By Stewart Doan
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Editor's Note: We kick off the New Year with a conversation with Sen. Kent Conrad (D-ND). As chairman of the Senate Budget Committee and a senior member of the Agriculture Committee, Conrad played a key role in shaping the 2008 Farm Bill and he’s staking out a similar position for himself in the next farm bill debate. Conrad, a member of President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, won praise from many ag groups for persuading the panel not to recommend draconian cuts in farm program spending. In our Dec. 14 interview before Congress adjourned for the holidays, Conrad emphasizes the importance of writing a farm bill that works for producers in all areas of the country while flatly stating that America’s record-large budget deficit will force policymakers to restructure commodity, conservation and biofuels programs. Conrad explains his opposition to the recently-enacted estate tax compromise and says he’s hopeful that the White House and congressional leaders will draw up a long-term deficit reduction plan early in 2011.
SD: Senator Conrad, welcome to Agri-Pulse Open Mic.
KC: Good to be with you.
SD: You supported the broad proposal to extend for two years the Bush-era tax cuts but voiced strong objections to a provision in the package lowering the estate tax to thirty-five percent on estates worth more than five million dollars. Give me your argument on the estate tax and where would you like to see the tax rate and exemption level set?
KC: I would like to see it set at the 2009 level, which is $3.5 million a person, seven million a couple, indexed for inflation with a forty-five percent rate. Next year, if we don’t act, the exemption will be a million dollars per person with a fifty-five percent rate, and so I thought the 2009 levels was a fair compromise and also fiscally responsible. The compromise is a five million dollar exemption per person, ten million a couple, and a thirty-five percent rate, and the difference between that level and what I have proposed over ten years is a hundred billion dollars. Now, I understand this is just a two-year agreement. I also understand the nature of precedent around here and to put forward a measure that costs a hundred billion dollars more than what I think were generous provisions in 2009 that only affect one quarter of one percent of estates in this country seems to me just not to be fiscally prudent or responsible.
SD: On deficit reduction, do you see the new Congress tackling spending cuts next year through perhaps budget reconciliation or will we see a summit and then wait another year?
KC: Well I would actually hope for a summit and action this year on a plan. In other words, what I have advocated now that the fiscal commission did not attain the fourteen of the eighteen votes that were necessary to move to an immediate vote on the floor, is to have a sit down with the President and leaders of the House and the Senate, Republican and Democrat, come up with a plan, a long-term plan to get us back on fiscal track, and a plan that would begin to be implemented in next year’s budget.
SD: Speaking of the Bipartisan Deficit Commission, which you were a member of, it recommended a fifteen billion dollar cut in ag spending with five billion plowed back into permanent disaster program. The draft report issued by co-chairs Bowles and Simpson in November recommended even deeper cuts. What happened between the draft and the final report that caused the targeted reduction in ag spending to be lowered?
KC: Yeah, the initial proposal was to cut a net of thirty billion dollars from agriculture. The final proposal was as you’ve described a net cut of ten billion. Look, I just refused to go along with the larger cut because the last Farm Bill was paid for as you know. We didn’t add to the deficit and the debt. In fact, we’re coming in nine billion below what was projected so the Farm Bill was absolutely responsible in respect to farm programs.
SD: I understand that at one point payment limits were going to appear in the commission’s final report. In the end they did not of course. Take us inside, what was the discussion like on that particular issue?
KC: Well, I think one has to respect the diversity of American agriculture. As you know, the biggest differences in agricultural policy are really regional differences and you know, my part of the country could live with very different restrictions than the South could. And I just think we have to respect the fact that in the South they have much higher costs, much higher capital costs in their agriculture, and cotton, rice, and other crops there that are extremely capital intensive. So I don’t think it would be wise to impose changes by a panel like this that really hasn’t had the opportunity to review the diversity of American agriculture and come up with a policy that makes sense for all corners of the country.
SD: On the SURE disaster program, as envisioned in the ’08 Farm Bill, it was supposed to end ad hoc disaster spending but that has not happened. How, if at all, do you think the SURE program should be changed?
