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Senate-House Pass Short-Term Farm Bill Extension

Associated Press writer Mary Clare Jalonick reported today that, “Congress passed a one-week extension of current farm law Thursday, defying President Bush by trying to find agreement on a new bill.

“As negotiations on a farm bill have stumbled, Bush has asked the House and Senate to extend the law for a year or longer. He says the new legislation is too expensive and would not do enough to cut subsidy payments to wealthy farmers in a time of record crop prices.”

Ms. Jalonick indicated that, “Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said farm-state lawmakers are ‘very close’ to a deal on the bill but it would be impossible to finish it all by May 2, when current law would expire under the new extension” [A related statement made yesterday by Chairman Harkin is available here].

“Harkin said negotiators were discussing adding more nutrition money to the bill. That would be a concession to urban lawmakers such as House Ways and Means Committee Chairman Charlie Rangel of New York, who has been charged along with Senate Finance Committee Chairman Max Baucus with finding extra money for the legislation.”

The AP article added that, “White House spokesman Scott Stanzel said Bush is expected to sign the newest extension, but reiterated the president’s comments that the ‘continued patchwork of short-term extensions is not serving America’s farmers and ranchers well.’”

With respect to nutritional aspects of the farm legislation, Stephen J. Hedges reported today at the Chicago Tribune Online that, “The continued failure of Congress to approve a final version of the 2007 farm bill could adversely affect low-income families who rely on food stamps and other federal nutrition assistance as food prices continue their dramatic rise, according to food assistance and nutrition experts.”

Mr. Hedges stated that, “Food and relief agencies said the continued delays—with Thursday’s votes marking the fourth time Congress has extended the 2002 bill to enable more negotiations on the 2007 bill—is making it tougher for low-income and fixed-income Americans who rely on federal food assistance.

“‘It’s really rough for people out there,’ said Ellen Vollinger, legal director of the Food Research and Action Center in Washington. ‘Certainly that’s one of the reasons we’ve been trying to get the farm bill done. Under the current law, the purchasing power of their benefits continues to erode.’

“That is because the 2007 farm bill includes assistance increases designed to halt the erosion of the value of food benefits that inflation causes.”

The Tribune article went on to explain that, “The Department of Agriculture, which administers the food stamp program, projects weekly food costs of about $132 for a family of four. That ‘thrifty plan’ amount is calculated each June for inflation, with the change taking effect each October.

“Under the current food stamp program, most households pay a portion of their food costs out of their own pockets and receive assistance for the rest.

“But the recent price increases mean that a household’s food benefits ‘are worth 95 percent of what they were in October, just because prices have spiked so much,’ said Stacy Dean, director of food assistance policy for the Center on Budget and Policy Priorities. Food prices have risen about 5.5 percent in six months, according to America’s Second Harvest, a food bank group.

“While the 2007 farm bill’s funding for food stamps does not address increased food costs, it does include indexing for the portion of food bills that food stamp recipients pay themselves.”

Also with respect to nutrition funding, as well as executive branch perspective on the negotiations, Reuters writer Charles Abbott reported yesterday evening that, “Negotiators writing the new U.S. farm law agreed to a $10 billion increase for nutrition programs including food stamps, up $500 million from the earlier target, said the Senate and House Agriculture Committee chairmen on Thursday.

“At the same time, the Bush administration threatened to veto the omnibus $600 billion farm bill because of one of its funding mechanisms. Lawmakers said they would drop the idea, a broker reporting requirement aimed at better tax collection.

“‘They’ve been at it for a year … I’m not real optimistic we’re going to get a new farm bill,’ said Agriculture Secretary Ed Schafer while in Kansas City, Missouri. The White House says Congress should give up and pass a one-year extension of the 2002 farm law, popular with farmers and ranchers.”

[Note: A separate Reuters news article from yesterday, which was posted at DTN (link requires subscription), added that, “‘The House and Senate can’t agree on funding levels, can’t agree on the method of funding and can’t agree on the reforms – the three basic building blocks of the farm bill,’ Schafer told a press briefing after an appearance in Kansas City.” The article also quoted Sec. Schafer as saying, “‘They’ll put something in there for everybody to love and get the votes and send it up,’ he said. ‘That is not a good way to make public policy but I just don’t see any direction here that either the House or the Senate is going so that we can come together… to provide an acceptable farm bill.’”]

Mr. Abbott also reported that, “Leaders of the tax and agriculture committees in the House and Senate said, after weeks of deadlock, they are close to agreement on the offsetting revenues that will allow a $10 billion spending increase for the farm bill and a package of at least $1.4 billion in tax breaks.

“The tax package was likely to include tax credits for cellulosic ethanol and a smaller excise tax break for corn-based ethanol. A 6-cent-a-gallon reduction was proposed earlier.

