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Archive for Tuesday, May 14, 2002

Higher subsidies promised with $190 billion farm bill

May 14, 2002

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— President Bush on Monday signed a $190 billion farm bill guaranteeing higher subsidies to growers in Midwestern and Southern states where key political races will decide which party controls Congress next year.

At an early morning ceremony, Bush said the six-year bill "will provide a safety net for farmers, and will do so without encouraging overproduction and depressing prices" a position contrary to what administration officials argued when the bill was being written.

The subsidies could help Bush in his quest to win back control of the Senate for the GOP, while giving him a chance to rack up IOUs for his own 2004 re-election effort.

"If he had vetoed it, it would have been very disappointing," said Minnesota farmer Nathan Johnson. "In the 2000 election, almost all of the agricultural areas voted for President Bush. They expected his support ... and we certainly have gotten it."

Some senators already are making plans to provide farmers with even more money this year in the form of a disaster-aid package for weather-related damage to 2001 crops.

The new farm law will increase spending by nearly 80 percent over the cost of continuing existing programs at a time when the president has been calling on lawmakers to show fiscal restraint. The bill is estimated to cost $190 billion over the next 10 years, although the programs must be renewed after six.

Damage control

The signing ceremony was scheduled for 6:45 a.m., assuring wide coverage by farm broadcasters while minimizing exposure elsewhere in the country. Bush said his timing was a nod to farmers who get up early every day to produce America's food. He was flanked by farm-state lawmakers from both parties who hope to benefit politically from the measure.

Bush senior political adviser Karl Rove had told GOP senators recently that Bush would not stage a high-profile signing ceremony to avoid antagonizing conservatives upset with the bill's price tag, a person familiar with that meeting said.

"It looks as though Bush is concerned about allowing the Democrats to create some domestic issues," said political analyst Stuart Rothenberg.

Republicans have been burned by farm issues before: In 1986, unhappiness with GOP farm policy helped Democrats win at least two Senate seats. In the heat of the 1998 campaign, President Clinton vetoed a GOP farm-aid package and forced lawmakers to add substantially more money.

Incentive to overproduce

Ken Cook, a critic of the bill who is president of the Environmental Working Group, said Bush was in a no-win situation. "Certainly, it was a loser to stand on principles here when the politics are so overwhelming."

One of the bill's biggest beneficiaries is expected to be Senate Agriculture Committee Chairman Tom Harkin, an Iowa Democrat facing re-election this fall who stood behind Bush during the ceremony. Harkin said the bill "is the economic plan for rural America."

The administration had complained that both Senate and House bills from which the final law was fashioned would encourage price-depressing crop surpluses. Some Republicans implored him to veto it even after the signing ceremony was scheduled.

"I would love to see him veto it. It is a budget buster," Sen. Don Nickles, R-Okla., said on "Fox News Sunday."

The bill gives farmers incentive to overproduce, Nickles said, predicting it will eventually force farm prices down. "I don't think that helps farmers in the long run," he said.

Some subsidies revived

The farm bill raises subsidy rates for grain and cotton growers and revives a target-price system abolished by the 1996 Freedom to Farm law to provide supplemental income when commodity prices are below certain levels.

The bill also brings back subsidies for wool and honey producers and provides new payments for milk, peanuts, lentils and dry peas. Farms that raise livestock and produce will benefit from an 80 percent increase in spending on land-conservation programs.

Support for the 1996 law dropped after commodity prices plummeted in 1998 and Congress responded with a series of annual bailouts of the farm economy. The new law, which essentially continues those bailouts, initially was expected to cost about $170 billion over the next 10 years. However, weaker-than-expected commodity prices are now expected to cause crop subsidies to rise and push the cost to $190 billion.

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