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ABOUT KEN

Ken Cook is president of Environmental Working Group, a public interest research and advocacy organization known for its Farm Subsidy Database. The author of dozens of articles, opinion pieces and reports on agricultural, public health and environmental topics, "[Cook's] fingerprints can be found on nearly two decades of U.S. farm law" (Omaha World Herald). Read more about the authors.

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May 8, 2008

Farm Bill: Pelosi's Wish For More Reform
Can Bush Grant It?

The AP's Mary Clare Jalonick reported this afternoon that House Speaker Nancy Pelosi "a suppporter of the bill, said she wished it had gone further in limiting payments to wealthy farmers but praised increases for nutrition programs, including food stamps and emergency domestic food assistance, by more than $10 billion. The measure would also expand a program to provide fresh fruits and vegetables to schoolchildren."

Bush's insistence on more subsidy reform, the core of the public case he is making for a veto, could end up granting Pelosi her wish. But first the administration has to muster the votes to sustain his veto. The only real shot is in the House.

The question is, how will this veto dance between Bush and Pelosi unfold. (I'm putting Harry Reid aside because a veto override appears hardest in the House and highly unlikely in the Senate.)

Will Bush just veto the bill, throw up his hands, and make another half-hearted suggestion that the 2002 bill be extended for a year or two? Unlikely. Extension would infuriate his fiscally conservative base. They hate the current bill and would harshly criticize a sequel. Nor would a simple extension be the logical finale to the two years his administration spent in nationwide farm bill listening sessions, developing its own detailed farm bill proposal, and making nonstop appeals for subsidy reform that have earned almost universal praise for the president on editorial pages across the country. Why, after all that, would Bush hand the keys back to the subsidy lobby to drive farm policy for another two years?

And for all the big talk from the subsidy lobby, as recently as 18 months ago, that they would simply muscle a 2002 extension through congress, that option was, and remains, impossible with Democrats in control. A straight extension can't pass the House, and probably couldn't pass the Senate.

Which raises the question of what counter offer, if any, Bush might present over the next week as he reaches for his veto pen? And how and to whom he will present it?

So far the president's rejection of the bill has focused on inadequate income caps for subsidies, other excesses in the commodity title, the costly new "permanent disaster assistance" program, failure to convert a portion of foreign food aid to local purchases, and sundry other issues. Add to that list, of course, what the White House terms the "bloated" cost of the bill.

For the most part, however, the administration has not raised veto-level objections to any of the provisions that advocates for sustainable food and agriculture, conservation or social justice tend to like about the bill. That list includes the increase for food assistance to the poor that Pelosi and other bill supporters are hyper-ventilating about.

Here's one way to put that food assistance increase in perspective: at $10.3 billion over 10 years, it is equivalent to the direct payments that subsidized farmers will collect in just the next two years (at $5.1 to $5.2 billion per year) under the conference agreement. That's as good a measure as any of the lousy deal Pelosi and her staff cut last summer, when the subsidy lobby took her to the cleaners and most of the Democratic caucus with her.

But those numbers also suggests how relatively easy it would be for Bush to accommodate Pelosi on food assistance, conservation and other farm bill items that matter most to her and to the majority of her caucus. It would then fall to her to nudge the House position closer to Bush on commodity policy. Then it would be up to the Senate to accept the compromise, or pack for a trip back in time to 1949.

Of course, none of this will matter unless the president can demonstrate that he has one-third of the House behind his veto--comprised of most of his party and some Democrats. The fact that he has a decent shot has the House Democratic leadership and the subsidy lobby working alongside, overtime, to override his veto, and sundry other interest groups, some queasy progressives among them, tagging along--again.

Farm Bill: NOT FOR DISTRIBUTION
Bootlegged Summary of Conference Committee Agreement

I can't vouch for the accuracy of this document, which was leaked to us. But it's the only paper we've seen on the agreement. Download the image or click link below for the full document. But remember, NOT FOR DISTRIBUTION!
farmbillsummary.jpg


Download full PDF file

Wasting Away, In Farm Bill Vetoville

Hot from the USDA press office.

