On Wednesday night, an update posted at the Senate Agriculture Committee Online indicated that, “Senator Tom Harkin (D-IA) issued the following statement after the U.S. House of Representatives tonight appointed conferees to merge the Senate farm bill with the House of Representatives’ version. The next step in the conference process will be formal conference meetings, which have yet to be announced. Senator Harkin is Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and chair of the conference committee.
“‘The House appointment of farm bill conferees brings together a diverse group of Representatives with strong leadership qualities and expertise across the full farm bill spectrum,’ said Harkin. ‘They will complement the existing list of Senate conferees and will work well to identify a final bill that fits our country’s needs, with strong farm income protection as well as investments in nutrition, conservation and renewable energy.’”
Yesterday morning, DTN Political Correspondent Jerry Hagstrom reported that, “Senate Agriculture Chairman Tom Harkin has scheduled a conference on the farm bill Thursday morning, less than 24 hours after appointment of House conferees on the bill and an extraordinary Wednesday evening meeting of key negotiators.
“House leaders were believed to have presented Senate leaders with a proposal to cut the increase in the farm bill from $10 billion to $6 billion and to leave out the Senate bill provisions for a $4.1 billion farm disaster aid package and 60-plus tax breaks that would cost $2.5 billion.
“House Agriculture Committee Chairman Collin Peterson, D-Minn., House Ways and Means Committee Chairman Charles Rangel, D-N.Y., Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, and Senate Finance Committee Chairman Max Baucus, D-Mont., met with House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., in Pelosi’s office for more than an hour Wednesday evening. All the leaders but Rangel avoided the press after the meeting. Rangel said, ‘We’re going to follow the constitutional procedure and go into conference.’”
Mr. Hagstrom added that, “Lobbyists and Republican members provided some details of the proposal the House was expected to have made to the Senate. House Agriculture Committee ranking member Bob Goodlatte, R-Va., said he, Peterson, Rangel, Pelosi and House Minority Leader John Boehner, R-Ohio, had all signed off on a proposal including offsets for the $6 billion increase to be made to the Senate. Lobbyists said the deal included leaving out the weather-related farm disaster package that Baucus and Senate Budget Chairman Kent Conrad, D-N.D., have championed and the $2.5 billion in tax breaks in the Senate bill. But Rep. Jerry Moran, R-Kan., characterized the proposal as concluding the traditional farm issues that are under the control of the agriculture committees and leaving the disaster aid and tax break elements to the Finance and Ways and Means committees. Baucus was expected to oppose the package and the decision of the negotiators to depart without speaking to the media could be interpreted as an attempt to work out differences over night.
“Lobbyists said the White House was not thrilled with the proposed offsets, but would not oppose them.”
Chris Clayton, writing yesterday at the DTN Ag Policy Blog, indicated that, “The long-awaited first public conference meeting on the farm bill will happen Thursday morning at the Capitol.
“It comes as the House came together on a bi-partisan agreement to spend $6 billion above the baseline on the farm bill and do it without any tax increases. House Democratic and Republican leadership apparently have agreed to the approach.
“What’s effectively left out? The $4 billion permanent disaster program, along with a bevy of tax cuts in the Senate farm bill that range from tax cuts for the Conservation Reserve Program to accelerated depreciation for race horses and a capital-gains deduction for the timber industry. There were more than 60 such measures in the Senate farm bill. The lack of negotiating progress between Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Charles Rangel, D-N.Y., led to the decision to move ahead with the House proposal.
“Effectively, the Senate, with all of its chiefs and lack of navigation skills, again appears to be getting outplayed by the House leadership that wants to get something done.”
A copy of the House spending framework that was presented to conferees at yesterday’s Farm Bill conference meeting was posted yesterday at the House Ag Committee Online- just click here to view this spending framework.
Mr. Clayton noted that, “The House also put a damper on ways the farm bill will be funded. In a 400-11 vote, the House agreed that the farm bill will not be funded by any tax increases. House members are now on the record that they won’t be paying for the bill with new taxes.”
