Bush Calling For Additional Funding For Food Programs

Fri. May 2, 2008


President Bush, who previously vowed to veto a supplemental spending bill that exceeded $108 billion and went beyond war funding to include money for other programs, called Thursday for an extra $770 million in food aid.

Bush's hastily scheduled announcement came just two days after a news conference in which he refused to budge from his insistence that supplemental spending not exceed the amount he had initially proposed, saying "$108 billion is $108 billion."

In a conference call with reporters, OMB Deputy Director Stephen McMillin sought to differentiate Bush's request from new spending demands sought by Democrats, saying the president's proposal is consistent with provisions routinely included in war emergency spending bills.

"If you look back at the [war and national security] supplementals that have been considered ... it's actually quite typical for food aid to be a component of the international security piece of that supplemental request," McMillin said. "Spending this money in this way contributes to stabilizing unstable regimes in the developing world and contributes to our national security."

Democrats have discussed funding such projects as unemployment assistance and education benefits for veterans the bill, which was requested by the administration to fund the wars in Iraq and Afghanistan.

Speaker Pelosi responded positively to Bush's announcement, though she did not specifically endorse his request. "We must take action to address this critical problem and demonstrate to the world the generosity and compassion of the American people," she said.

Bush has been an ardent proponent of ethanol, which is mostly made from corn and which has been implicated in driving up food prices by reducing the use of corn for food.

Council of Economic Advisers Chairman Edward Lazear, who was also on the call with reporters, said growing demand, energy prices and adverse weather account for most of the pressure on global food prices and that ethanol contributes only about 2-3 percent of the increase.

Nevertheless, McMillin and Lazear left little doubt that Bush would at least consider changes to ethanol subsidies, though he is currently undecided.

"As you know, the president is a free trader -- he believes that we should have neither taxes nor subsidies that distort the economy," Lazear said. He noted that changing subsidies causes "transition costs" for businesses, and Bush "will be thinking about those in the near future."

Lazear indicated the high price of gasoline makes ethanol production profitable without the subsidies. "We would be seeing ethanol even in the absence of ethanol subsidies," he said.

And McMillin volunteered that Bush's FY09 budget does not include funding for extending the ethanol tax credit beyond its expiration in 2010 and does not assume revenues after the ethanol tariff expires at the end of this year.

The $770 million in food aid will primarily be targeted at Africa, the officials said. It includes $395 million in emergency food aid, $225 million to the Agency for International Development for disaster assistance, and $150 million for development assistance through USAID.

Since the funding is part of an FY09 request, it will not be available until Oct.1.

But the officials said there is a significant ramp-up period for delivering food aid and that passing the legislation well before the beginning of the fiscal year would be helpful.

by Keith Koffler