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Spreading the joy on farm program payment means testing

If you report more than $200,000 on the adjusted gross income line of your tax return, the Bush administration doesn’t think you should receive a commodity program payment.

If you do, that puts you in the wealthiest 2 percent of taxpayers, and you’re too affluent to be participating in commodity programs, said Agriculture Secretary Ed Schafer, speaking at the National Cotton Council’s annual meeting.

Schafer’s comments started me thinking. President Bush and Vice President Cheney receive more than $200,000 a year in salary and benefits. Both probably continue to receive earnings from oil and gas company investments.

Schafer was the president of a company with $50 million in annual sales before he became governor of North Dakota. Should he be required to return his USDA salary if his AGI is more than $200,000?

I have to confess Sen. Blanche Lincoln, D-Ark., started me on this train of thought. “When you talk about means testing, you should talk about every other area of payments,” she said at a press briefing. “Shouldn’t you talk about means testing tax benefits for hedge fund managers who are making a billion dollars a year?”

Both the House and Senate farm bills contain reforms, with the Senate bill reducing the adjusted gross income limit from the current $2.5 million to $750,000 or by 70 percent and the House bill to $1 million.

“Going any further would be dangerous because we don’t know the consequences. And we don’t know the consequences because this administration has not been implementing the caps as thoroughly as they should, according to a GAO study.”

Sen. Chuck Grassley, R-Iowa, has said neither the House or the Senate bill would have much effect on “payment abuse.” Lincoln agrees. “I don’t think the evidence is there to tell us it will do a tremendous amount in terms of curbing abuse that couldn’t have already been curbed if this administration was implementing the rules.”

The administration has been harping on payments to residents of Manhattan. “By and large, these folks are over the cap for the 2002 farm bill,” she says. “Either the law is not being implemented, or these people are getting other types of payments.

“Until we start putting the same kind of means testing restrictions on conservation payments, sugar payments, milk payments, the tax benefits corn growers get from ethanol, you’re not going to see much evidence of cleaning up abuse.”

How can you compare farm payments to individual salaries? The payments represent a contract between the government and the farmer that no matter how low prices drop, farmers will continue to produce food, fiber and now fuel. Those contracts frequently involve shared risk.

“We’ve heard some people shouldn’t be participating in payments because their fingernails aren’t as dirty as they should be,” said Lincoln. “When you sign your name on the dotted line for that $1-million-plus operating loan for a cotton or a rice farm, you’re putting yourself at risk.”


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