- The Washington Times - Tuesday, July 31, 2007

With the prices of many subsidized row crops at or near record levels and with farm incomes very strong and likely to remain so for some time, this was the perfect moment for Congress to begin reforming the trade-distorting, welfare-laden farm-subsidy programs. Regrettably, the House balked last week. Real reform will now be up to the Senate, where Republican Richard Lugar of Indiana and Democrat Tom Harkin of Iowa could lead a bipartisan reform agenda. The Senate will be considering its own five-year farm-overhaul legislation after the August recess. However, if the Senate follows the House’s path to failure, President Bush will need to exercise his veto threat and force Congress to reconsider. Otherwise, an opportunity for real reform will have been lost for at least another five years, and the prospects for rescuing the multilateral Doha trade negotiations will suffer another major blow.

The good news is that the five-year, $286 billion House measure, which was passed last Friday by a 231-191 vote, did not achieve a veto-proof two-thirds majority. The bad news is that scores of Republicans decided to vote against this previously bipartisan measure only after Democrats added a provision that would have increased taxes by $7.5 billion over 10 years for foreign multinational corporations operating in the United States. If the tax increase were not part of the bill, a veto-proof margin for a very bad bill almost certainly would have been achieved. In other words, it is fair to say that the House remains a bipartisan obstacle to real farm reform. Indeed, House GOP Minority Whip Roy Blunt declared that the farm bill could “easily have been a huge bipartisan victory” without the tax provision.

A much-preferred substitute bill, offered by Wisconsin Democratic Rep. Ron Kind and Arizona Republican Jeff Flake, was resoundingly defeated 309-117. A similar substitute bill that Mr. Kind offered in 2001 garnered 200 votes, including the vote of Democratic Rep. Nancy Pelosi, who is now speaker. In an effort to protect the new Democratic members who were elected from rural districts last year, Mrs. Pelosi opposed the Kind reform bill this year and embraced the business-as-usual bill produced by the Agriculture Committee. Worse, more than 75 percent of Republicans opposed the Kind-Flake measure as well.

Farmers are notorious for gaming the present system of price-based counter-cyclical payments, which the Kind-Flake bill would have reformed. The substitute bill also would have barred farmers with annual adjusted gross incomes of more than $250,000 from receiving subsidies. The Democratic version, which most House Republicans supported absent the tax measure, allows subsidies for farmers earning up to $1 million per year. To its credit, the White House wanted the limit to be $200,000. The Kind-Flake bill also would have limited direct payments, which are made to qualified farmers (and their wives) irrespective of crop prices, to $40,000 per person. Direct payments should have been eliminated altogether, but the measure passed by the House actually raises the individual limit for direct payments by 50 percent — to $60,000.

The Senate will have its hands full. Let’s hope it has a backbone.



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