Budget may force changes to some farm bill programs

Feb 19, 2010
by DTN

House Agriculture Chairman Collin Peterson said last Monday he believes the next Congress may have to take up a reconciliation bill that could include a rewrite of the farm program.

Speaking by telephone to the American Association of Crop Insurers convention, Peterson said he is not an advocate of a reconciliation bill but believes that international concerns about U.S. finances and difficulties in selling U.S. bonds overseas may force the next Congress to consider a reconciliation bill.

A reconciliation bill updates existing laws to pull them in line with changes made in a budget resolution. As its passage only requires a simple majority in the Senate, a reconciliation bill can be used to push through legislation for which there aren’t 60 votes to break a filibuster.

“This budget is completely out of control,” Peterson said. “I’m not advocating reconciliation. We have a very good possibility after this election, no matter who wins, to force the mother of all reconciliation.”

Noting that the 1995-96 reconciliation bill included the farm bill, Peterson said a 2011 reconciliation bill might include it even though the 2008 farm bill runs until Sept. 30, 2012.

“If that happens, I want to be ready,” Peterson said. Peterson said if Congress takes up reconciliation, “everything would be on the table in that kind of environment,” including Social Security, Medicare, Medicaid, defense spending, homeland security, farm programs and nutrition programs.

Peterson said one reason he wants to hold farm bill hearings this year is to be ready if he needs to put a farm bill in a reconciliation bill. Peterson plans to hold three hearings in Washington in late March and early April and field hearings in July. He said he wants to avoid holding hearings between August and the November elections because he wants the hearings to be bipartisan. “Being bipartisan takes a lot of time. Bipartisanship is hard to come by,” Peterson said.

If a reconciliation bill does not affect the process, Peterson said he plans to proceed with writing the farm bill early in 2011, mark it up in the fall of 2011, and finish it before the current bill expires.

Peterson said he is opposed to the Obama administration’s plans to cut $8 billion from crop insurance expenditures over the next 10 years, in part because he wants to preserve as high a baseline for agriculture as possible for the next farm bill or reconciliation negotiations.

“I will fight tooth and nail against them taking any money out of the baseline,” Peterson said. He had threatened to take up the matter in Congress if administration officials do not “back off,” but he added, “It’s hard to get any damn thing done around Congress any more.”

The 2008 farm bill authorized the Agriculture Department’s Risk Management Agency to renegotiate the standard reinsurance agreement that sets the rules for crop insurance companies’ delivery of policies. Peterson said he intended to give the administration authority to make changes so that crop insurance would be improved in parts of the country where there is dissatisfaction with policies, not to make the large scale cuts that the administration has proposed.

“Crop insurance may be the only farm safety net in five or 10 years, and we’ve got to make sure it works,” he said. The Obama administration has said the proposed cuts are justified because crop insurance underwriting profits and payments for administrative and operating expenses are too high. Officials were expected to make a new offer to the companies last week that might backtrack somewhat from the proposed cuts.

Peterson said he is starting early on the next farm bill in part to motivate farm groups to decide what they want in the bill and to get control of the agenda, which in the last farm bill, was dominated by reformers who wanted to cut programs. “We fought on their ground,” Peterson said. “Their idea of formulas has nothing to do with reality.”

Peterson said he believes that a program different from the direct payments that farmers receive despite high or low prices may provide a better safety net.

He also criticized the ad hoc disaster bill proposed by Senate Agriculture Committee Chairman Blanche Lincoln, D-AR, and Sen. Thad Cochran, R-MS, as part of the jobs bill. He said their plan to provide additional direct payments to farmers who experienced only a 5 percent loss would garner criticism. “This kind of stuff is not going to be helpful in defending this going forward,” he said. — Jerry Hagstrom, DTN