Farm bill conferees exchanged offers and counteroffers late Thursday as President Bush considered whether to sign a one-week extension of the 2002 farm bill Congress sent him Thursday.
Bush is under pressure to sign the one-week extension even though he has said that if Congress did not finish the new bill by today, he would favor a one-year or longer extension.
Because of both chambers’ limited schedule today, if Bush does not sign the extension, antiquated permanent laws from the 1930s and 1940s will go into effect.
Some of the permanent laws would not go into effect immediately because sections of the 2002 bill expire on planting dates, but dairy provisions might cause an increase in milk prices. Administration officials have said that a comment period would delay the impact of permanent law.
A senior Senate Democratic aide said that even if permanent laws do not go into effect immediately, farmers are likely to hold Bush responsible.
One farm leader said that if wheat farmers were to find that their bankers will refuse to give them loans because the farm program is not clear, they will blame the Bush administration for being unwilling to sign a one-week extension. Bush’s advisers should recommend a veto only “if they want to put a ‘kick me’ sign on their backs,” the farm leader said.
Senate Agriculture Chairman Tom Harkin canceled a farm bill conference Thursday, but other meetings took place.
Senate Budget Chairman Kent Conrad and House Agriculture Chairman Collin Peterson said the Senate Finance and the House Ways and Means committees agreed to use increased government income from stricter stock basis reporting as the major offset for about $6 billion of the $10 billion increase in farm bill spending over 10 years.
Conrad maintained the rest of the $10 billion should come from customs user fees, which CBO and OMB classify as negative outlays rather than tax increases. Conrad and Senate Finance Chairman Max Baucus said conferees have presented House Speaker Pelosi with a proposal to handle the tax package attached to the farm bill by increasing tax breaks only by the amounts of tax reforms through other provisions in the same package.
Conrad said provisions that would limit net operating losses and ethanol subsidies would be used to pay for conservation and alternative energy tax breaks.
A Baucus aide said that other farm tax reforms would be used to come up with a package of $2.4 billion that would be used to fund an equal amount of tax breaks.
To sweeten the farm bill for the House, the Senate offered to increase spending on nutrition by $500 million to bring the total nutrition increase to $10 billion.
The Senate also offered to decrease disaster assistance from $4 billion to $3.8 billion and to decrease direct payments to farmers by $250 million.
But the House rejected the Senate offer on the financing and the tax package. Peterson and House Agriculture ranking member Bob Goodlatte said House conferees became worried that some of the tax breaks in the Senate package were only short term. Peterson said the Senate package would create a new group of tax extender issues.
A Baucus aide said that Baucus told conferees that tax bills often include short-term measures and that he is planning a major tax reform bill for 2009 and 2010.
The House offered, with Pelosi’s approval, to include $1 billion in tax breaks and to raise money through farm bill cuts and tax compliance measures to increase the total spending by $9.5 billion.
Negotiators said more meetings and a possible formal conference are planned for today, but House Ways and Means Chairman Charles Rangel said he does not plan to participate in meetings today. “We are closer, but there are so many different directions for how we are closer,” Rangel said.
This article appears in the April 19, 2008, edition of National Journal Daily.
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