STATEMENT BY SECRETARY OF AGRICULTURE ED SCHAFER ON CONGRESS' ANNOUNCEMENT OF A NEW FARM BILL WASHINGTON, May 8, 2008- In January 2007, the President put forward a farm bill proposal that represents fiscal responsibility, would improve the safety-net for farmers and move current programs toward market oriented policies. Our proposals were warranted and timely considering that 2008 net farm income is forecast to be $92 billion - 51 percent above its 10 year average.

"Today, the United States House and Senate announced the completion of a farm bill that unfortunately fails to include much needed reform and increases spending by nearly $20 billion. At a time of record farm income, Congress decided to further increase farm subsidy rates, qualify more people for taxpayer support, and move programs toward more government control. We should not remove farm commodities from market forces and make them dependent upon government support programs.

In addition, Congress decided to include a new permanent disaster program. This program represents a return to outdated farm policy and questions the government's investment in crop insurance which was designed to protect farmers against low commodity prices and crop failures. This action will discredit farm programs and jeopardize public support for future farm bills.

Americans appreciate our farmers and ranchers and understand the uncertainties and risks that farming presents. However, they do not understand why their taxes should be used to provide payments to individuals with adjusted gross incomes of $500,000 and higher, some of the wealthiest people in America.

We are also concerned about a lengthy list of extraneous provisions that are not related to farm programs and have no place in this legislation.

For a year and a half, the Administration has been consistently clear that Congress needs to move forward with a good farm bill that the President can sign. They have failed to do so. This legislation lacks meaningful farm program reform and expands the size and scope of government. I have visited face to face with our President and he was direct and plain. The President will veto this bill."

Farm Bill: Reforms Cut Off Subsidies To Wealthy
Filthy Rich Still Qualify

Not a subscriber to DTNag.com? Good. Maybe you'll think I came up with this description of the "income caps" farm bill conference principals have hammered out, when in fact it was Chris Clayton at the DTN Ag Policy Blog ("It's Done, Except for the Voting, Veto, etc.")

One of the final hangups was how to deal with adjusted gross income eligibility. Lawmakers agreed to cut off people from commodity payments if they receive more than $500,000 non-farm income. However, farmers can receive up to $750,000 in net farm income before direct payments are cut off. In theory, a person could have $499,000 in stock sales and $749,000 in net farm income and still collect direct payments.

Hmmm. How many tax returns have an adjusted gross income (income after most expenses and decductions) on them of $1,248,000? Let's consult the latest published IRS table on tax returns sorted by AGI:

Adjusted Gross IncomeNumber of ReturnsPercent of ReturnsAverage AGI
Total134,372,678100.0%$55,238
No adjusted gross income1,761,0411.3%-$48,530
$1 under $5,00011,476,4168.5%$2,631
$5,000 under $10,00012,114,2379.0%$7,476
$10,000 under $15,00011,635,6848.7%$12,481
$15,000 under $20,00011,126,5998.3%$17,463
$20,000 under $25,0009,784,1677.3%$22,419
$25,000 under $30,0008,738,1076.5%$27,461
$30,000 under $40,00013,940,40510.4%$34,718
$40,000 under $50,00010,618,5067.9%$44,782
$50,000 under $75,00018,351,03713.7%$61,450
$75,000 under $100,00010,449,9897.8%$86,170
$100,000 under $200,00010,810,3678.0%$132,334
$200,000 under $500,0002,737,8022.0%$288,144
$500,000 under $1,000,000524,5060.4%$677,248
$1,000,000 under $1,500,000127,9250.1%$1,210,080
$1,500,000 under $2,000,00056,615>0.05%$1,722,378
$2,000,000 under $5,000,00084,0700.1%$2,980,990
$5,000,000 under $10,000,00021,431>0.05%$6,852,066
$10,000,000 or more13,776>0.05%$27,313,795

Source: Internal Revenue Service, 2005.

