies. A bill passed the full Senate along bipartisan lines and the House Agriculture Committee also approved its own bipartisan bill. But many House Republicans complained that planned cuts to food stamp programs in the farm bill don't go far enough, and House Speaker John Boehner has yet to bring it to the floor.

Still, the farm bill could be attractive to fiscal cliff negotiators because it contains between $20 billion and $30 billion of savings over the next decade, U.S. Sen. Amy Klobuchar, a Democrat, said in a speech on the Senate floor Wednesday.

"And I urge the House of Representatives to complete work, to work with the Senate, so that we can make sure as we come to the year end, if we have a major deal, which we must have with the fiscal cliff, that we also include the farm bill," Klobuchar said.

Representatives of the dairy industry are particularly worried about what happens on Jan. 1.

That's because the industry's current price support system will expire and be replaced by a 1949 law that could double the wholesale cost of milk. Under current law, the federal government helps set a floor on the price of milk by buying milk when it falls below $16.94 per hundredweight, a typical unit of measurement in the industry. If there is no farm bill by Jan. 1, provisions of the 1949 will take effect, setting a new price support level of more than $38 per hundredweight.

As a result, major Minnesota companies such as such as Land O' Lakes and General Mills would see their costs jump. That could cause prices to spike at the grocery store.

"Where the support price is, it's too low now and if the '49 law goes into effect, it's too high," said Pat Lunemann, president of the Minnesota Milk Producers Association. "We really just need to have the farm bill passed."

Lunemann, who owns and operates the Twin Eagles Dairy in Clarissa, Minn., said he's frustrated that he's seen little sign of progress in Washington.

While he said Minnesota's delegation has been responsive to farmers' concerns, he has a suggestion for the rest of Congress.

"I think we need to have some remedial courses on how to get along," he said.

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