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USDA's Conner defends farm bill proposal

I read with disappointment your May 3 editorial entitled “Voodoo economics in farm bill proposal?” It is disappointing that no attempt was made to contact USDA or to present the facts of the farm bill situation prior to publishing the editorial.

First, your editorial criticizes USDA's claim that the administration's farm bill delivers $5 billion over baseline. Then, your publication congratulates the Congress for creating farm bill reserve funds, which by Congress' own admission have a zero balance and little chance of finding offsets to fund them. Let's compare the two situations objectively and then you and your readers can decide which is real and which is “smoke and mirrors accounting” as your editorial suggests.

The USDA fiscal year 2008 budget summary clearly states: “The budget also provides an additional $500 million per year beginning in 2008 to support proposed initiatives in the new farm bill across various titles.” Five-hundred million per year multiplied by the 10-year budget cycle equals $5 billion over baseline. This new, additional funding is fully accounted for within the president's budget which achieves a balanced budget within five years. That is fact.

In contrast, the House and Senate budget resolutions include reserve funds for the farm bill of up to $20 billion and up to $15 billion respectively. Congress has essentially set up a checking account with a zero balance, hoping later to find funding somewhere outside of agriculture to make a deposit in the account. Members of Congress have themselves expressed less than optimistic views about whether that funding will ever materialize.

The administration's budget has a farm bill checking account with a $5 billion balance, while the congressional budget has a farm bill checking account with a zero dollar balance and slim hope for a future deposit. Farmers understand checking accounts, they understand farm finance, and they understand the adage a bird in the hand is better than two in the bush.

The fiscal year 2002 congressional budget resolution had a reserve fund for the development of the 2002 farm bill. The difference? The 2002 budget resolution actually reserved additional funds for the agriculture committees, while the 2008 budget resolution contains zero additional funds.

Agriculture is not alone in facing stiff competition for funding to make congressional budget reserve funds a reality. This year nearly 50 reserve funds have been created by House and Senate budget resolutions — with no actual dollars set aside to fulfill any of them. Now we have 50 individual checking accounts with not a single dime between them. Try to write a check on any one of the 50 accounts, and the check will bounce sky-high searching for funds.

Thus, agriculture will be competing with a whole host of other very important needs — veterans' health care, middle income tax relief, Medicare benefits, and education. With so many reserve funds in competition and with the goal of balancing the budget within five years, no one should assume that real dollars will be found to fill any of these reserve funds.

Conversely, the administration increases funding for agriculture by $5 billion over our baseline — and we account for every dollar. Anyone who wants to know how we propose to accomplish the additional spending can look to the back of our farm bill proposal book and see it clearly laid out in black and white. This is hardly “smoke and mirrors” or “voodoo economics” as your editorial suggests.

Finally, your editorial applauds Congress for providing a “means of recapturing some of the $60 billion agriculture ‘lost’ when the CBO recalculated its baseline.” This is interesting logic. Is the baseline lower because loan rates were decreased? No. Is it lower because direct payments were decreased to farmers? No. Then, it must be that Congress cut target prices? Also not true.

The difference between the CBO score of the 2002 farm bill in 2002 and the CBO score of the exact same legislation now is agricultural commodity prices have increased. In 2002, CBO projected that farm commodity prices would be low, leading to large farm program payments. In 2007, largely due to renewable fuels and increased demand, CBO is projecting higher prices, often above levels that trigger farm payments.

Anyone who longs for the days of the 2002 baseline is essentially hoping for lower farm prices and less money in farmers' pockets. Farmers throughout the country claim they want their income from the market and not the federal government. Hoping for the 2002 baseline is to hope for farm prices to decline. If this happened, the baseline would grow, but the loan rate for rice would still be $6.50, the target price for cotton would still be 72.4 cents, and not a single dime would be available for other farm bill priorities — nothing for specialty crops, nothing for renewable energy, nothing for rural development, nothing for conservation programs; not a single new provision in the new bill.

Thus, the only way to add additional money to the farm bill is for it to be added to the budget. The president made a commitment to American agriculture by proposing $5 billion over baseline. The Congress, however, chose to create a shell account with a zero balance to improve the current farm bill. In my mind, the difference is crystal clear. It is not difficult to determine which approach currently represents real funding to enhance the farm bill. Farmers are savvy folks; they see it too. It is unfortunate that your editorial did not.
Charles F. Conner
Deputy Secretary
U.S. Department of Agriculture

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