WASHINGTON Senate Budget Committee Chairman Kent Conrad, D-N.D., said Jan. 29 that Congress has only six weeks to finish the farm bill before the Congressional Budget Office releases its new baseline budget projections, which will have an impact on the bill.
The new House and Senate farm bills use farm subsidy budget projections for a variety of purposes, but the March score for projected future agriculture spending is expected to be lower because commodity prices have risen and farm subsidy payments have fallen. Conrad said that, under its rules, the House must immediately use the new score, which would change the budget numbers for the bill as passed.
Conrad also said the Senate Finance Committee has been working on some alternative methods to come up with money for the farm bill in reaction to objections raised by the House Ways and Means Committee and the White House to some of the policy changes that underlie the codification of the doctrine of economic substance that is in the Senate-passed farm bill. The details of those objections have not been revealed. The House Ways and Means Committee press office did not return a call seeking comment. The doctrine of economic substance is a tax rule that says items businesses claim as deductions should lead to increased economic activity, not just reduce taxes. The Internal Revenue Service has made the ruling, but some companies have protested the rule and the courts have been asked to rule on it.
Conrad said the codification of the doctrine of economic substance still will be part of the bill, but the amount of money generated will be smaller if the policy objections are addressed.
Senate Finance ranking member Charles Grassley, R-Iowa, told Iowa reporters Jan. 29 in a telephone call that he wants a chance to explain to White House officials why the doctrine of economic substance should be codified and why it is not a tax increase. Noting that four circuit courts of appeals have said Congress ought to define economic substance, Grassley said the provision would do "what the courts told us we ought to do because Congress ought to define the tax code as opposed to the courts."
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Noting that the codification would raise $10 billion to $12 billion per year in revenue, Grassley said, "The president might call that a tax increase. But who is fighting it and who maybe the White House is speaking for is a lot of K Street lobbyists or investment firms, accounting firms, law firms that think up all these tax loopholes and sell them to businesses. We are shutting down their factory, their industry of loophole openers. I don't consider that a tax increase."