“Senate Agriculture chairman Tom Harkin disclosed the $10 billion increase for nutrition just before the Senate voted to keep agricultural programs running until May 2 while the new farm law is finalized. House chairman Collin Peterson, Minnesota Democrat, confirmed the nutrition figure later.

“The House passed the one-week extension a couple of hours later and sent it to the White House. A spokesman said President George W. Bush would sign the extension.”

The Reuters article also stated that, “Among the issues to be decided on farm policy were whether to tighten crop subsidy rules and proposals to deny crop subsidies to the wealthiest Americans. Negotiators said an additional $730 million was to be cut from crop supports.

“There were suggestions among negotiators to take the money from ‘direct’ payments of $5.2 billion a year guaranteed to farmers…[A]t midday, Senate Finance Committee chairman Max Baucus, Montana Democrat, mentioned half a dozen issues still at play on the tax package. They included a disaster relief fund for agriculture, faster tax write-offs for owners of race horses and tax incentives for timber companies.”

Congressional Quarterly reported yesterday that, “House-Senate negotiators continued to meet, working to trim about $730 million from farm programs to reduce the size of the tax offsets needed to underwrite the overall bill.

“Lawmakers indicated that commodity crop subsidies are on the table. Sen. Kent Conrad , D-N.D., said that issue needed to be settled before the conferees could agree on the final financing package. The White House has repeatedly pushed for a reduction in farm subsidies.

“Agriculture Chairman Tom Harkin, D-Iowa, tried to win a two-week extension of the current law to buy enough time to seal a deal and complete the paperwork, but Sen. Larry E. Craig, R-Idaho, refused to agree to more than one week.”

The CQ item also reported that, “Negotiators have tentatively agreed on $1.4 billion in tax credits, one of the most controversial elements of the package. Senate Finance members had initially pressed for $2.5 billion in tax breaks on top of the $10 billion in extra spending above the bill’s baseline.

“But both the specifics of those tax breaks and the offsets for them have proved fiercely contentious.

“‘That’s not the end of the story,’ Sen. Kent Conrad, D-N.D., said of the latest $1.4 billion figure.

“House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., are expected to make the final call on which tax provisions to include in the final bill.”

DTN writer Chris Clayton reported yesterday (link requires subscription) that, “Negotiators also were talking about a wide range of issues on Thursday, including potential payment limits and changes to adjusted gross income eligibility for commodity programs, House Agriculture Committee Chairman Collin Peterson, D-Minn., said as he headed back into a meeting.

“Peterson later said he planned to continue meeting through the evening to get an agreement reached. Peterson said he wanted a deal done by the time negotiators leave the Capitol on Friday.

“In the backdrop of the negotiations at the Capitol, the Bush administration continued to argue that Congress cannot get a bill completed that the president would sign. U.S. Secretary of Agriculture Ed Schafer criticized the farm-bill negotiations to reporters Thursday in Kansas City, Mo., saying he was not optimistic that a bill could be completed that the president would sign.

“U.S. Rep. Earl Pomeroy, D-N.D., said the White House has ‘tried to obstruct this process at every turn.’ Pomeroy said he didn’t think the president wanted a bill to get to his desk, though he didn’t know why the Bush administration continued to complicate the negotiations.”

Mr. Clayton also noted that, “Coming out of a closed-door meeting, Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, said negotiators had agreed to $1.4 billion in tax cuts, though he declined to provide details. Some tax measures on the table were sent to House and Senate Democratic leaders for them to come to some terms on. Conrad also added that one area still being debated was how to squeeze as much as $730 million more in savings from commodity programs.”

Philip Brasher reported today at The Des Moines Register Online that, “Referring to the struggles over funding the bill, Sen. Tom Harkin, D-Ia., said negotiators were ‘trying to shoehorn this into a smaller space.’

“Lawmakers divulged few details of the private talks but said there was tentative agreement to drop a funding provision that the Bush administration objected to as an increase in taxes. The provision would require that brokers start reporting the cost basis of stock transactions.

“The lawmakers instead will tap user fees on products that go through customs, a funding source the White House supports.”

Mr. Brasher added that, “But Sen. Kent Conrad, D-N.D., cautioned, ‘Nothing is agreed to until everything is agreed to.’

“There also was agreement to shrink the Senate’s package of tax breaks from $2.4 billion to $1.6 billion or less, Harkin said.

“Harkin also expressed fears that planned conservation spending would be reduced before the talks were done.”

The Register article stated that, “White House spokesman Scott Stanzel said Bush would sign the one-week reprieve that passed Congress on Thursday. But the president still believed ‘we owe it to agricultural producers to provide the certainty of at least a year extension of current law,’ Stanzel said.”

Keith Good