The Bush administration, in a letter, has offered to allow Congress to go $10 billion over budget in drafting the 2008 farm bill so long as lawmakers agree to make significant subsidy and funding reforms.
The letter dated Feb. 29, a copy of which was obtained by Dow Jones Newswires, said the offer to allow for the extra spending was contingent upon Congress agreeing to such things as not raising loan rates for farmers and discarding some measures to protect sugar producers.
Bush administration officials worked out a deal in February with key members of the U.S. House of Representatives that would have allowed for $6 billion in spending above the 10-year baseline budget set by the Congressional Budget Office. This proposal, presented to House and Senate leaders, bumps that up to $10 billion, but also demands tighter reforms in return.
One such demand calls for lawmakers to completely do away with a plan that would guarantee U.S. sugar farmers 85% of the domestic food market and pledge that the U.S. Department of Agriculture would buy sugar surpluses and sell them for use by the ethanol industry. The Bush administration is also demanding that lawmakers completely replace the current price-based countercyclical subsidy program with a revenue-based program.
USDA officials have argued in the past that the current countercyclical program under the 2002 farm bill doesn't help farmers in times of severe drought or other disasters that wipe out crops completely. The current price-based program can also be more costly, according to USDA officials, because it doesn't take into account farmers' yields and can, at times, pay out too much.
A Compromise
USDA officials have fought for months to get lawmakers to set a hard subsidy cap, prohibiting payments to any farmers with an annual adjusted gross income of more than $200,000, but in the Feb. 29 letter, the Bush administration offered a compromise.
Lawmakers continuously either rejected or ignored the $200,000 AGI cap, so the Bush administration has agreed to accept a farm bill with a $500,000 AGI cap.
Spending Offsets
The House and Senate, in their respective farm bill versions approved last year, adopted several different revenue-raising tax measures and budgetary "gimmicks" to pay for over-budget spending increases.
The Bush administration is demanding that all of those be done away with and, in the Feb. 29 letter, made specific recommendations for budget offsets. Those recommendations include repealing research and development funds for oil and gas drilling and reforming "overpayments in Medicare to supplies and equipment."
House and Senate Democrats recently agreed on a plan that would limit farm bill spending to $10 billion above-budget, but that plan is unacceptable, according to the letter, because it pushes expenditures beyond the 10-year window the Congressional Budget Office can officially tally.
The letter from the Bush administration wasn't well-received by the Senate Agriculture Committee, said Kate Cyrul, communications director for Chairman Tom Harkin, D-Iowa. "At this point, the administration is the biggest sticking point to getting a new farm bill," Cyrul said.
"With little new information in this paper, it seems the White House is more intent on foreclosing options to getting this bill done, rather than working to create a solution."Dow Jones
