Farm bill extension passed
By Larry Dreiling
An extension to the 2008 farm bill has passed both houses of Congress as part of the government's effort to avoid a Jan. 1 “fiscal cliff” that could have dramatically raised taxes on most Americans, slashed spending and imposed the 1949 permanent farm law that would cause dairy prices to skyrocket.
The House passed the legislation 257 to 167 late Jan. 1 with 85 Republicans joining 172 Democrats in backing the bill. Republicans, though controlling the House, were fractured with 151 Republicans voting against the tax plan, as well as 16 Democrats.
The Senate had voted 89 to 8 in the early morning hours of New Year's Day to pass the tax overhaul plan.
The bill keeps the 2008 farm bill in place until the end of the fiscal year in September.
Senate Agriculture Committee Chairwoman Debbie Stabenow of Michigan said she considers the slimmed-down extension to be "Mitch McConnell's version of a farm bill." She was referring to the Senate Republican leader from Kentucky, who she said forced bargainers to accept the version of the farm bill that appeared in the deal.
McConnell spokesman Michael Brumas responded: "Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime."
Stabenow and House Agriculture Chairman Frank Lucas, R-OK, announced Dec. 30, 2012, that they had agreed on the last-minute move. Expiration of those dairy programs could have meant higher milk prices at the grocery store within just a few weeks.
The nonpartisan Congressional Budget Office estimated that extending the entire bill through September, including disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.
House Speaker John Boehner of Ohio has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version of a farm bill in June. The bill, generally passed every five years, includes food stamps, farm payments and other help for rural areas.
One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill's cost over five years. Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.
But the prospect of higher milk prices prompted some action. Secretary of Agriculture Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.
Extending the entire agriculture bill would have included an overhaul of dairy programs that was included in both the Senate and House committee bills. The new dairy programs include a voluntary insurance program for dairy producers, and those who choose that new program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices--an idea that hasn't gone over well with Boehner.
In July, he called the current dairy program "Soviet-style" and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.
Criticism of the extension from agricultural groups was swift, not only over the way the dairy program was treated, but also because more than two-dozen other programs funded by the farm bill have been left in the lurch until a new farm bill is adopted.
Leading off with reaction was the National Milk Producers Federation President and CEO Jerry Kozak, who called the Senate's vote "a devastating blow to the nation's dairy farmers. After months of inaction, the plan that passed overnight as part of the fiscal cliff package amounts to shoving farmers over the dairy cliff without providing any safety net below.
"Meanwhile, the House is now considering a similar proposal that extends the farm bill nine months, but also without the new dairy safety net program that would provide better protection for the nation's milk producers.
"Dairy farmers across the country have united behind the Dairy Security Act provisions in the original farm bills that have already been approved by the full Senate and by the House Agriculture Committee.
"These stopgap efforts don't even qualify as kicking the can down the road. It's little more than a New Year's Day, hair-of-the-dog stab at temporarily putting off decisions that should have been made in 2012 about how to move farm policy forward, not offer more of the same."
Roger Johnson, president of the National Farmers Union, said the legislation "continues unjustified direct payments" for 2013 while failing to provide disaster aid or support for dairy farmers.
"Farmers, ranchers, rural communities and all Americans deserve better and would have been better served with a new five-year farm bill," Johnson said in a news release shortly after the bill passed the House. "It is truly a shame that the bipartisan work of both the Senate and House Agriculture Committees has been summarily and entirely discarded. Not only was that work far better than what has passed, it also provided meaningful deficit reduction."
The taxation fiscal cliff legislation raises revenue by $620 billion over the next decade by:
--Raising the tax rates for individuals earning more than $400,000 a year and couples earning more than $450,000 to 39.6 percent.
--Setting the estate tax at a $5 million exemption for individuals, or $10 million for couples with a rate at 40 percent. The $5 million exemption will also be indexed for inflation. While some farms groups had advocated eliminating the tax altogether, the deal still avoids reverting to a $1 million exemption under the fiscal cliff.
--Permanently placing the tax on capital gains at 20 percent for those earners with income above the $400,000 threshold for individuals or $450,000 for couples.
--Permanently adjusting the Alternative Minimum Tax to avoid raising taxes on middle-class earners.
The 2 percent payroll tax break is allowed to expire, thus paychecks will be slightly smaller for virtually every wage earner in the country.
Lawmakers also again delayed $1.6 trillion in sequestration cuts from going into effect for another two months to allow talks to continue.
The deal also eliminates a congressional pay raise. This was designed as a poison pill to make lawmakers voting against the plan seen as voting to raise taxes on the working class while also voting to increase their own pay.
Mary Clare Jalonick of The Associated Press contributed to this report.
Larry Dreiling can be reached by phone at 785-628-1117, or by email at email@example.com.