In a public affairs program yesterday, Senator Chuck Grassley (R-Iowa), the Ranking Member on the Senate Finance Committee discussed the Farm Bill and the first meeting of conferees; to listen to his perspective on Finance Committee funding offered in response to a reporters question, just click here (MP3- 2:27).
Congressional Quarterly reported yesterday that, “House and Senate conferees met briefly Thursday to begin hammering out a final version of the long-delayed farm bill.
“The conference began a day after a new bipartisan deal backed by House leaders cleared the way for that chamber to name its conferees. It will resume next week.
“Significant differences remain with the Senate version of the bill, but lawmakers said agreement on a final package that could pass both chambers was near.
“‘The promised land is in sight,’ said Saxby Chambliss of Georgia, ranking Republican on the Senate Agriculture Committee.”
The CQ item also noted that, “Sen. Kent Conrad, D-N.D., a backer of the disaster fund, said Senate conferees will hang together to reject the House proposal. They will counter with a proposal to spend $10 billion beyond the baseline, financed in part with new customs and users fees.”
And Dow Jones News writer Bill Tomson reported yesterday that, “Agriculture leaders in the U.S. House of Representatives unveiled a new farm bill proposal during a meeting Thursday with their Senate counterparts on a conference committee tasked with forming unified legislation over the next several days.
“House Agriculture Committee Chairman Collin Peterson, D-Minn., told reporters that he expects Senate conferees to take the next few days to scrutinize the proposal and perhaps make a counter proposal as early as Monday.”
Mr. Tomson indicated that, “The new House plan would go $5.5 billion over the farm bill budget, a sharp drop from the $10-billion-over figure that senators have been planning, but Peterson said he did not want to include a controversial $4 billion farm disaster program.
“Senators have entwined the disaster program – a fund sought for farmers that get hit hard by natural calamities – with a $2.5 billion package of tax credits not related to agriculture issues, he said.
“‘They’re the ones that tied this together,’ Peterson said about the disaster program, ‘and they’re the ones that are going to have to untangle it.’”
The Dow Jones article added that, “The new House plan ignores the U.S. Department of Agriculture’s request that farmers with more than an adjusted gross income of $500,000 be denied subsidy payments. Instead, the Peterson-Goodlatte proposal stipulates that only farmers with a $500,000 AGI in non-farm income – outside agriculture-related income – be denied.
“Furthermore, Peterson and Goodlatte refused to remove a provision to protect U.S. sugar farmers from imports by guaranteeing them 85% of the domestic food market. The USDA would be forced to buy up sugar surpluses and sell it to ethanol refiners, which administration officials adamantly oppose.
“The new House plan does not depend on the tax measures that have, in the past, provoked veto threats from the White House, but it does contain one previously un-debated revenue raiser that the administration had hoped to use to help cut the federal deficit.
“House farm bill conferees hope to use a ‘credit card compliance measure’ straight from Bush’s budget proposal to fund $5.5 billion in over-budget spending.”
Meanwhile, DTN writer Chris Clayton reported yesterday that, “Stalemate continued in farm bill negotiations even as congressmen and senators held their first formal conference talks Thursday.
“House negotiators offered a new framework for funding the farm bill that would spend $5.5 billion above the baseline for the bill, but would eliminate the $4 billion permanent disaster fund as well as a myriad of tax credits in the Senate bill.
“But Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, told conferees that the Senate would hold the line waiting for $10 billion they were promised earlier. After an hour of talks, the meeting ended with a suggestion the conference could meet again sometime early next week.
“Meanwhile, a top USDA official further complicated the issue by saying the Bush administration likely would not accept the funding mechanism the congressmen proposed to pay for their offset.”
Mr. Clayton went on to explain that, “Chuck Conner, deputy secretary of USDA, reviewed the one-page House framework and said afterward that the credit-card proposal was not acceptable as an offset, nor would other tax-compliance funding measures be considered acceptable for the farm bill. Administration officials put forward a variety of measures about a month ago they considered acceptable for farm-bill offsets and the credit card measure was not included.
“‘We have been very clear about that for the last six weeks and that remains our position,’ Conner said. ‘So based on what I have seen on that one sheet of paper, the administration would not support coming up with $5.5 billion in new revenues to offset the farm bill.’”
