MN-02 : Should the Ryan Budget Save the Kline Family Farm ?

John Kline (R-MN-02) issued a press release in advance of his vote in favor of the Paul Ryan (R-WI-01) FY 2012 budget :

“ … hundreds of Minnesotans shared with me their thoughts about better ways to encourage job creation and foster long-term economic growth. The overwhelming majority of constituents told me they have no choice but to make the difficult decisions to guide their families and small businesses through difficult economic times, and they expect Washington to do the same.
This week Congress will vote on a responsible, restrained budget that will help America’s job creators put our nation back to work and secure America’s future by stopping Washington from spending money it doesn’t have. Our budget will cut $6.2 trillion in government spending over the next decade compared to the President’s budget, and $5.8 trillion relative to the current baseline. It also preserves benefits for today’s seniors while strengthening the safety net for our children and grandchildren.”

Already many have focused on the cuts that the Kline / Ryan budget will impact on Medicare and other entitlement programs … yet there has been little discussion about the 33% reduction in outlays for Education (Section 500 of the budget) from FY 2012 to FY 2013 … which would be one that Mr. Kline should be most interested as the Chairman of the Education and Workforce Committee.
Heck, Mr. Kline as Chairman of Education Committee is promoting cuts to Head Start (FY 2012 Budget (GOP Budget) that would have a national impact
• 218,000 low-income children and families would be removed from Head Start.
• 16,000 Head Start and Early Head Start classrooms would close.
• 55,000 teachers and related staff would lose their jobs.
• 170,000 families trying to find jobs or stay employed would lose childcare)
In Minnesota, every county would be affected … as Minnesota’s 35 federally designated Head Start grantees served 16,018 families in 2010.
And Head Start has a proven track record exhibited by :
192% Increase in Language Development
362% Increase in Emerging Literacy
288% Increase in Social Emotional Development
173% Increase in Physical Health and Wellbeing

But this commentary, is not about Education funding or any of the other proposed cuts … but instead what Mr. Ryan and Mr. Kline have protected --- Farm Subsidies.

American taxpayers paid roughly $15 billion in total farm subsidies last year, according to government data including $5 billion in direct payments to farmers accounts. With the farm sector booming—the USDA estimates net farm income this year will be the second-highest in 35 years—direct payments should become an easy target. Iowa State University economist Chad Hart noted that the payments go to farmers regardless of crop price or quality. Most of the payments go to the largest farmers in America given the amount of land they own. From 2002, when the program was expanded, through 2010, the top 10% of recipients received 67% of the funds, according to David DeGennaro, an Environmental Working Group legislative analyst. Roger Johnson, president of the National Farmers Union, said the direct subsidies have become indefensible because they don't go to farmers who need them to survive tough times.
Prominent Republicans like Senator Susan Collins (ME) view America’s fiscal problem and offer a solution… “I support the elimination of the ethanol subsidy — that’s worth some $6 billion a year.” Senator Collins added “I think we should cap farm subsidies for wealthy corporate farmers.”
Senator Collins was joined by Chris Coons (D-DE), Jeanne Shaheen (D-VT), Mark Warner (D-VA), Bob Corker (R-TN), Sheldon Whitehouse (D-CT), Tom Coburn (R-OK), Barbara Boxer (D-CA), John McCain (R-AZ), Jim Webb (D-VA), Bob Bennet (R-UT), Benjamin Cardin (D-MD), Mike Enzi (R-ID), Jack Reed (D-RI), Richard Burr (R-NC), Jon Kyl (R-AZ), and Dianne Feinstein (D-CA) in signing a letter to end the Volumetric Ethanol Excise Tax Credit.

Targeting farm subsidies is not new … The CATO Institute lists 10 reasons while The Heritage Foundation complains that it subsidies millionaires. Heck, the New York Times editorialized that cutting farm subsidies was an easy one.

