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President Bush may veto Farm Bill; first veto since 1956; “excessive subsidies” in $300 billion package; leading subsidy recipients published

May 9, 2008

In Washington, fears are growing the US President George W. Bush will veto the Farm Bill over “excessive subsidies”. The $300 billion, five-year billion bill emerged from a House-Senate conference this week after months of wrangling over subsidies, incentives and tax credits.

The Farm Bill has not been vetoed since 1956, and originally observers did not think that an election-year veto was possible, since the top ten states in farm subsidies control half the electoral votes for the presidential campaign. Agriculture Secretary Ed Schafer restated the President’s threat to veto the bill, and White House budget director said that the bill “doesn’t have hardly enough reform.”

A controversial feature has been the cap on farmer income in order to receive subsidy payments. The new bill forbids subsidies to farmers with more than $750,000 in income, or $1.5 million for a married couple.

EWG has published a list of the leading subsidy recipients, who received as much as $900,000 in subsidy payments in 2006.

In Iowa, Senator John McCain said that, as drafted. he would veto the Farm Bill because of excessive subsidies, which he called unnecessary. McCain added, “I do not believe we should have tariffs against imported products, but I want to promise you as president of the United States of America I will recognize one fundamental fact, and that is the farmer in the state of Iowa and the United States of America is the most productive, the most efficient and the best, and I will open every market in the world to your products and I will sell them.”

The Farm Bill bill contains a reduced 45 cents per gallon ethanol subsidy and a $1.01 per gallon subsidy for cellulosic ethanol. Tax credits for biodiesel were removed from the bill, and the tariff on Brazilian ethanol is extended through 2010.

The bill contains $900 million for biofuels development, $900 million for nutrition programs aimed to offset higher food prices, while land stewardship programs would received an additional $4 billion, and specialized crops $1.35 billion.

Negotiations over the stalled Farm Bill had put existing ethanol incentives in peril last month, according to House Agriculture Committee chairman Collin Peterson. The chairman said that, in order to offset $9.5 billion in increased spending, Senate negotiators had proposed a $0.05 per gallon cut in the ethanol blender tax credit and reductions in other incentives for a total of $1.226 billion in ethanol support cuts.

Earlier this month, the US House of Representatives had voted to extend the existing Farm Bill until April 25 to give lawmakers more time to resolve differences between the House and Senate versions of the new Farm Bill, which includes tax breaks and incentives for biofuels. President Bush has stated that he will not sign legislation extending the current Farm Bill for another year.

The Farm Bill was passed by the Senate in the fall, while the House version passed in July. Senate Agriculture Committee chairman Tom Harkin said the bill would earmark $1.3 billion for biofuels over the next five years.

The Senate passed an overall funding measure on October 5, but the Agriculture Committee under committee chairman Tom Harkin had been working on specific program allocations until November, which include ethanol tax credits and next-generation biofuel investments. The Senate finance committee previously proposed cutting the ethanol tax credit to 46 cents per gallon.

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    Written by Jim Lane · Filed Under Policy, Producer News 

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