Center for Rural Affairs Urges Farm Bill Veto
According to Hassebrook, the conference report breaks faith with rural America and squanders too many ripe opportunities to create a better future for rural communities across the country.
"This bill reflects a failure of leadership by both Congress and the Administration. Congress produced only the illusion of reform to provide political cover for its failure to adopt real reform. The Administration talked reform, while refusing to support the one true reform on the table – the Dorgan Grassley amendment – and refusing to use its existing administrative authority to close payment limitation loopholes," explained Hassebrook.
The Center's analysis of payment recipients (www.cfra.org/falsereform) found that 99 percent of farmers affected by the payment limitation provisions in the conference report would continue receiving the same large direct payments by switching to other means of exceeding the paper limits on payments. The analysis found only five farmers in seven states that would face any cut in direct payments under the direct attribution provisions of the farm bill conference agreement.
"Closing one gate while leaving two open won’t keep the hogs out of the trough," added Hassebrook.
The Center also offered the following evidence that the equally flawed means test (AGI) provisions are no more effective at denying payments to high income recipients:
1) Senator Chuck Grassley's analysis of U.S. Internal Revenue Service data revealed that from 36 to 41 percent of those who would lose farm payments under the House, Senate and Administration means test proposals were landlords. They will continue to enjoy the benefits of full farm payments by switching to cash rent arrangements. The federal checks will now be sent to tenant farmers, but high income landlords will still capture them through top dollar cash rents.
2) High income farms will divide income between spouses and even the farm corporation to stay below the limits. Rich couples can put their multimillion dollar income in one spouse’s name and the farm in the other. For example, Nancy Pelosi is the 15th richest member of Congress, but according to her financial disclosure reports, she’d be eligible for payments. That is because most of the couple’s investments are not in her name.
3) Large farms that approach the income limit will get around it by expanding their operation - purchasing land and other assets to create deductions for interest, depreciation and inputs. Secretary Schafer got it right when he said recently that "If there is a farm in America that can't meet a $500,000 hard cap, they need a new accountant." (The cap in the final legislation is even higher.) Ironically, this provision may worsen the tendency of the farm bill to subsidize the destruction of family farming. Not only does this farm bill subsidize large farm expansion – it further pushes large, high income farms to keep growing in order to reduce their taxable income and thereby avoid the loss of all payments.