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Washington Insight: Major Farm Bill Funding Battles Ahead; Rocky Road to End Zone

Note: This is what I filed earlier for my Inside Washington Today column. The importance of the topic to the farm bill debate ahead is the reason why I'm offering this to all agweb viewers.

An inability to date to get House budget and Democratic leadership to free up billions in additional farm bill funding which does not have to be offset led House Ag Chairman Collin Peterson (D-Minn.) on Thursday to pull back from offering a chairman's mark.

Instead, Peterson will issue draft farm bill language title by title (total of ten) via subcommittee action, beginning with the energy, conservation and research titles, with markup scheduled for next Tuesday, May 22, by the Conservation, Credit, Energy and Research Subcommittee. The livestock title would be marked up in subcommittee next Thursday, May 24, with other tiles scheduled for markup after the Memorial Day recess and the full Ag Committee markup slated for the week before the July Fourth recess.

Senate Ag Committee Chairman Tom Harkin (D-Iowa) said he would release his chairman's mark in June, with the full Ag Committee then taking action title by title, rather than going the subcommittee route.

Peterson's farm bill funding strategy takes a two-fold approach. Importantly, Peterson said some sections of each title would be funded by money already in the Congressional Budget Office (CBO) farm bill baseline, with other sections from the $20 billion reserve fund for agriculture in the FY08 budget resolution.

However, budget offsets and/or revenue enhancers must still be found for those funds.

Comments: There are 23 so-called reserve funds via the FY08 budget resolution which represent a $190 billion spending wish list. Agriculture is just one in a long line of groups and lawmakers wanting more funding. It won't come easy, if at all.

In another important development, Peterson took a direct assault on Senate Ag Committee Chairman Tom Harkin's favorite conservation program, and one Harkin pushed successfully in the 2002 Farm Bill debate – the Conservation Security Program (CSP), which Peterson said would be cut by $1.1 billion and not allow new signups for that program until 2012.

Peterson acknowledged that Harkin is "not happy" about those cuts, but Peterson would instead divert the funds to two other conservation programs. Some of the prior CSP funding, Peterson said, may be used to help add 1.5 million acres — about $1.6 billion worth — to the Wetlands Reserve Program, which pays farmers to retire wetlands acres for hunting and preservation – topics of groups that Peterson supports. Peterson said "these other proven programs are higher priority than CSP."

Peterson's explanation: "CSP came out of the Senate, without any debate in this committee. "These other proven programs are higher priority than CSP. We think some significant changes are needed to CSP. It's too complicated and I'm not sure its priorities are set up right. So we're focusing on making changes to it to make it more effective going forward."

"A lot of people on the Senate Agriculture Committee agree with us," Peterson said. "We're funding CSP but not at the level Sen. Harkin wants." Peterson said he was not cutting the program, but "taking a break from sign-up."

Sen. Harkin reacts. “The House bill perpetuates the damage to conservation and the environment caused by the previous two Congresses and the Bush administration,” Harkin said in a statement. “Farmers need more conservation funding on agricultural land, yet the House bill doesn’t provide it.”

Conservation and farm groups are asking Congress to find billions of dollars in additional funds to enable new incentives in the area of conservation, as well as renewable energy, local foods and new markets.

Peterson and Harkin are heading toward another farm bill clash over Peterson's push for an ever-ready agriculture disaster program. Harkin prefers boosting funding for and some changes in the crop insurance program.

Regarding farm bill funding matters, Democratic leadership has reportedly pledged to offer $4 billion to $5 billion in additional farm bill funding for crop-based renewable fuel initiatives, Peterson said. Peterson and ranking Republican Bob Goodlatte of Virginia will spend the next few weeks negotiating with House leaders to find additional funding.

But for now, funding boosts are only promises, Goodlatte said. “We don’t know that what we’ve put into this at the end of the day will be a reality,” he said. “It’s a pretty haphazard way to write a farm bill.”

Negative reaction to the farm bill funding woes was swift. Rep. Jerry Moran (R-Kan.), ranking member of a key House Subcommittee said, “No matter how bipartisan the Ag committee member are, we can not craft a satisfactory 2007 farm bill. Though the Democrats try to mask this reality with a $20 billion reserve fund, those funds exist only on paper. Absent additional dollars the Committee can not fulfill its responsibilities to our nation's farmers and ranchers.” He added that while Peterson made a significant effort to get additional funds included in the budget for funding the farm bill, “the House leadership and Budget Committee failed to heed his plea.”

