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Lawmakers finish farm bill compromise

Married couples with joint incomes of up to $1.5 million from their farm operation could still qualify for crop subsidies under a five-year, $300 billion farm bill compromise — but a veto is possible.
/ Source: The Associated Press

Married couples with joint incomes of up to $1.5 million from their farm operation could still qualify for crop subsidies under a five-year, $300 billion farm bill compromise that would boost the Agriculture Department's food and farm programs.

In some cases, farm couples with incomes totaling $2.5 million — assuming $1 million is from other, non-farm sources — could also qualify. That's far too rich for the Bush administration, which renewed President Bush's threat to veto the package as being too generous to wealthy farmers.

As details of the House-Senate compromise emerged Thursday, Agriculture Secretary Ed Schafer reiterated the veto threat. White House budget director Jim Nussle said the legislation still spends too much, relies on budget gimmicks and "doesn't have hardly enough reform."

"For those reasons, it would still be something that the administration would oppose," Nussle said.

Georgia Sen. Saxby Chambliss, the top Republican on the Senate Agriculture Committee and one of the bill's negotiators, said that Bush has not told him directly he'll veto the bill, but White House staffers have made it clear to him that Bush's support is unlikely.

House Speaker Nancy Pelosi, a supporter of the bill, said she wished it had gone further in limiting payments to wealthy farmers. Pelosi said she would have "preferred more commodity reform," referring to scaling back subsidies, but praised increases for nutrition programs, which make up two-thirds of the bill's cost.

The legislation would:

  • Increase the nutrition programs, including food stamps and emergency domestic food assistance, by more than $10 billion over ten years. It would also expand a program to provide fresh fruits and vegetables to schoolchildren.
  • Expand subsidies for certain crops, extend dairy programs and increase loan rates for sugar producers. It includes language which calls on the federal government to buy surplus sugar and sell it to ethanol producers, where it would be used in a mixture with corn.
  • Make small cuts to direct payments, which are distributed to some producers no matter how much they grow.
  • Cut a per-gallon ethanol tax credit that supports blending fuel with the corn-based additive from 51 cents to 45 cents in favor of more money for cellulosic ethanol, which is made from plant matter.
  • Add dollars for conservation programs designed to protect farmland.
  • Require that meats and other fresh foods be labeled with their country of origin.
  • Eliminate loopholes that now allow farmers to collect subsidies for multiple farm businesses.
  • Cut expanded food assistance for an international school lunch program that was passed in the House farm bill last year. While the House had included more than $800 million in permanent dollars for the McGovern-Dole program, the final bill includes less than $100 million.
  • Pay farmers for weather-related farm losses out of a new $3.8 billion disaster assistance fund. Schafer on Thursday criticized the program, which he says questions the government's investments in existing crop insurance for farmers and discredits farm programs.
  • Give tax breaks to owners of race horses, a provision added by Senate Minority Leader Mitch McConnell, R-Ky. Animal rights groups criticized the provision, saying Congress shouldn't help the industry in the wake of a Kentucky Derby entrant collapsing and having to be euthanized last weekend.

Limiting subsidies
In recent days, congressional negotiators have come closer to the White House in terms of how much money would be paid to wealthy farmers, one of the biggest sticking points with the Bush administration.

The bill would eliminate some government payments to individuals who make more than $750,000 — or married farmers who make more than $1.5 million — in farm income annually.

Individuals who make more than $500,000, or couples who make more than $1 million jointly, in non-farm income would also be ineligible for subsidies.

Under current law, there is no income limit for farmers, and married couples who make less than one-fourth of their income from farming will not receive subsidies if their joint income exceeds $5 million.

The Bush administration originally proposed a new cap for those who make more than $200,000 in annual gross income, but has indicated it could accept a limit of $500,000. As of last week, negotiators were considering a $950,000 income cap on farm income.

Rep. Stephanie Herseth Sandlin, D-S.D., said members were meeting Thursday to coordinate a House override strategy.

Herseth Sandlin said she is optimistic that the chamber would approve the bill if Bush vetoes it. But House Minority Leader John Boehner of Ohio signaled Thursday that he would vote against the bill.

"I think, in a time of high commodity prices, to be raising loan limits and target prices just really flies in the face of reality," he said.

Sen. Chuck Hagel, a Republican from the farm state of Nebraska, also criticized the bill.

"The loopholes are still there," Hagel said. "It's larded down with pork. It's just a bad bill."