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Farm Bill Update: Taxing Matters

POSTED: 06:03 PM ET, 04/16/2008 by The Editors

Back in 2002, then House Agriculture Committee Chairman Larry Combest (R-Texas) helped engineer tens of billions of dollars in new spending for agriculture in a massive new farm bill that was denounced by fiscal conservatives. Combest's pivotal role in outflanking a reform faction and bringing President Bush on board for the increased spending was detailed in a 2006 Post series on waste in agricultural subsidies.

This week, in an ironic twist, the current chairman of the committee, Collin Peterson (D-Minn.), has emerged as the budget hawk -- fighting to pare billions of dollars in Senate-backed spending and tax breaks in an effort to save the faltering legislation. The concern of Peterson and a bipartisan group of farm state lawmakers in the House is that Senate greed could sink the whole bill.

At one point, Peterson resorted to barnyard imagery to warn the other body against overplaying its hand. "There's a saying in farm country that pigs get fat but hogs get slaughtered," said Peterson during a last ditch House-Senate negotiating session Tuesday.

Peterson's main gripe is with the Senate's insistence on adding $2.5 billion in tax breaks for timber interests, conservation groups, biofuels producers, wind farmers, and others. Retired farmers selling their land could spread out capital gains over 20 years, and would be excused from paying self-employment taxes on federal payments they get for putting land in a national conservation reserve.

Even more controversial is the Senate's inclusion of the Equine Equity Act, which allows faster depreciation of race horses. Peterson warned that could help wealthy Saudi princes. But Sen. Charles R. Grassley (R-Iowa) responded that Amish farmers would be helped by another part of the act that enables them to take a long-term capital gain on workhorses held for more than a year.

"We should treat animal agriculture the same as Wall Street," huffed Grassley during a passionate plea for the provision. But Peterson likened the more than 60 tax provisions to earmarks that are likely to invite a presidential veto. "This is a farm bill, not a tax bill," he said.

House officials are also lukewarm at best over another Senate add-on: a $4.1 billion provision to create a permanent new program to channel funds to farmers and ranchers suffering weather-related losses.

Peterson, a "Blue Dog" who supports the tighter budget controls initiated by the new Democratic majority, has warned that he may not be able to bring either House Republicans or the White House along with a bill containing the beefed-up spending.

Both the disaster and tax measures are backed by Senate Finance Committee Chairman Max Baucus (D-Mont.), who is adamant. Without the tax package, Baucus said Wednesday, he may not be able to rally the needed 60 votes for Senate passage. "It has to be in the mix," he said.

With the farm bill expiring at midnight Friday, Congress now faces a potential calamity. Lawmakers need either a deal or an extension by then, but administration officials warned yesterday that Bush won't sign an extension unless the White House concludes negotiators are making "substantial progress" in settling their differences. "At this point we have not seen that," said Deputy Secretary of Agriculture Charles Conner.

Without action by Friday, farm programs would default to what they were in 1949. The U.S. government would be required to support milk prices at $28.20 per 100 pounds, well above current prices. But soybean growers would get no support at all.

It's uncertain who will blink. If the White House refuses to sign an extension, then the administration will take the blame in farm country for pushing U.S. agriculture into chaos, asserted one senior House aide. On the other hand, there is growing pressure on the Senate to back down.

Rep. Rosa DeLauro (D-Conn.), who chairs the House panel that writes annual spending bills for agriculture, on Tuesday denounced a Senate proposal to fund tax breaks and other farm spending by utilizing savings from the Medicare program previously earmarked for mental health.

"To take that money and apply it to race horses, frankly I don't think those are our priorities," she said.

-- Dan Morgan

By The Editors |  April 16, 2008; 6:03 PM ET Harvesting Cash
Previous: More Problems at the Smithsonian | Next: Update on Student Funds


Please email us to report offensive comments.

They also had tax breaks in THE FARM BILL for fossil fuels!!! Why not report on THAT!

Posted by: Fred | April 17, 2008 11:17 AM

We need to skip the fossil fuel argument. The energy crisis can only be solved with nuclear power options and fuel cell technologies. Smaller carbon footprints.

Posted by: Cigars | May 3, 2008 11:34 PM

Yes, nuclear power - let's have a whole bunch of radioactive waste material (even after it's recycled, there is still waste) with no where to go but up in space so we can begin littering our entire universe.
How bout we focus our energies and funding on localizing agricultural production and energy through wind-power, biomass, water, and sun to ensure a sustainable future for our children?

Posted by: Anonymous | May 4, 2008 4:52 PM

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