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Farm bill conference tied up in tax accounting, votes threatened

Any momentum towards finishing a farm bill is at a snail's pace. Even with the impetus of an increasingly frustrated agricultural base, last Friday's farm bill conference largely focused on the merits of taxes and accounting methods. The meeting did not go well.

Before the April 18 conference, the House and Senate had once again swapped farm bill proposals. After weeks of back-and-forth, the sticking point remains the need for some $10 billion in extra funding including $2.5 billion in tax breaks the Senate insists on (for more, see

President Bush reluctantly signed another extension of current law through April 25 to allow Congress to finish the near $300 billion farm bill.

“We could work through this if we had the offsets of the $10 billion,” said Iowa Sen. Tom Harkin, Senate Agriculture Committee chairman on Friday. “The House has now proffered an offset of only $6 billion. (The Senate) accepts that and returns that $6 billion offset plus $4 billion in custom user fees.”

Harkin then referenced a contentious, informal meeting between legislative leaders the previous evening in the office of Charlie Rangel, House Ways and Means Committee chairman. “The House informally proffered a $6 billion pakage that included everything but disaster. It included offsets on the ethanol package. There was $500 million in savings yet to be determined. There was a $1 billion reduction in direct payments and a $800 million tax compliance over the $6 billion. I wrote it down as it was stated in the meeting.”

“Let me correct you,” interupted Collin Peterson, House Agriculture Committee chairman. “We did not specify direct payments. What we said would be considered would be things like direct payments, payment limits and potential other issues. There was no agreement on specifics in that area.”

“Direct payments were discussed, but I stand corrected,” said Harkin. “There was $1 billion in further reductions and $800 million in tax compliance over the $6 billion. That all added up to about $9.5 billion.”

At this point, Peterson said he was “ somewhat uncomfortable talking about this. Our conferees that have jurisdiction over these offsets and the tax portion of this package aren't here. Also, the ranking member and chairman of (the Senate Finance Committee) aren't here.

“The first problem is we still don't have offsets agreed to by everyone. We can't deliver on that because we don't have votes amongst us.”

Peterson said he was for a disaster program although there are others in the House that aren't.

“I think the holdup for getting the offsets is the (Senate) tax provisions … As someone listening in, my sense is there's disagreement between (the House and Senate) about the overall level of the tax cuts. This really isn't a $2.4 billion tax package. It's actually a $10 billion tax package.

“The way (the Senate) got to the $2.4 billion is you've shortened up the length of these tax cuts. All of them are still there, it's just that some of them expire at the end of this year. Some are only for one year - the forestry tax cut is in the offer at $453 million, but only for a year. So the actual 10 years for it is in the $4.5 billion to $5 billion.

“That's part of the dispute between (the House) Ways and Means people and (the Senate) Finance Committee people. (The House) views this as adding a bunch of things to the mix. These are things that anyone being realistic understands that once (the bill is passed), won't be terminated after one year. Yes, (the House) will consider $1 billion in tax cuts over 10 years. But what's been put on the table is actually a $10 billion cut.”

Peterson admitted the Senate's approach to accounting was “within the rules. But (the House) has made a judgment on many levels that this is something that has to stop. This hasn't only happened with the farm bill, but with others. That's part of the problem.”

Several legislators spoke on having allowed the new farm bill debate to spread outside the agriculture committees. “If we'd had the funds from the outset within the jurisdiction of our committee, we'd have been done a long time ago,” said Virginia Sen. Bob Goodlatte, ranking member of the Senate Agriculture Committee. “There would've been tough decisions made and disagreements between the House and Senate. But it would've been within the dimensions of the agriculture committees and we'd have decided those. We'd have compromised and done it.

“But because another dimension has been added it's increased the complexity many fold. I regret that but now we're having to deal with it.”

This set off a long discussion on how taxes are scored and a skirmish over how tax rules apply to all. Several senators objected to House members complaining about taxes being counted only for one year.

The House “can't claim they don't have a tax bill,” said Arkansas Sen. Blanche Lincoln. “There are revenues in the bill, therefore there are tax components. That's the reason Ways and Means is here. To say this is apples and oranges just isn't accurate.”

Some forty minutes into the conference, Texas Rep. Randy Neugebauer brought farmers back into the conversation. “The commodity programs in the country expired last September. In south Texas, we have corn as high as this table and cotton has been planted.

“This is an important bill to those people. We're asking them to feed and clothe America and yet we're saying ‘We can't get our job done but we expect you to do yours.’

“I was particularly disturbed when discussions moved towards adding more nutrition to the bill and that the subject of direct payments had come up. I thought those discussions should have been done in full conference.

“Some say this isn't a tax bill. Well, it's not an agriculture bill anymore - it's a nutrition bill. Only 12 percent of this bill has anything to do with production agriculture in this country.”

If, as Peterson had suggested, the players weren't available to finalize funding disputes, Neugebauer suggested the wise course would be to gather them all “in the room at the same time. Offers bounce back and forth. But then we have to go get permission or something from someone else because it's in their jurisdiction. We have got to get all the players in the room at once and work out the money issues.”

Calling the new legislation a “nutrition bill with some agriculture subtitles” Neugebauer said “we may be asking too much of this bill (by making) it lift too much policy at once. Putting all that weight on one wagon isn't fair to American agriculture.”

In the same vein, North Carolina Rep. Bob Etheridge asked for absolutes. “I want to know who won't vote for the ag bill without tax provisions in it? What are the provisions put in by the Senate that are (absolutes)? It seems to me that's the basic question … We need to know that so we can deal. I want this bill done.

“We're into the (growing) season. Farmers need to know. For those of us in ag country, the bankers also need to know.”

Like Goodlatte before him, Peterson said “if it was in the power of the House Agriculture Committee, (a new farm bill) would've been done a long time ago. Had we known then what we know now, I believe we wouldn't have gone down this path.

“We would've written a bill witin our jurisdiction. (Not doing so) was a mistake.”

Harkin then warned a bill must be done by April 25. It isn't just the Bush administration that is balking at further delays. “(Idaho) Sen. (Larry) Craig has been all over the airwaves saying he won't allow another” extension.

Peterson: “And he will hold it up in the Senate?”

Harkin: “That's right.”

Peterson: “One member can do that?”

Harkin: “One member can do just about anything.”

At this, perhaps recalling Craig's recent “wide stance” problem, there was laughter from the crowd. Harkin backtracked. “To stop anything,” Harkin emphasized. “Not to do anything, but to stop something.”

Peterson: “That's one more reason why some of us (in the House) think things need to change, okay? We have a bunch of folks at rope's end.”

Harkin told conferees he'd soon begin taking votes. “If there isn't a settlement by Tuesday (April 22) that's agreeable (to all parties involved), I'll exercise my authority and begin having votes. I will put to a vote certain items and packages. They may win, or not.

“I haven't done that thus far because I wanted negotiations to continue. But I want to be clear: if this isn't done by Tuesday - and I mean an agreement (in place) by Tuesday - I'll start asking for votes on proposals.”

The conference is expected to meet Tuesday morning.

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