Looks like about three-tenths of one percent (0.3 percent) of all tax returns would exceed that amount. And what fraction of that fraction would be wrapped up in farm programs? I'd tell you but my microscope is on the blink.

Surely the conference committee leaders will be asked at their press conference later today how many people will be caught up in this subsidy crackdown? And how much money these historic "reforms" save taxpayers?

May 6, 2008

Farm Bill: Any Means (Testing) To An End

When I testified last year before the House Agriculture Committee's conservation subcommittee, chaired by Rep. Tim Holden, I was asked what I thought about means testing for conservation programs. The back story was the administration's proposal to means-test commodity programs (cutting off subsidies for adjusted gross incomes of $200,000 or more) which the subsidy lobby hated not just because it threatened the unlimited supply of taxpayer money to the biggest, wealthiest subsidy farms in the country, but because it was the camel's nose under the tent, and the camel was George W. Bush. The back story's sub-story was that EWG very publicly supported the idea, along with Dorgan-Grassley style payment limits.

Some of the subcommittee members seemed to surprised to hear that I thought means testing for conservation should be on the table. I told members of the Texas Farm Bureau the same thing when I met with them here in town recently. It was Earth Day, come to think of it.

So when Jerry Hagstrom of Congress Daily sought our views on the matter Monday, here's the response we emailed him:

Means testing is clearly appropriate for commodity subsidies. Taxpayers should not be accelerating farm consolidation by bankrolling big, wealthy farm operations, which is what commodity subsidies do. But with tight funding and such a large unmet need for conservation programs, we should also take a hard look at means testing for all farm bill programs, even conservation.

Our view is that if policymakers have ideas in this department, they should present them for discussion and debate.

But the subsidy lobby is crassly and transparently calculating that at least some conservation groups will be scared away from Title I reforms, and perhaps enlisted to the cause of resisting them, if means testing for conservation programs is put on the table. Some groups clearly would be scared off, and by much lesser threats than this.

While EWG may differ from them in emphasis or nuance on this issue, we think EDF and other groups make a strong and principled case for treating conservation programs differently than commodity programs when it comes to income caps and payment limits.

Other conservation groups covered their eyes, ears, mouths--and especially their noses--on any issues pertaining to Title I during the past year's debate, hoping that conservation programs would somehow be sustained or expanded with money that fell from the sky. EDF was different. EDF never shrank from making the case for broader subsidy reforms as part of their impressive effort to secure substantial increases in conservation investments.

Bully for them. EDF has had the courage of their convictions to suggest where to find the money for conservation--in Title I, crop insurance, and by eschewing the 'permanent disaster' fund--while other conservation groups have cowered in the modest comforts of committee accommodation, in silence or in press releases. That's one reason we're down to $4 billion above baseline for conservation at this point, an amount that doesn't even replace the funding cuts to conservation since 2002.

Of course, in farm bill politics EDF's reform stance is a prescription for retribution by subsidy interests and the politicians in their thrall, if they can arrange it, no matter what impact the revenge may have on conservation.

The reprisal dynamic was on display last summer in the legislative intimidation of Ducks Unlimited by Rep. Marion Berry of Arkansas. He threatened DU during House consideration of the farm bill with an amendment that would have defunded the organization's crucial role of providing technical assistance to farmers under conservation programs like the Wetlands Reserve Program. Berry's amendment was in retaliation for DU's support in 2002 of the Boehlert-Kind-Dingell-Gilchrest reform amendment, which outraged the subsidy lobby (Berry's rice and cotton constituents in particular) because it would have shifted some money away from top crop subsidy recipients to pay for dramatically increased conservation investments.

Conservation groups who take stands like that are bound to become targets of recrimination by the subsidy lobby and their friends in congress.

The message is always the same: play nice, keep your great big save-the-world pie hole shut about Title I reform, and maybe you'll get some money. A lot less money than is needed, a lot less money than you want, a lot less money than you've told your supporters you'll be fighting for in the farm bill, of course.

