It's Ifs, Ands, and Buts for the Farm Bill

By Steve Kopperud, Policy Directions, Inc.


The debate over when we’ll see a 2007 farm bill has shifted to if we’ll see a 2007 farm bill, and should Congress decide to throw up its collective hands and opt for an extension of the 2002 omnibus package, what that means for all of the new and evolving legislative issues that could be lost in the shuffle, particularly the focus on alternative energy.

This talk makes the players in the energy, immigration, environmental, and other issue camps increasingly nervous the 2007 farm bill will not be the legislative train that carries their parochial interests into law.

The Senate farm bill drama pivots on money and authority, only this time it’s not the naïve legislative groping that was the hallmark of the politically expedient House farm bill, but rather a battle of Senate war horses – one who controls the money and the other who controls the programs.

Senator Tom Harkin (D-IA), chair of the Senate Agriculture Committee, has his staff cobbling together a draft bill reflecting not only Harkin’s priorities on conservation, nutrition, and energy, but also the opinions of the grass roots and the call for “reform” of the underlying farm payment programs. This reform is not only needed in 2007 in the context of global trade obligations, but also, if successful, will yield the federal dollars Harkin needs to pay for his new programs.

Like the House, the Senate operates on a “pay-go” system, meaning new programs are paid for by either eliminating old programs, or by cutting back or rewriting existing programs to save money and offset the new dollars to be spent. The Harkin wish list – quintupling the Conservation Security Program, expanding food stamp eligibility, and funding loan guarantees and research programs for farm-based energy programs – carries a hefty prospective price tag. And he’s locking horns with his own party, a confrontation led by Senator Kent Conrad (D-ND), who wants to create a $5 billion permanent farm disaster program, something Harkin supports in concept, but not at the funding levels Conrad envisions.

Both senior Democrats went to Senate Finance Committee Chair Max Baucus (D-MT), a member of Harkin’s ag committee, asking him to come up with about $10 billion in new revenue. This should have been a slam dunk since seven other members of the ag committee also sit on the finance panel. But Baucus, firmly in the Conrad camp on permanent disaster funding, told Harkin what no committee chair ever wants to hear: the Finance Committee will put together the revenue offsets, but Harkin will have to spend the money the way Baucus wants it spent. Suffice to say, Harkin ain’t happy because last time he looked, he, not Baucus, chairs the ag committee.

When Baucus unveiled his money plan – $8 billion to $10 billion in total, with tax credits as an option to cash conservation program payments, alternative energy tax credits for wind, solar, biodiesel, and ethanol development, rural development bonds, and a permanent disaster program “trust fund” – Harkin called it unimpressive. Shortly after a flurry of dueling press releases, a senior Harkin staffer confirmed the scheduled mark-up of Harkin’s farm bill set for mid-September was postponed. His explanation was simple: “You can’t mark up a farm bill without knowing how you’re going to pay for it.”

The alternative energy crowd – from ethanol to biodiesel to solar to wind – is holding its breath and saying quiet prayers the jousting senators will come to an agreement relatively quickly. Are all of these folks salivating over guaranteed loans and development grants? Partly, but the big reason the energy crowd wants a farm bill this year is as a legislative vehicle to which other priorities can be attached and protected as Congress moves to get the omnibus farm programs in place.

A hint of what the energy gang is after can be found in Baucus’ public statements defending his Finance Committee offset package. Baucus’ committee early this year hammered together an energy tax bill to accompany this session’s Senate-approved omnibus energy package. The energy tax bill not only extends most existing ethanol and biodiesel tax incentives, it offers clarifications to previous actions and offers new tax goodies besides. Baucus is frustrated his own Senate Democrats can’t agree on how to conference their energy authorizing and tax packages with the House, so he’s said he’ll cherry pick his energy tax bill and tack those provisions onto the farm bill.

Further complicating the energy component of future conference committee action is the House farm bill’s offset actions. While the spotlight was on House Speaker Nancy Pelosi’s (D- CA) food stamp eligibility expansion and her willingness to tax the U.S. subsidiaries of foreign companies to get the money, little attention was paid to the hit energy companies may take on offshore drilling and exploration tax breaks, incentives lost – along with future exploration – as a means of paying for farm bill initiatives.

Getting the Finance Committee so deeply involved in the farm bill process also means finance panel members will likely want to participate in the conference committee, if only to make sure their boss’ priorities are met. There’s also the possibility Senator Jeff Bingaman (D-NM), chair of the Senate Energy Committee, may claim jurisdiction as well and ask to name conferees. If successful, this signals the boys and girls who sit on the equivalent committees in the House that the invitation-only conference committee just turned into the legislative equivalent of a fraternity keg party.

It’s no secret farm bills defy the rules of legislative evolution learned in high school civics classes. Sure, we may go through the drafting, committee, and floor debate in the respective chambers, and the conference committee technically should be reconciling the common interests of both chambers. But in a farm bill, the original bills coming out of the House and Senate are dress rehearsal, and conferees wind up rewriting the underlying bill almost entirely to ensure they hit budget, appease leadership and constituents, meet new political challenges, and overcome the “unforeseen consequences” of their bills as passed.

One hope for the energy crowd is that conference on the House and Senate energy bills and their tax packages begins soon. But even if this is so, the bills are so substantially different – the Senate ups the Renewable Fuels Standard, while the House ignores farm-based fuels – issues like big oil tax breaks, coal, automobile mileage standards, and the like make an efficient reconciliation unlikely.

This stalemate means markup on the farm bill in the Senate won’t start until late September or early October, pushing committee action and floor action back until sometime in October or November. Congress wants to be out of town by Thanksgiving – however, many contend we’ll be singing Christmas carols as it recesses – so it’s unlikely there is time to get the dollar debate finalized, get the Senate bill marked up, through floor action, and through conference and to the president’s desk before that deadline.

And, let us not forget, President George W. Bush, who’s become the watchdog of the Treasury based on the veto threats over spending bills he’s wracked up in recent months, may threaten a veto.


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