In summary, there are a significant number of elected Republican and Democrat leaders, think tanks and newspapers that all embrace the concept of terminating farm subsidies.

Yet, Republican House Budget Committee Chairman Paul Ryan's (R-WI-01) blueprint for the fiscal 2012 budget contained a paltry $3 billion per year over the next decade— leaving $120 billion in total expected spending on farm subsidies. Compare that to the outlay for Education which will be cut $23 billion in just FY2013 alone.

So, why would Mr. Kline and Mr. Ryan not raise the ante … that’s a great question … the answer is unknown … but what is known is that Mr. Kline’s Family Farm participates in accepting federal subsidies.

Yes, Mr. Kline the taxpayers expect you to make “the difficult decisions” in these “difficult economic times” but when one group is enjoying a banner year, we don’t expect you to continue to participate in receiving federal subsidies … we expect you to stop reckless Washington spending that benefits to a numerically small but highly motivated group who will fight ferociously to safeguard their benefits ... or as they are also known - your family, friends and supporters.

Congress To-Do List : AMT, Farm Bill, SCHIP, FISA

As Congress returns to Washington, the first order of business needs to be a return to some of the issues that you may have thought were done – AMT, Farm Bill, and SCHIP.

Although these issues were addressed during the first session of the 110th Congress, they still need to be at the top of the To-Do List.

Alternative Minimum Tax (AMT)
Faced with the end of the Income Tax year, Congress and the President extended the AMT patch for 2007, but the issue is still looming for the 2008 tax year. Minnesota can be proud of Betty McCollum, Collin Peterson and Tim Walz for voting fiscally responsibly against this patch. Now is the time for the rest of Congress to agree that pushing the debt out to next generation is fiscally irresponsible.

This problem has been known for decades, but instead of addressing it, Congress has magnified it. Consider Chuck Grassley’s (R-IA) comments (March 8, 2001) when the Bush Tax Cuts were being proposed.
“ Roughly one in seven taxpayers will come under the shadow of the Alternative Minimum Tax by the end of the decade… That figure will significantly be higher if President Bush’s tax plan is adopted, and that is according to the Joint Tax Committee of the Congress.”

His words have been proven true.

Let’s not fall for Michelle Bachmann’s Taxpayer Choice Act legislation.

The tax code is riddled with loopholes and subsidies that have no justification other than to appease certain political interests. It’s time to address these.

The Farm Bill
First, let’s acknowledge that although it is called the Farm Bill, it actually is the major authorization for nutrition programs (Food stamps, emergency food assistance program (TEFAP), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), etc.) and conservation programs.
Second, Bush has firmly stated that he will veto the bill. With all the talk of a recession and stimulus legislation, the pork barrel spending will be the justification that Bush uses when he vetoes the bill. As the House-Senate conference committee meets, they should re-consider some of the amendments that the Senate voted down. Specifically, Sherrod Brown's (D-OH) amendment. Senator Brown discovered that during a time when the USDA paid out $10.5 Billion in aid to farmers, it paid $19 Billion out to the private crop insurance industry to help farmers fill out forms and qualify for federal aid when crops are damaged, for example, by disease, freeze, flood, or drought. Perhaps the worst part of the current law ties the insurance agents’ fees to crop prices, which have recently soared. Additionally, Senator Klobuchar’s amendment should also be given further consideration.

The Farm Bill as presently constituted will not be approved, so it behooves Congress to enact a fiscally more responsible bill before sending it the White House.


State Children’s Health Insurance Program (SCHIP)
Unable to override the President’s veto, Congress has passed another temporary funding program which extends the current program until late 2008 or early 2009 depending upon your state. This stopgap measure alludes addressing the uninsured problem. This legislation had bi-partisan support and many states feel the need to serve their citizens, but the Bush White House continues to object.
Take Ohio , where the Republican-controlled General Assembly voted to expand the coverage limit. Currently, states must get at least 95 percent of children in families with incomes below 200 percent of the poverty level enrolled in the program before eligibility could be expanded. This hurdle is difficult to do as no state currently meets that requirement … so while citizens that would like coverage and the states want to increase participation, the Bush White House is rejecting those requests. Remember the states share in the payment on this program. Ohio will not be the only state affected.