But if you do play along the commodity boys will throw you a few bucks that are mandatory (and many more bucks that are merely authorized) for programs you consider central to your mission, whether it is holding the nation's migratory bird flyways together, protecting farmland from sprawl, preserving ecological gems or helping family farms protect their land and everyone's water, air and wildlife. Big Ag will even consider "protecting conservation through conference" if you bend sufficiently to their wishes, though of course you never know what the House (or Senate) might do. . .some things are beyond their control. . . Blah, blah, blah.

The standard bonus in these deals is that the subsidy lobby will do their level best to resist their powerful impulse to warp or destroy conservation program function and effectiveness through hatchet jobs on policy. Like collapsing all conservation easement programs into one--or dropping their demand for income caps or payment limits, if that's what twists your shorts.

Food assistance advocates are treated to their own version of these bullying tactics in every farm bill cycle.

I disagree with Chairman Peterson's characterization of EDF's position (as reported by Hagstrom in CongressDaily) as "hypocritical." But I certainly understand why he might misread as inconsistency EDF's thoughtful case for treating conservation subsidies differently than commodity subsidies.

The chairman's difficulty in distinguishing false virtue from the genuine article surely is symptomatic of his constant, acute occupational exposure to high doses of hypocrisy from the subsidy lobby. I'm worried for him.

How can a person not become confused and disoriented about what is and is not hypocritical when:

. . .Subsidy-addicted farmers continually express their powerful yearning to earn their living from the market, instead of the detestable Big Government, just as soon as higher prices permit. . .

. . .Politicians declaim that direct payments made without regard to prices or income are "hard to defend" in this overheated farm economy, then increase those payments selectively for the very largest subsidized farms. . .

. . .Commodity groups dependent on export markets warn that without direct payments for cotton plantations, America may become dependent on other countries for our food--as we are for our oil. . .

. . .Farm organizations pine for the day when market prices and incomes suffice to render "market-oriented" subsidy checks unnecessary, so that conservation programs and rural development can at long last be fully funded. . .

. . .Political leaders assert that Congress has no business dictating farm size through subsidy limits, with the exception of dictating that 10 acres or less is not a farm at all. . .

. . .Proponents of "production agriculture"--code for plantation-scale subsidy operations--brag about feeding the world, then express heartfelt regret at not being able to feed some of the world's poorest and hungriest kids by coming through with the $840 million promised by House Speaker Nancy Pelosi and Ag Committee Chairman Peterson for the McGovern-Dole International Food for Education Program. . .

Even the sturdiest farm policymaker is bound to be impaired over time by prolonged exposure to so much howling hypocrisy. No one should hold it against him.

Farm Bill: Washington Post Sour on Sugar Deal

The Washington Post was a triple threat today on the farm bill, with Dan Morgan's story, the op-ed from George McGovern and Bob Dole, and this rippin' good editorial page rant on the sugar giveaways in the farm bill.

THE DEADLINE for completion of a new farm bill has been pushed back to May 16. But the endless wrangling over a piece of legislation that Congress once hoped to finish in 2007 has not induced a significant change in the thinking of those who regard it as an opportunity to lock in lush new benefits for American agricultural producers. President Bush has reportedly relaxed his position on means-testing for farm subsidies, offering to permit individuals earning up to $500,000 to continue receiving direct payments. Yet farm-state lawmakers are holding out for a level nearly twice that.

Among the least defensible provisions under discussion is a plan by those lawmakers to prop up U.S. sugar cane and sugar beet farmers.

. . .the [sugar] lobby and its Capitol Hill supporters have come up with an ingenious new way to protect the industry: raising the support price for U.S. sugar, already above the world price, for the first time in 23 years, while requiring the federal government to set aside a certain quantity of imported sugar for conversion to ethanol.

Ethanol Mandate Wins Fallows'
Prestigious "Stupidest Policy Ever" Contest

From James Fallows blog at The Atlantic:

Hundreds of entries later, the results are clear. An absolute majority of contestants spoke in favor of ... mandates and subsidies for ethanol use as the stupidest manifestation of bipartisan public policy in the last 50 years.

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