Johanns issues presidential veto threat

For the full article, click on the headline above. 

Secretary of Agriculture Mike Johanns told reporters today the administration does not support the farm bill version as it was approved out of the House Agriculture Committee last week. In its current form Johanns said President Bush would veto the bill because it does not go far enough to reform current farm policy. In addition, sources now say extra funding will require raising taxes to pay for increased costs.

He explained that the

House Ways
and Means Committee may raise taxes on businesses that are housed overseas to pay for the extra $4 billion for nutrition.

"We find it unacceptable to raise taxes to fund a farm bill that contains no reform," Johanns stated. "The House bill actually takes a step backward and puts a larger bull's eye on the backs of US farmers when it comes to trade."

Several provisions of the administration's farm bill proposal were included in the House version. Others contained portions of the proposal, such as the idea of offering farmers the choice between current programs or revenue-based countercyclical problems. The House also approved dealing with payment limitations based on adjusted gross income (AGI). However, Johanns said the $1 million limit is too high compared to the administration's proposed $200,000 level.

Johanns' areas of concern:

  • Payment limits: Johanns says the limits don't go far enough. USDA estimates a total of 7,000 farmers will be impacted by the House bill, compared to 38,000 in their proposal. Potential savings is $473 million compared to $1.5 billion.
  • Direct payments: The House version fails to address problems in the system that allowed farmers to collect $3 billion in payments after Hurricane Katrina when in fact no loss was suffered. The administration's proposal helps fix this price phenomenon.
  • Loan rates and market prices: The House proposal raises loan rates on 14 of the 25 eligible crops and increased target market prices on 12 of the 17 eligible crops. "This clearly represents a step backward," Johanns claimed, adding the marketing loan program is the most trade distorting under WTO obligations. USDA proposed rates at 85% of a five-year average, taking out the high and low years, the same proposal the House approved in 2002.
  • Budget gimmicks: Johanns said he is not fooled by Peterson's attempt to hide costs by changing the time of payments so they're not included in the 10-year score.
  • Missing priorities: Several important USDA proposed provisions never made it into the House version. One includes a consolidation of the 11 conservation programs into three. Other items include support for beginning farmers, funding for rural communities and mandatory renewable fuels funding.

Kind amendment

Johanns said of nearly all of the priorities that are missing from the House bill, there are amendments that will be proposed on the floor tomorrow. And yes, one of them is the Kind-Flake updated reform bill announced on Tuesday.

Johanns noted their new proposal moves in the direction of the administration's proposal. The AGI limit is one of them at $250,000, closer than any other to the administration's proposed $200,000 limit.

Read an earlier post today to see what Peterson and industry groups think about the bill.

Food for thought

The last time a president vetoed an omnibus farm bill it was 1956. One reporter on the call questioned whether the House had the votes to override a veto. And if they didn't, they'd likely get an extension of the 2002 Farm Bill.

Is this what Peterson wants? Possibly.

Johanns defended the comments, stating the president's goal is to get a bill signed on his desk yet this year. "Please do not assume we have any preference of an extension of the 2002 Farm Bill. We do not support that approach."

 

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