Congress should enact legislation that would establish limited trial programs for states that wish to participate. Thereby, if a state’s Republican-controlled General Assembly wants to serve their citizens better, why should a Republican President say no? If it is limited and temporary, it should be able to withstand a Presidential veto.

Obviously, Bush will use his veto power to influence what Congress passes, but I would encourage Congress to counter that with the passage of a new version of the Protect America Act (PAA) which modernized the Foreign Intelligence Surveillance Act of 1978 (FISA). The current law will expire in February. Since it has been reported that “late-payment of telephone bills resulted in interruptions of the timely delivery of surveillance results shifts the power to Congress to set the tone of the debate.

My message to Congress, address ATM, the Farm Bill, and SCHIP before FISA.

VOTE 60 : Norm Coleman Leadership produces Republican Victory in Farm Bill

"Judge me, Norm Coleman, by what I've done. By my ability to bring people together and my ability to make good things happen. You can measure it versus a guy who's been there 12 years; 12 years, which by the way is the time when your kids go at first grade to the time they graduate high school. If you're there, get the job done. Be measured by your ability to get the job done. I think that's fair." Candidate Coleman 2002

That was Candidate Coleman who presented an image of a can-do coalition builder. When the election results were announced that Coleman would be the representing Minnesota for the next six years, Independent voters, like me, thought “Let’s give the guy a chance ... if can work across the aisle, that would be great”

Coleman garnered two prime committee assignments – Foreign Relations (which he has disappointed me repeatedly) and Agriculture, Nutrition, and Forestry. Agriculture would be the big one for many Minnesotans.

Before discussing the current Farm Bill, it should be noted that the previous Farm Bill was signed by President Bush on May 13, 2002 to be effective with the beginning of the Fiscal Year on October 1, 2002 and expiring at the end of FY2007 ( or September 30, 2007). Coleman’s challenger in 2002, Paul Wellstone was on the Agriculture Committee and despite 9/11 and the military action thereafter, Congress was able to get the bill done in a timely manner. Farmers and bankers knew what to expect.

The House of Representatives held hearings and developed a bill that was passed in July 2007. The Senate though operates on its own time table.
The technically the Farm Security Act of 2002 expired on September 30, but through Public Law No: 110-92 continuing funding for many programs was extended (at the previous funding rates.)
The Senate Agriculture Committee approved the farm bill in October without any dissenting votes. The bill then languished on the floor as Republicans and Democrats clashed over how to deal with the nearly 300 amendments that had been filed.
Majority Leader Harry Reid (D-NV) wanted to select a list of amendments that were directly related to farm policy, but Republicans said that he should not be allowed to limit their proposals on such wide-ranging legislation.

On Friday, November 16th, the Senate finally addressed the issue with a procedural vote (meaning “Do we really want to vote on this?). The vote failed as 42 Republican Senators voted “No” (meaning “We are going to drag this out”).
According to Norm Coleman’s interview with former First District Congressman Tim Penny on Friday, Reid suggested that each side be allowed 20 amendments to be considered. Coleman stated that he convinced his fellow Republicans that they should precede. [ Now, we know what Coleman meant when he said “ my ability to bring people together, he meant bringing his fellow Republicans to action. ]

The Senate proceed to consider a number of amendments. EVERY Amendment FAILED …including the amendment known as the Dorgan-Grassley amendment which would have closed loopholes, placed a hard cap of $250,000 on payments and invested the savings in small business development, beginning farmers and other initiatives to create future in rural America. President Bush had requested that payments be limited to $200,000 but the Senate bill is for $1,000,000. This fiscally more responsible amendment failed by four votes with Coleman supporting the $1 million subsidy (read more here) .

