Falling Off Dairy 'Fiscal Cliff' Could Mean $6 To $8 Milk

Falling Off Dairy 'Fiscal Cliff' Could Mean $6 To $8 Milk

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If Congress and President Barack Obama can't find a solution soon, most Americans will see thousands of additional dollars taken out of their paychecks next year.

And, on top of that, you'll be paying even more at the grocery store.

For example, no compromise means milk subsidies will end, and the cost of a gallon of milk could double.

Imagine milk hitting $6 to $8 a gallon. We're edging close to that now because an impasse over a new farm bill is wedged in Congress right now.

Under a 1947 law, unless the new bill isn't passed by December 31, the government will be forced to buy vast quantities of milk at twice the wholesale rate.

There are two bills in Congress right now. The Senate has passed one for $23 billion in savings.

The House is looking to ax $35 billion.

The sticking point is the full House of Representatives has not approved the bill.

Chris Galen, of the National Milk Producers Federation, told Fox News, "The farm bill is like this low-hanging ornament on the Congressional Christmas tree that, if they just embrace it, they can automatically come up with tens of billions of dollars in budget savings, and then they can figure out where else they need to cut spending after that."

Secretary of Agriculture Tom Vilsack has said his department is preparing if the permanent law comes into effect. The temporary solution is to attach a farm bill extension to the fiscal cliff legislation.

Milk would be the first to be affected.

There's a possibility that the government could end up being the biggest customer to farming.

"Things like wheat and corn – their permanent farm law price supports wouldn't kick in until the growing season. Those pieces of legislation are tied to the growing season for those crops, and that wouldn't be until the spring. So, really, milk is the first but not the only commodity that would be affected in the absence of a new farm bill."

Congress is meeting Thursday and Friday to hammer this out. But so far there's no sign of political willpower to get it sealed as we fall off the dairy fiscal cliff.

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