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Farm Subsidies May Not Face Limits

Lawmakers Would Have to Find Other Ways to Cut Costs

By Dan Morgan
Washington Post Staff Writer
Friday, April 15, 2005; Page A23

The Bush administration has signaled that it will not pressure Congress to enact limits on government payments to big farmers this year if lawmakers can come up with other ways to cut spending on agricultural programs by $5.4 billion.

The subsidy cuts and other proposed changes in the farm program were hailed by budget cutters, environmentalists and foreign governments when they were included in the administration's budget proposals in February. They have run into heavy resistance in some parts of the Farm Belt. Southern cotton and rice growers in the GOP's political base would be hit particularly hard.

Cotton and rice growers in the South would be hit particularly hard by cuts to farm subsidies. (Julie Bennett -- Town Talk Via AP)

In remarks to a Senate Appropriations subcommittee this week, Agriculture Secretary Mike Johanns acknowledged that many of the policy proposals, such as reducing the maximum payment, are "sensitive." Lawmakers, he said, "may have other proposals to achieve these savings, and we are willing to work with Congress on other recommendations."

Kenneth Cook, president of the Washington-based Environmental Working Group, called that a "flip-flop."

"What the secretary is really saying is that the administration has backed down under pressure from members of Congress who depend on campaign contributions from big agribusiness," he said. "It was smart and courageous for the president to propose limiting payments, closing loopholes and cutting overall subsidies. His change of plans is a sad reminder of this administration's policy to leave no big business behind."

Administration officials deny that is the case.

"We have not withdrawn the president's proposal, and payment limitations are an important part of it," said Agriculture Department spokesman Ed Loyd. "I don't think you've seen the last discussion of payment limitations." White House press secretary Scott McClellan called the Bush proposals "common sense, reasonable ones."

They would reduce spending on farm programs and respond to growing foreign pressure to cut subsidies that are seen as giving U.S. farmers an unfair advantage in world trade.

Reducing agricultural spending by $5.4 billion is a key part of the administration's plan to cut the federal deficit in half. So far, however, the Senate Budget Committee has agreed to cuts amounting to only $2.8 billion. The House Budget Committee has come up with $5.3 billion in cuts, but those include savings in food and nutrition programs for the poor that the Senate has ruled off-limits.

Without reductions in some farm export subsidies before July 1, the United States could face trade retaliation under a recent ruling by the World Trade Organization. Additional retaliation could occur as early as 2006 unless Congress takes further steps to dismantle price and income support for growers.

The administration has proposed limiting total payments to individual farmers in a single year to $250,000 compared with the current $360,000. It also wants to close loopholes that enable farmers to evade the limits, reduce the costs of commodity programs by 5 percent and restrict use of a price support mechanism that has been the centerpiece of farm programs since the 1930s.

A Government Accountability Office report last April found that farmers were skirting the payment limits, often legally, using corporate entities, relatives and shadow partners. Some farms collect more than $1 million a year, far in excess of the limits.

While the idea of limiting these payments is extremely unpopular across the southern cotton belt, where more government aid is needed to make up for depressed world cotton prices, it resonates among prairie populists in both parties who are wary of corporate farming and big government.

Sen. Charles E. Grassley (R-Iowa), a champion of lowering the limits, said yesterday that he thinks he still has the president's support.

"I've spoken to officials at the highest levels in the administration and am confident they are committed to a reasonable limit. The president is a powerful ally in my campaign," he said.

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