Later, the DTN article added that, “Conner also was asked if the administration would consider a cut at this time in direct payments. Conner repeated the administration’s position that direct payments are not viewed as trade distorting by the World Trade Organization and remain a good support tool for farmers. Direct payments have continued to be questioned because of the high market prices for commodities.” [Note: For more on the Bush administration’s perspective on direct payments, see pages 14 and 15 of their Farm Bill proposal.]
“‘Our proposals included a lot of reforms to those other titles and we used some of the money that we saved in those reforms to actually increase direct payments,’ Conner said. ‘We still think that’s good policy, very good policy.’”
Also with respect to executive branch perspective on the Farm Bill negotiations, Associated Press writer Mary Clare Jalonick reported this morning that, “Agriculture Secretary Ed Schafer said Thursday he is not optimistic Congress can complete a farm bill before the current law expires next week.
“A program to pay farmers for ruined crops and a slew of controversial tax breaks are holding up the legislation, which would expand the nation’s agricultural and nutrition programs.
“‘They’ve been at it for two years and we are down to the last days and we don’t have anything solved,’ Schafer said. ‘That doesn’t give me a lot of optimism that they can get it done.’”
To listen to brief comments from Sec. Schafer made yesterday on the Farm Bill, see this audio clip (MP3- 0:59) from Gary Crawford (USDA Radio), as well as this clip (MP3- 0:22, USDA) on a potential extension.
Ms. Jalonick noted that, “The two chambers began formal negotiations on Thursday after House Speaker Nancy Pelosi named House conferees. She and Senate Majority Leader Harry Reid, D-Nev., met with the bill’s key negotiators Wednesday, but the lawmakers were unable to agree on a way to move forward on the bill.
“Members of the Senate have objected to a new House proposal that would add $5.5 billion to the total and eliminate the disaster program and the tax breaks.
“In earlier meetings, lawmakers from the two chambers had agreed to add $10 billion, including the disaster program. More recently, lawmakers agreed to designate at least $4 billion of that extra money for disaster aid.
“One of the disaster program’s biggest proponents is Senate Finance Committee Chairman Max Baucus of Montana, who wrote it into the bill. Baucus, who is up for re-election this year, has championed the idea back home, where a years-long drought has destroyed many farmers’ crops.”
[Note: for additional background on disaster payments, see this analysis from the Environmental Working Group (EWG), which indicated that, “Plans for a permanent trust fund to compensate farmers and ranchers for weather-related losses will send even more agricultural subsidies to the very regions that already receive the lion’s share. Based on their historical share of ad hoc disaster spending, of the twenty states represented on the Senate Finance Committee, just four stand to gain over half (55 percent) of the committee’s allocation of disaster aid expenditures under a permanent fund: North Dakota, Kansas, Iowa and Montana.”
The EWG analysis also included this map, and noted that, “Within the states where farm disaster payments are routine are tens of thousands of farmers who have collected them every other year, or more frequently, over two decades.”]
David Rogers, writing yesterday at Politico.com, reported that, “House farm bill negotiators outlined Thursday a bipartisan compromise that jettisons Senate disaster aid funds but promises to have enough Republican support that it could overcome any future veto by President Bush.
“‘If the White House is stupid enough to veto this, they’re going to get overridden,’ House Agriculture Committee Chairman Collin Peterson (D-Minn.) told Politico. ‘That’s where we’re at right now.’
“‘I told [Agriculture Secretary Ed] Schafer, they aren’t just being unreasonable, they’re going to be totally irrelevant. This is the big thing that has happened here in these last few days.’”
Mr. Rogers explained that, “The streamlined House package promises new money for food stamps, fruit and vegetable growers and conservation programs, but drops all of about $4.05 billion previously allocated for a disaster aid trust fund championed by Senate Finance Committee Chairman Max Baucus (D-Mont.) and other Great Plains colleagues.
“Lost as well would be a $2.5 billion package of tax cuts which the Senate Finance panel had hoped to preserve but which have met resistance in the House from Republican and Democratic tax writers. Many are related to agriculture and Western land management and timber issues, as well as a $489 million capital gains and depreciation tax break for the thoroughbred industry.”
