Wall Street Journal, April 29, 2008: Farm Bill Leaves Safety Net Intact

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April 29, 2008; Page A3

WASHINGTON — A five-year, nearly $300 billion farm bill emerging on Capitol Hill appears to fall short of President Bush’s goal of making big cuts in subsidies to affluent farmers. The question now is whether Mr. Bush will sign it.

Under a tentative agreement reached by key members of the House and Senate, the bill would make only modest changes in support for farmers.

The measure would end a practice that allows farmers in some cases to collect triple payments from the government. The legislation would only slightly trim so-called direct payments that annually provide commodity producers with income support.

The proposed bill would ratchet down payments to wealthy individuals not directly involved in farming, perhaps setting a cap that would cut off benefits for those earning above $500,000 in nonfarm income. Details of that proposal have to be finalized, congressional aides said.


Even after those changes, though, the measure would leave intact a safety net that dates to the Depression, when the government intervened aggressively to stabilize the farm economy.

In some cases the legislation would shore up the safety net, making it easier for producers of wheat, soybeans and other commodities to trigger payments under a program meant to counter swings in the U.S. economy.

Whether Mr. Bush intends to pick a veto fight with Congress on the farm subsidy issue is unclear. The White House has kept a low profile since congressional negotiators reached a tentative agreement late last week, in part because some details of the package seemed fluid over the weekend.

But a White House spokesman said Monday Mr. Bush is concerned about the direction of the bill. White House spokesman Scott Stanzel pointed to Mr. Bush’s threatened veto of the farm bill back in February, and added that the legislation “currently being discussed” lacks the “important reforms the president has repeatedly called for.”

“We are watching the debate on Capitol Hill very closely,” Mr. Stanzel said Monday. “But we remain concerned that Congress has not risen to the challenge of reforming” subsidy programs.

In hopes of easing conflict with Mr. Bush, congressional negotiators made a concession to the White House in the bill, embracing an administration-supported funding mechanism for new spending. Under the bill, $10.4 billion in spending on food assistance will be paid for with Customs user fees, rather than direct tax increases, which the White House opposed. Even with the concession, Mr. Stanzel voiced concern that the legislation uses “budgetary gimmicks and accounting tricks “to offset the spending.

Rep. Ron Kind (D., Wis.) said the bill “looks like a nightmare” for those hoping to reduce the government’s involvement in the farm economy. “Negotiators managed to avoid every opportunity to reform wasteful, outdated subsidies,” said Mr. Kind, a leading advocate of such changes.

A year in the making, the legislation would create a new framework for spending on a wide range of government programs, from farm supports to low-income food assistance to research in next-generation biofuels.

The legislation could be on the House floor late this week.

For critics, the bill represents a missed opportunity. A diverse coalition of lawmakers and interest groups — and even the White House — had wanted to scale-back federal supports, arguing those payments are less important with farm incomes rising.

Back when the debate began, Mr. Bush called for deeper changes than now envisioned by lawmakers. He proposed limiting benefits to wealthy farmers — initially suggesting a cap of $200,000 in adjusted gross income — and urged no easing of the triggers for programs meant to counter economic swings.

The demands reflected Mr. Bush’s frustration with the 2002 farm bill, which made no effort at reform and complicated U.S. efforts to negotiate the Doha Round of global trade talks.

Those talks have been in stalemate for years, amid complaints that the U.S. and rich countries in Europe haven’t done enough to lower farm subsides.

Ralph Grossi, president of American Farmland Trust, a group lobbying for farm subsidy reform, warns combined changes to subsidy programs would likely “complicate the administration’s ability to negotiate the Doha agreement.”

Write to Greg Hitt at greg.hitt@wsj.com1

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