
Amidst rising prices and record profits, Congress is set to pass a new round of subsidies and special protections for some of the largest corporations and richest people in the country worth close to $300 billion. But it is not a new energy bill loaded with tax breaks for oil companies, it's a new five-year Farm Bill containing direct payments and price supports for farmers who in many cases have seen their incomes skyrocket in recent years. The bill extends or increases many of the programs enacted in the 2002 version; but this time the White House is threatening a veto.
President Bush triggered howls from conservatives when he signed the 2002 Farm Bill and his Administration is taking advantage of public unease over food prices to try and
force Congress to cut the programs popular with farmers. "This is the right time to reform our nation's farm policy by reducing unnecessary subsidies," he said last week. But the bill has bipartisan support from Democrats and Republicans eager to court Mid-Western votes and seems headed for passage. That would set up an election year showdown between the Administration and Congress over the normally mundane topic of agricultural policy with prospects for the Congressional and presidential elections in the balance.
The bill authorizes direct payments to farmers with incomes as high as $2.5 million. The Administration wants to limit payments to farms with non-farming incomes of less than $200,000. Congress would raise that cut off to $500,000 but would allow payments to farmers with incomes from farming activities of up to $950,000. The 2002 Farm Bill contained loopholes that allow farmers to collect a government subsidy even when prices rise above the supported level and result in payments to wealthy individuals in non-farming areas like Park Ave., New York. The Administration wants those loopholes closed and wants to bring U.S. agricultural policies in line with the nation's international treaty obligations. Democrats have stuffed the bill with $10.4 billion in assistance for food stamps, subsidies for corn-based ethanol and other biofuels, increases in conservation programs, and support for organic farmers. Those are goodies designed to win Democrats votes in farm country.
The rising cost of fuel has had an impact on food prices, but Federal subsides for ethanol has also taken its toll. As farmers plant more acres of corn and demand for corn to produce ethanol increases, prices for corn have hit record highs on the commodities market. That in turn has increased prices for products of all types that contain corn-based ingredients. Food prices and government subsidies are sure to be an issue in the presidential campaign as Sen. John McCain is against ethanol subsidies and subsidies generally, while his democratic rivals, Sen. Barack Obama and Sen. Hillary Clinton support the production and use of more biofuels like ethanol.