House and Senate farm bill negotiators are coming closer to an overall deal, agreeing today on certain tax breaks favored by the Senate in return for more money for domestic and international food aid, a priority for the House. Both sides have agreed to cut a tax credit for blended ethanol from 51 cents to 45 cents, a penny more than expected, while allowing for controversial racehorse depreciation and timber tax breaks, valued at $361 million. The latter would be paired with an equal increase for food aid programs. That brings the total boost in nutrition programs to $10.361 billion over 10 years, more than double any other spending increase in the bill.
Senate Agriculture Chairman Tom Harkin, Senate Budget Chairman Kent Conrad and House Agriculture Chairman Collin Peterson announced the deal this morning. Peterson said House Speaker Pelosi and House Ways and Means Chairman Charles Rangel insisted on the nutrition provision after Senate conferees would not budge on the racehorse provision, which is important to Senate Minority Leader McConnell, and the timber measures, which have been promoted by Sen. Blanche Lincoln, D-Ark. Negotiators will have to cut farm programs by $361 million to pay for the nutrition programs, but Conrad said the increase in the nutrition budget “is really required” given the rising food prices around the world and the increasing number of people coming to food banks in the United States. Peterson said they have not yet determined how to divide the money among federal programs, but noted that Rangel had said he wants the money directed to those who do not qualifying for other programs.
An aide to Senate Finance Chairman Charles Grassley, R-Iowa, said that the ethanol tariff would be extended at the current rate. Peterson said the bio-diesel tax credit would not be in the farm bill, but there are plans to include it in Senate Finance Chairman Max Baucus’ tax extenders bill. Peterson also praised Rangel and Pelosi for agreeing Thursday to accept customs user fees as an offset for the $10 billion increase in farm bill spending above the $600 billion, five-year baseline. “It was a miraculous outcome,” Peterson said. “Charlie Rangel really came through making — with the backing of the speaker — a tough decision he didn’t want to make.” A Baucus aide explained that the $10 billion increase in revenue would come from extending customs user fees beyond their current expiration date in December 2014, not through an increase in the amount of those fees.
Negotiations were expected to continue today, and Harkin said he hopes to present a bill to a formal conference late Monday. Conrad said the negotiators had agreed today on how to cut $730 million from the bill, but still have “hundreds of millions of dollars” more to cut. Conrad said that the $4 billion disaster aid program he and Baucus championed will take a hit. “The discussions are all along the lines of greater reform,” Conrad said.
This article appears in the April 26, 2008 edition of National Journal Daily PM Update.