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EWG: House bill will not ‘reform’ payment limit rules

Although she is married to a multi-millionaire, House Speaker Nancy Pelosi would qualify for farm program payments under the House Agriculture Committee’s new payment limit reforms, Environmental Working Group leaders say.

The speaker isn’t expected to break out any farmland around her San Francisco home, but Ken Cook, the EWG’s president, appeared to be trying to make Pelosi the “poster child” for his efforts to defeat the House committee’s new farm bill payment limit language.

The House was scheduled to take up the committee bill on Thursday (July 26). The bill reduces the payment eligibility cut-off from $2.5 million to $1 million in adjusted gross income, requires direct attribution for farm program payments and eliminates the three-entity rule. Cook claims the bill perpetuates the status quo or worse.

“If there was one point I could make, it would be to try to crystallize how wrong the conventional wisdom is about this bill,” he said, speaking to reporters along with Chuck Hassebrook, executive director of the Center for Rural Affairs, and Roger A. McEowen, professor of agricultural law at Iowa State University, in a June 23 press conference.

“The rules passed by the House Agriculture Committee are such that far from eliminating millionaires from federal farm subsidy programs, they will in effect allow people of great means to participate in the programs with very little difficulty if they can afford a lawyer and a certified public accountant.”

Cook has been trying to “reform” the rules on farm program payments since before his Environmental Working Group posted its first list of farm program payment recipients on its Web site in 2001.

The postings have prompted cries of outrage from farmers who contend such payments keep their farming operations afloat when government policies, adverse weather conditions and low prices have threatened to put them under. Despite those complaints, the EWG has continued to post new lists and recently expanded those to include previously undisclosed payment information.

“When we look at House Speaker Nancy Pelosi’s financial disclosure statements, at her income and her spouse’s, it’s pretty clear to us that Speaker Pelosi could qualify for federal farm subsidy programs were she to have a farm operation under these rules that supposedly are very hard on anyone with an annual income of more than $1 million,” said Cook.

“We can explain very clearly why that is the case under the existing regulations and the provisions that were contained in the House bill.”

Currently, farmers can receive payments of up to $360,000, including direct payments, counter-cyclical payments and marketing loan gains or loan deficiency payments, according to Iowa State’s McEowen.

“Now, if you look at the bill written by the House ag committee, don’t get confused by a couple of things,” he said. “They’re speaking the right language if you’re interested in getting toward a true hard cap that Sen. Grassley, in particular, has been talking about for a number of years.”

(Sens. Charles Grassley, R-Iowa, and Byron Dorgan, D-N.D., are authors of stricter rules on farm program payments, which they recently re-introduced in the Senate. The legislation would limit farmers to payments of $250,000 per year.)

“Direct attribution is good, that’s the way we want to go,” said McEowen. “That’s a good start with respect to getting a hard cap on payment limits. And elimination of what is called the three-entity rule is also a good step in the right direction.”

But, McEowen says, those steps would be “gutted” by a regulation USDA issued in June 2003 that allows farmers and their spouses to file separate tax returns to circumvent the adjusted gross income eligibility cut-off rules.

“What the regulation says is ‘yes, you have a $2.5 million AGI cap, but if you file a separate tax return then the amount of AGI you reported on your federal income tax return for that year is what governs,’” he said.

“If you file a joint return and report your AGI on the return for the year on a joint return you can still slide under the million dollar cap if, as the regulation says, a certified public accountant or an attorney specifies the amount of income that would have been declared had you filed two separate returns.”

McEowen, a former tax professional who helped farmers structure their farming operations to receive more payments, says he believes House Agriculture Committee members who are touting their bill as reform legislation don’t realize the regulation is in force.

“Congressman Pelosi could qualify for payments if she were to report on a separate return salary from the U.S. House of Representatives and any other investments she has, which are substantially less than a million dollars,” he said. “It doesn’t make a bit of difference under this regulation how much income her husband has, which is in the multi-millions, she would still qualify to receive payments.

“You will find a lot of commodity groups that understand how this regulation works, especially cotton and rice producers. These growers, who historically have been big enough to bump up against the payment limit, I would anticipate would be in full support of this legislation.”

Hassebrook criticized House ag committee members for claiming the new rules tighten payment limits when the bill increases the limitation on direct payments to producers who are married from $80,000 to $120,000.

“It’s a 50-percent increase, and what this means for married farmers is they can receive an additional $40,000 a year they can use to drive their neighbors out of business by bidding land away from them,” said the chief staff person for the Nebraska-based Center for Rural Affairs.

Speaking at a press conference on Tuesday (July 24), House Agriculture Committee leaders acknowledged their payment limit rules were controversial, but said they represent meaningful reforms.

“This is a very tough pill for some parts of the country to swallow,” said Committee Chairman Collin Peterson, D-Minn. “I think people on both sides of the debate aren’t happy with the bill, which means we probably did our job.”

In another telephone conference call, Sen. Tom Harkin, D-Iowa, the Senate Agriculture Committee chairman, said he was disappointed with the House bill language on payment limitations.

“I hope we can do better than the House on payment limits,” said Harkin. “I believe the language that comes out of the Senate committee will be much tougher.”

Although the House ag committee has completed its work, the Senate Committee on Agriculture, Nutrition and Forestry has yet to hold a mark-up session on the bill. Harkin told reporters his staff has been working on finding offsets to help make up for the $60 billion decrease in the budget baseline for agricultural spending.

“I’ve been told by the majority leader (Sen. Harry Reid, D-Nev.) that there’s no room on the Senate calendar for a vote on the farm bill this month,” said Harkin. “So our plan is to come back after the August recess and complete our bill in September.”

Harkin noted that Reid has announced that the Senate’s new target date for adjournment is Nov. 17, which would allow Congress another month and a half to conference the farm bill, approve it and send it to President Bush.

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