Sequester option revisits ‘behind the scenes’ farm bill extension

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Feb. 20, 2013-What a difference a few weeks can make. After backing an extension as the 2008 farm bill, Majority Leader Harry Reid, D-Nev., is now proposing an “alternative” sequester package that resembles much of what Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., tried to pass shortly before 2012 ended.

Of course, at that time, both Stabenow and Agriculture Committee Chairman Frank Lucas, R-Okla., seemed confident that House and Senate leadership would accept their offers to extend the 2008 farm bill as part of the fiscal cliff negotiations, albeit with a few significant changes. They worked tirelessly over the last weeks of December to produce a farm bill extension package.

Among other things like renewal of energy programs and organic provisions, Chairman Stabenow wanted $125 million in “retroactive” insurance for tart cherry growers who had been hard hit by a spring freeze in her home state of Michigan. Chairman Lucas wanted continuation of direct payments to give growers some “certainty” on government supports for 2013. And Minnesota Democrat Collin Peterson, the ranking member on the House Committee on Agriculture, wanted major dairy reforms from the proposed Dairy Security Act.

But as major newspapers ran headlines warning consumers of $8 per gallon of milk if the 1938 mandatory law for dairy pricing kicked in at the end of the year, sources close to the negotiations told Agri-Pulse that the White House issued only one directive regarding the farm bill: fix the looming “dairy cliff” so prices would not dramatically escalate.

As Vice President Joe Biden and Ranking Senate Minority Leader Mitch McConnell, R-Ky, huddled to negotiate a package of tax provisions and budget cuts that avoided the so-called “fiscal cliff,” it became apparent that farm bill provisions would only be able to catch a ride if the bigger fiscal deal was reached. But it couldn't be just any farm bill package. It had to be a deal that would be able to pass the House and Senate without causing other complications. And it needed to be something -both in substance and bill size - that didn't overshadow a major rewrite of our nation's tax and spending laws.

Shortly after Biden and McConnell reached a deal, Majority Leader Reid told staff he wanted a “clean” farm bill extension - something that wasn't forthcoming from the ag committee chairs. With the clock-ticking down to a final vote on the larger package, McConnell's policy advisor, Neil Chatterjee, huddled with Reid's legislative assistant, Kasey Gillette, and Speaker John Boehner's legislative assistant, Natasha Eckard, to hammer out language for a farm bill extension. Several other House and Senate staff members contributed as they rushed to find agreement.

“Everyone agreed that we could cut direct payments from a political standpoint, but because it was a ten-year ‘pay-for' on a one-year extension, we could have easily triggered a budget point of order - threatening the larger tax and budget cutting package,” noted a source familiar with the negotiations. “And no one was willing to blow the whole fiscal cliff deal over agriculture.”

The three staffers knew the dairy reform provisions were a non-starter in the House. During a GOP caucus meeting, Speaker John Boehner had publicly chastised the Dairy Security Act's market stabilization language in the farm bill extension package crafted by Lucas, Stabenow and Peterson, describing the supply management provisions as “Soviet style.” With guidance from Eckard about what could or could not pass the House, both Gillette and Chatterjee workedwith numerous others to draft what they viewed as an acceptable extension ofthe current farm bill.

According to sources familiar with the discussions, Chairman Stabenow was extremely upset to learn about this new version of an extension and appeared to be venting her frustrations on Sen. Pat Roberts, R-KS, during a late night discussion on the sidelines of the Senate floor, captured on video. She called a members onlymeeting to discuss options for returning to the larger extension package. But some GOP members pointed to the potential for a budget point of order and realized that it was the condensed extension package or nothing.

After the meeting, Sen. Pat Leahy, D-Vt., argued for an adjustment in the Milk Income Loss Contract (MILC) provisions, and Reid signaled that Leahy would have toquickly come up with his own offset that was acceptable to Democrats becauseRepublicans were done with the deal. Ultimately, funding for the Supplemental Nutrition Assistance Program (SNAP) was reduced to pay for enhanced assistance to dairy farmers.

Fast forward a few weeks and Majority Leader Reid endorsed a new fiscal package that appears to contain much of the farm bill extension package advanced by Sen.Stabenow and rejected in late December - leading some to speculate that Stabenow, who is a tireless farm bill negotiator finally got her “payback” from Reid. A spokesperson for Stabenow declined to say whether Reid was responding to concerns she expressed in Dec., while saying that “Reid made the farm bill a top priority for the 113th Congress when he introduced it as one of several priority bills.”

Although the sequester option has not yet been formally introduced, an outline of the measure indicates that Reid's bill would cut defense spending and net farm bill spending each by $27.5 billion over the coming decade and postpone cuts called for in the sequester until Jan. 2, 2014. It would also raise an additional $55 billion by placing a minimum tax on millionaires and closing other tax loopholes.

Stabenow told reporters that the $27.5 billion represents a ceiling on savings going forward and the Agriculture Committee would not berequired to make additional cuts when members write a new five-year farm bill. Last year, the Senate passed a farm bill that saved $23 billion and the House Ag Committee passed a similar bill with about $34 billion in savings over ten years.

The total elimination of direct payments saves about $31 billion, but the bill would “reinvest” $3.5 billion to pay for yet unspecified 24 of the 37 farm bill programs that expired earlier than all other farm bill programs. The early expiration date was a budget gimmick, designed to make those programs fit into funding parameters available at the time the 2008 farm bill was written.

Still, the likelihood of Senate-passed bill to avoid $85 billion in cuts on March 1 seems to be a long shot.

Sen. David Pryor, D-Ark., who represents rice producers supportive of direct payments, has already come out in opposition to Reid's proposal to avoid sequestration. And the new ranking minority member on the Senate Agriculture Committee, Sen. Thad Cochran, R-Miss., described the measure as a “political messaging bill,” noting that, “it's unfair and unfortunate that the entire federal government looks to agriculture and national defense to pay for its debt.”

A vote on this sequester alternative is expected in the Senate next week. The House has passed two bills to replace sequestration but neither has been scheduled for a vote in the Senate.

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