KC: We were talking yesterday about changes that might be made in SURE. In fairness, what happened there was we got hit with disasters immediately and the SURE program had not yet been implemented so of course there had to be an ad hoc program to prevent real hurt across those areas affected by disaster. Once the SURE program was put in place, I think we’ve learned a lot about things that need to be done to simplify it and also make it more effective for especially the South. Again, these regional differences are huge in agriculture and we’ve got to be sensitive to them.
SD: Can you shed any light on the commission’s recommendations to cut the Conservation Stewardship Program? With record high commodity prices, the question comes up why cut funds for working lands programs rather than land retirement programs like the CRP?
KC: Again this is a balance, a matter of listening to everybody on the commission and all the witnesses that came before us. What one sees in the conservation programs is tremendous overlap. One of the things that became clear as the commission did its work is we’re going to have to harmonize conservation programs that are part of the Farm Bill. There are just too many different programs with differing requirements that’s really preventing people from participating because it’s just too complicated, too confusing. So one thing is clear, there’s going to have to be consolidation and simplification of conservation programs.
SD: You decided to hold onto chairmanship of the Budget Committee in the 112th Congress but indicated you will still play a very active role in the next Farm Bill debate as a senior member of the Agriculture Committee. Your key role in the ’08 Farm Bill debate is well documented. Where are the policy pressure points this time around and given the budget challenge, will change to the commodity title have to be revolutionary?
KC: Stewart, you have asked really the most important question. I believe budget pressures are going to lead the change in policy, and I think we all saw in the last Farm Bill debate that there is an opportunity to go to income protection programs rather than the structure that we have historically had. I think we’re also going to see what we’re mentioning with respect to conservation, there’s going to have to be a consolidation and simplification of programs across the board that can save money and I think also lead to more effective programs for American agricultural producers. I think we’re also going to have to be more aggressive on trade. You know, we have markets that have continued to be blocked to us, notably we see in South Korea they continue to block us on beef in a way that’s really unfair and unwarranted. I think there are going to be lots of opportunities. I’d say the biggest opportunity remains the energy opportunity because one of the key priorities for America is to reduce our dependence on foreign energy and agriculture can play a big role there.
SD: Has the commission identified a viable way to reform the safety net with this tying of Direct Payments to the cost of production?
KC: I think they’ve got an idea there that has merit. They did not write legislation so that will be left to the Agriculture Committee, but I think there’s going to be a chance as we go forward to the next Farm Bill to do some very exciting things for production agriculture. And again, I think it’s very important for us to remind listeners that the Farm Bill did not contribute to the deficit. That was paid for. In fact, it’s coming in nine billion below projections, so I think we can be very proud of the fiscal responsibility that agriculture contributed. I wish other parts of the budget had done as well.
SD: Final question, you’ve been a supporter of tax incentives for biofuels and this broad tax package we’ve been talking about does include a one year extension of the blenders tax credit for ethanol and retroactive extension for biodiesel through the end of 2011. Where do you want to see federal policy in this area go long term?
KC: Well Stewart, this is also an area where there’s I think real opportunity. I think we all understand there is a limited life to what we’re currently doing. You know the industry came forward with a proposal that they did not push, but which they laid out there. I think we’re going to have to pursue that approach. It’s a broader way of dealing with the opportunity in biofuels. We’ve got to help build the infrastructure in order to take advantage of the demand that’s all across the country. I think that’s going to have to be the focus of federal efforts going forward, serious efforts to build the infrastructure so biofuels can be an even bigger part of our energy future.
SD: We’ve been visiting with North Dakota Democratic U.S. Senator Kent Conrad. Senator Conrad, thanks so much for joining us on Agri-Pulse Open Mic.
KC: It’s always good to be with you Stewart. Thank you for your professionalism and for your really good questions. I hope people across the country have a chance to get more educated on agriculture policy because it’s really critical to America’s economic strength.
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