The Politico.com article noted that, “Senate Agriculture Committee Chairman Tom Harkin (D-Iowa), who has fought with Baucus for months, appeared to have some sympathy for the House approach. Bringing along the Finance chairman won’t be easy, but the new House position could force both the Senate and White House to reexamine their own stands.
“While opposing even modest tax receipts, for example, the administration has refused to endorse any savings from costly direct payments to farmers — an annual expenditure of over $5 billion. ‘We like direct payments, they don’t cause trade distortion,’ Conner said Thursday. But at a time of record crop prices, the system has provoked increasing public ridicule.
“By the same token, the Senate pressure to provide more for disaster aid could force a final confrontation between this priority and direct payments. Until now, direct payments have been a sacred cow for many in the commodity lobby. But both the White House and lawmakers may have to rethink their stand if they are to get a final bill.”
DTN writer Chris Clayton flushed out more details yesterday with respect to proposed changes in farm income limits for federal farm payments (“Farm Income Could Be Exempted From Rules,” link requires subscription).
Mr. Clayton stated that, “A commodity producer could have unlimited farm income and still collect commodity payments, but lawmakers plan to cut off producers who have more than $500,000 in annual income from non-farm sources.
“House Agriculture Committee Chairman Collin Peterson, D-Minn., discussed with reporters some of the changes in income eligibility that have been agreed to so far in the farm-bill conference negotiations.
“The House has changed its plan for income eligibility from the bill passed last year. Under the version of the farm bill passed last July, people with less than two-thirds of their income from agricultural sources would be cut off from commodity payments when adjusted gross income topped $500,000. That bill also would eliminate payments for all producers making above $1 million AGI.”
The DTN item noted that, “Currently, a producer can have up to $2.5 million in income and still collect commodity payments. People earning above $2.5 million can continue collecting payments if three-quarters or more of their income comes from farming.”
Dan Morgan provided an easy to read general overview of Farm Bill activity over the past couple of days in a brief item posted yesterday at The Washington Post Online.
The Post update stated that, “House Speaker Nancy Pelosi (D-Calif.) has turned up the pressure on Senate Democrats to support the House version of a $290 billion, 5-year farm bill, reports Dan Morgan, co-author of a nine-part Post series in 2006 exposing waste in agricultural subsidies.
“At a meeting Wednesday night, an angry Pelosi berated Senate Finance Committee Chairman Max Baucus (D-Mont.) for trying to tack onto the farm bill an array of tax measures to fund new spending, including disaster aid for Montana wheat growers and cattle ranchers. Tucked into the package pushed by Baucus is a $489 million capital gains depreciation tax break for thoroughbred horse breeders, such as those in the home state of Senate Minority Leader Mitch McConnell (R-Ky.).”
The item added that, “‘By the end of it, Baucus was stuttering,’ said a smiling House Agriculture Committee Chairman Collin Peterson (D-Minn.). A Baucus aide said the senator ‘has a long history of crafting legislation that can get votes and be signed into law. Sometimes that makes people mad.’
“Pelosi’s irritation was directed at Baucus’ unyielding position on taxes, now standing in the way of a farm bill that would provide benefits for key Democratic constituencies while also strengthening the party’s frayed ties with rural America.”
The Post Online update also noted that, “After Wednesday night’s high-level meeting involving Pelosi, Peterson moved quickly on Thursday to put forward a bipartisan House farm bill proposal that avoids new taxes and includes key provisions favored by Pelosi.
“These include a $9 billion increase for food stamps and nutrition programs; a $4 billion increase for conservation programs and $1.3 billion more for programs benefiting fruit and vegetable growers not eligible for traditional farm subsidies. In a nod to consumer groups, the bill also contains long-sought provisions requiring country-of-origin labeling of imported meat.
“But farmers, now enjoying record prices and profits, would also be big winners. Benefits included in the expiring 2002 farm bill–broadly criticized by fiscal conservatives as unduly generous–would be kept largely intact. The House proposal, for example, guarantees farmers $52 billion in automatic payments over the next 10 years even if prices stay high. As the 2006 Post series showed, farmers receive these payments even if they are not growing crops.”