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Time running out for farm bill?

WASHINGTON -- Under pressure to finish a new farm bill by April 18, the date the extension of the 2002 farm bill expires, House Agriculture Committee Chairman Collin Peterson, D-Minn., proposed the bill leave out a weather-related disaster aid pr...

WASHINGTON -- Under pressure to finish a new farm bill by April 18, the date the extension of the 2002 farm bill expires, House Agriculture Committee Chairman Collin Peterson, D-Minn., proposed the bill leave out a weather-related disaster aid program and a package of agricultural tax breaks, but key senators made a counteroffer that includes the disaster program and the tax breaks.

The senators who made the offer include Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, Senate Finance Committee Chairman Max Baucus, D-Mont., and Senate Budget Committee Chairman Kent Conrad, D-N.D.

Ticktock, ticktock

President Bush has said that if Congress has not finished the bill, it would be better to extend the 2002 farm bill for another year or more. But both House and Senate aides say they do not believe that a simple extension would pass Congress. If an extension is necessary, the aides say, there would be pressure to cut the direct payments that farmers get whether prices go up or down to increase food stamp benefits in this period of rising food prices. Agriculture Secretary Ed Schafer has said that if Congress has a deal at hand, he would recommend that President Bush sign another short-term extension. But Schafer also has said he is beginning to give up hope that Congress will finish the bill in the next week.

Serious negotiations between the House and Senate began after Peterson decided that the best way to force action on the bill was to schedule a public conference at which he could present an offer to the Senate.

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Disaster aid

Although congressional farm leaders and Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif., had agreed to increase spending by $10 billion, Peterson proposed on April 10 increasing spending by only $5.5 billion and leaving out the disaster aid program that Baucus, Conrad and the National Farmers Union had made a top priority. Peterson also proposed leaving out the tax breaks that the Senate Finance Committee had added to the bill. Peterson said he is not opposed to the disaster aid program, but he does not believe money under rules that require the House to account for all spending increases should be used to pay for it. Peterson said he believes the tax breaks should be left out and that a bill with the tax breaks in it will not pass.

Rep. Earl Pomeroy, D-N.D., the only House member who serves on both the Agriculture and Ways and Means committees, said Pelosi does not think money subject to pay/go rules should be used for disaster aid. Pomeroy has been an ally with Conrad in promoting the disaster aid program, but said he would prefer a fully funded disaster aid program, but only if it is funded through cuts in other parts of the bill.

Baucus was frank about his views on the House offer. "This $5.5 billion offer is a real lowball for farm country," Baucus said in an e-mail to Agweek. He added, "This $5.5 billion offer is a real lowball for farm country. And the absence of disaster assistance is unacceptable to Senate conferees. But I'm confident this won't be the House's final position. It's a jumping-off point. I've had an agreement with Speaker Pelosi, Leader Reid, and Chairmen (Charle) Rangel (D-N.Y.), Peterson, and Harkin for $10 billion in additional farm spending, including $4 billion for disaster assistance. In farm country, a handshake is your word. And I am sure my colleagues understand that."

National Farmers Union President Tom Buis, who has been one of the biggest advocates of a permanent disaster program, said he was disappointed the House did not include the disaster program in his initial offer and urged the Senate to reject the House offer. "The House proposal provides zero funding for a permanent disaster program which, in my opinion, is the only significant improvement in the commodity title of either bill," Buis said. "Farmers and ranchers are facing unprecedented increases in production costs, thus their financial risks are greater than ever.

"With a reduced crop, producers will not be able to offset these increased costs in the marketplace. It does not matter what the price of the commodity is if you have nothing to sell. It is vitally important that Congress pass a good farm bill, not just a farm bill for the sake of passing a new bill."

Senate offer

On April 11, the Senate came back with an offer to include disaster aid the tax breaks that were in their bill. The Senate also offered a different method to pay for it. The House proposed by requiring merchants and banks to improve their reporting of credit card transactions, which would make it difficult for merchants to avoid taxes on sales. But Agriculture Deputy Secretary Chuck Conner told reporters that the White House would not support the House's plan to use of increased government revenue from improved reporting of credit card sales.

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Baucus said the spending would be offset by extending the customs user fee program for $4.1 billion; ending the ability of physicians to refer patients to specialty hospitals they own, which would save $2.4 billion in Medicare outlays; and requiring brokers to report what customers initially paid for stocks in securities transactions, which would result in a $6 billion increase in tax receipts. Baucus said he believes his offsets "will be more popular with the White House and the country."

Senators and their aides also defended the tax package. A Senate aide noted that a provision to shorten the depreciation period for race horses has gotten a lot of attention, but that the package includes a number of provisions that House members have supported, including the CRP provision, tax credits for biofuels and faster farm equipment depreciation. Other measure in the tax package would allow deduction of certain broadband Internet expenditures and extend the ethanol tariff from Jan. 1, 2009, to January 2011.

'Unacceptable' cuts?< /STRONG>

Baucus and Harkin said the only change in the farm bill to which the major conferees had agreed March 25 was a reduction in the cut in crop insurance from $5.9 billion to $5.75 billion. Since March 25, Peterson had planned to cut crop insurance subsidies even more to a total of $6 billion. Peterson said the cuts would come in states with the highest premiums and the lowest loss rates, but crop insurance executives said the cuts would hurt service to farmers in all states. Rep. Jerry Moran, R-Kan., said April 10 that he objected to the plan and Sen. Pat Roberts, R-Kan., called the level of the cuts "unacceptable." Harkin said that to reduce the crop insurance cut, the Senate proposal would delay implementation of the increases in crop target prices and loan rates and make a small change in his average crop revenue program. Harkin noted that the change in date for target prices and loan rates would not matter because crop prices are above those levels at the present time. Harkin also told reporters that the Senate proposal does not include any cuts in direct payments, but he said he would not rule out a small cut because the proposal is not finalized.

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