Robbing Peter to pay Paul. "I don't think it's a great message out to the conservation world that we're going to play a game of robbing Peter to pay Paul before we even start the process" of writing the bill, said Ferd Hoefner, policy director for the Sustainable Agriculture Coalition.

A Minnesota group's negative reaction. “We are extremely disappointed in Rep. Peterson’s judgment,” said Loni Kemp, Senior Policy Analyst at the Minnesota Project. “It is shortsighted to rob one excellent program to pay for other conservation programs. This nation is confronting a crisis in water quality and wildlife habitat--which farmers can help solve, but only if they get the help they need.”

Facing a farm bill spending allowance considerably smaller than the 2002 farm bill, Minnesota Project said Peterson “decided to cannibalize the popular working lands program known as CSP in order to add more funds to the Environmental Quality Incentives Program and the Farmland Protection Program. He said he is seeking additional funding, but in the meantime proposes to freeze conservation spending and protect commodity subsidy spending.”

“Every five years Congress has an opening to set policies that shape the future of American agriculture. How can the 2007 farm bill lead us forward if it is frozen in last century’s policy? We need visionary leadership to help farmers take care of the land, clean up the water, and provide wildlife habitat--while they farm. Pitting conservation programs against each other for a shrinking piece of the pie does not lead us forward at all,” the Minnesota Project said in a statement.

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Comments: Peterson's raiding of over $1 billion from the CSP clearly illustrates the funding issues involved in trying to cobble together the complexities of the new farm bill. And funding battles are clearly ahead, as I detail below.

The up to $5 billion that Peterson signaled would be freed up by Democratic leadership comes from legislation (HR 6) that the House passed but the Senate has not acted on, and may not consider. House Democrats introduced an energy package on Jan. 12, 2007, that aims to reduce dependence on foreign oil by pumping money into a fund for renewable and alternate energy sources. Democrats promised during the last election campaign to repeal tax incentives for big oil and gas companies and to invest the tax dollars in clean-energy research. HR 6 seeks to recoup royalties lost on more than 1,000 faulty leases issued to oil companies in the Gulf of Mexico between 1998 and 1999.The bill also would repeal the royalty relief programs for deepwater leases in the gulf and elsewhere.

The funding vault. The CBO estimated the provision would increase royalty revenue by $6.2 billion between 2007 and 2016. In all, the Joint Committee on Taxation and the CBO estimate the bill would shift about $14 billion in royalties and tax incentives to an alternative energy account.

White House opposition. Besides problems getting the Senate to go along with some of the HR 6 provisions previously detailed, while the Bush administration released a statement supporting most of the provisions in HR 6. the White House strongly opposes raising taxes on only the oil and gas industries in the manufacturing sector. The administration also opposes forcing certain oil and gas companies to renegotiate the 1998-1999 deepwater royalty relief leases.

The opposition to HR 6 funding issues means that a point of order could and likely would be brought up on both the House and Senate floor should the farm bill tap any such funding. That point of order would likely be sustained, especially in the Senate. And even if it failed, President Bush would likely veto any such development. This is why a presidential veto of a future farm bill is still a live option – despite the reluctance of Bush administration and congressional leaders to talk about such a situation this early in the process.

Knowing he faces battles ahead, Peterson said his panel “are the folks who live with [farming] all the time, every day,” adding that members of his committee were the most knowledgeable people in Congress to work on farm bill proposals. However, Committee ranking member Bob Goodlatte (R., Va.) said members are in "the beginning of a long process" and that he further expects "significant debate" when the bill eventually hits the House floor. But if the farm bill lacks the funding needed to provide a host of "must-have" initiatives dealing with conservation, energy, specialty crops, dairy subsidies, and food and nutrition, a farm bill battle royal will indeed take place on the floor of the House and Senate.

In another funding matter, while some farm-state lawmakers from both political parties note that the CBO cut $60 billion from the farm bill baseline for this year's bill, the reason for billions of dollars of that reduction is because of higher to much higher season-average price forecasts by CBO, which means billions of dollars would not be paid out via some farm programs like counter-cyclical payments, loan deficiency payments and marketing loan gains. However, what those same lawmakers do not point out is that should program crop prices tumble in the years ahead, program spending would accelerate by billions of dollars because those program payments are mandatory under farm bill language. Still, farm-state lawmakers are urging that some of the “savings” of a lower farm bill baseline be added to the current farm bill funding ledger.

My bottom line: While I am not quite there yet, it is becoming increasingly evident that funding and other complexities (the farm bill issues and other issues for a busy Congress) of this farm bill debate could lead to a big push for extending most of the provisions of the 2002 Farm Bill.