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April 04, 2009

Obama’s U.S. farm subsidy cuts meet stiff resistance

by David M. Herszenhorn

Among the audacious proposals in President Obama’s budget was a plan to save more than $9.7 billion over a decade by putting strict limits on farm subsidies that are disbursed regardless of market conditions or even whether the land is actively farmed.

But Mr. Obama’s grand ambitions have run into political reality.

The budget outlines approved by the House and Senate recently night do not include limits on farm subsidies at all, and even champions of change say that if the president’s plan can be revived, it will have to be scaled back so significantly that the savings could amount to just several hundred million dollars.

Some of the fiercest critics of farm subsidy programs say the new administration overreached in offering a proposal that could have cut off payment not just to large corporate agribusinesses, but also to medium-sized family farms that might not even be profitable, setting off a huge alarm in the powerful farm lobby.

The White House plan would have prohibited so-called direct payments to farms whose annual gross receipts exceeded $500,000 — a large sum on the surface, but one that did not take account of whether those receipts yielded any real profits.

Within days, the National Farmers Union, which represents roughly 250,000 farm families, forcefully denounced the president’s plan and urged Congress to oppose it. The group’s board also raised the issue at a meeting with officials at the White House

While Mr. Obama’s Democratic allies on Capitol Hill adopted much of his budget template, the farm subsidy limits never got off the ground.

In the House, farm-state lawmakers told the Budget Committee chairman, Representative John M. Spratt Jr., Democrat of South Carolina, that they would not support any budget plan that tinkered with hard-fought agreements they struck in passing last year’s omnibus farm bill.

And in the Senate, Kent Conrad, Democrat of North Dakota, chairman of the Budget Committee and an ardent defender of agricultural interests in his state, quickly discarded the president’s proposal.

Even some of the toughest critics of farm subsidies would not endorse the president’s approach.

Representative Ron Kind, a Wisconsin Democrat and a major advocate of cutting subsidies, has been working with the White House chief of staff, Rahm Emanuel, to revamp Mr. Obama’s plans. “There’s more that we can do to tighten up these programs,” said Mr. Kind, who is urging an eligibility cap of $250,000 in income.

Other critics of farm subsidies said that the initial White House proposal, while bold, missed the mark.

“It cast a cloud over the whole gesture to have something like that,” said Ken Cook, the president of Environmental Working Group, a nonprofit that has energetically lobbied to reduce farm subsidies.

Mr. Cook suggested that the administration had done a more careful job in laying the groundwork for initiatives on climate change and health care. “In this case,” he said, “it was thrown out there and those of us on the reform side of the agenda really found ourselves in an awkward position.”

Amendments to adopt some of Mr. Obama’s limits were defeated by the Budget Committees in both chambers.

Congressional Democrats and the Obama administration said that the budget resolutions adopted Thursday protected Mr. Obama’s top priorities, on health care, energy and education, while also reducing the deficit.

But administration officials also conceded that the president’s farm proposal was far more ambitious than lawmakers were willing to endorse. The officials said they had not given up on the idea of ending government subsidies for the wealthiest farmers just as they plan to end the Bush tax cuts for the wealthiest Americans.

“We look forward to continuing the conversation with the leadership and the relevant committees and the stakeholders in finding the best way to support rural America and get some savings and efficiencies out of agricultural programs,” said Kenneth S. Baer, a spokesman for the Office of Management and Budget.

In the Senate, Mr. Conrad did help with approval of a budget provision that would save $350 million over five years by making modest cuts to crop insurance programs, but it was far short of the $2 billion in cuts to insurance programs that Mr. Obama had proposed.

As part of his budget plan, Mr. Conrad also expressed a willingness to consider “targeted savings in agriculture” down the line.

As usual, party lines in the debate over farm subsidies were blurred in some cases by geographic interests.

In the House, Representative Paul D. Ryan, Republican of Wisconsin, joined Representative Earl Blumenauer, Democrat of Oregon, in offering an amendment to cap eligibility for farm subsidies at $250,000 in family income. Senator Charles E. Grassley, Republican of Iowa, offered a similar amendment in the Senate. Both were defeated.

In last year’s farm bill, the income eligibility cap was reduced to $750,000 in farm income or $500,000 in non-farm income, from $2.5 million.

But even if the Obama administration succeeds in getting a $250,000 cap enacted, it is unclear that it will save much money.

In 2007, when the Bush administration proposed a $200,000 income cap, a study by the Agriculture Department found that fewer than 2 percent, roughly 38,000 of more than 2.6 million farm proprietors or landlords of farm properties, reported gross income of more than $200,000 and received subsidy payments.

One of those who studied the plan was Keith Collins, then the department’s chief economist and now an industry consultant. “There’s just not going to be a lot of savings on a $250,000 hard cap,” Mr. Collins said.

New York Times

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