So what was the point of waiting ?

We must remember that although subsidies got a lot of media attention, the bill also is the major authorization for nuitrition programs … (Food stamps, emergency food assistance program (TEFAP), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), etc.) I have already written how Republicans Love Subsidies but Hate Welfare.

This delaying of approval has hurt the people who need these nutrition programs. Although Congress approved a Continuing Resolution in September, it was at the existing levels. As The Star-Tribune reported today “Food inflation has more than doubled during the past 12 months.” For example, nationally, eggs cost 37 percent more than a year ago. Chicken feed -- made mostly of corn -- is 60 to 70 percent of an egg farmer's costs. Dairy farmers pay more for feed, too, up by as much as 40 percent since last year. And why is corn up … demand for ethanol … another highly subsidized product and which will increase sixfold based on the Senate approving the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 the day before it voted on the Farm Bill.

Let’s look at just how just one program will be impacted … milk and cheese account for about 40 percent of WIC food expenditures. As a result of higher food prices, it will cost significantly more for the people to buy these commodities … but the dollars were capped at last year’s rates … so the additional cost is being born by the needy … or they go without. Further, since the cost of the foods has increased faster than the budget, state WIC programs could have to reduce participation and establish waiting lists.

The end result is a cut to the Safety Net for the working families … but the Safety Net for $1 Million Dollar Mega-Farms is retained.

Thanks, Norm. I’ll be glad to “"Judge me, Norm Coleman, by what I've done.” … you’ve done a horrible job … on a Key Assignment … but I suspect that your Republican colleagues are pleased.
You delivered legislation late, that rewards the wrong people (even above what President Bush wanted) and hurts those that need it most.
By my account, you didn't "get the job done" !

FYI – The VOTE 60 in the title of this commentary refers to my effort to promote the importance of the US Senate races in 2008. VOTE 60 will be the headline of future commentaries and you can read about it here .

Why Republicans Love Farm Subsidies but NOT the Farm Bill

At the Republican Presidential Candidates debate, Ted Faturos asked “I'm curious which candidate could label themselves fiscally responsiblee, will endorse the elimination of farm subsidies if they are elected president in 2008.”

Mitt Romney responded “I believe in supports” and Rudy Giuliani added “The governor's right.” Giuliani went on to say “The subsidies in Europe are far higher than they are in the United States. We could reduce subsidies here if they would do it there. But we shouldn't do it on our own.”
{NOTE : For an additional comment on this logic, please see the SIDEBAR below.}

So the two leading Republican candidates professing love for subsidies … but what about the people who really authorize spending – Congress ?

With all the media attention about farm subsidies ( Link -Farm Subsidies Go to Billionaires “Farmers” of New York City , Link - Deceased Farmers Got USDA Payments , Link – How Growers Double their Subsidies , etc.), Congressman Ron Kind tried to address these issues during the House debate. Kind’s proposal would have overhauled the farm bill by ending payments to farmers earning more than $250,000 a year (which was in line with what President Bush proposed), limiting payments farmers can receive under guaranteed loan programs, expanding conservation programs and replacing many subsidies with crop insurance and other protection that pays only if farmers lose money.
Roll Call Vote 747 was voted down by the Republicans 151 – 44 with Minnesotans Bachmann and Kline supporting continuing the subsidies.

Therefore, to an overwhelming majority of Republicans, subsidies are good government. So why hasn’t the Senate moved the bill forward ?

Well, like so many other pieces of legislation, there are a number of competing purposes. So, while Republicans Love Subsidies, there are other parts of the bill that they don’t like – taxes and welfare.
Collin Peterson said at FarmFest "We are spending less than 12 percent on farmers. Over 68 percent of the farm bill is for nutrition, for food stamps and the other feeding programs." {MORE on this in a commentary tomorrow.} Further, the bill would impose taxes on some foreign and multinational corporations operating in the United States that do not now pay taxes on some earnings as a result of international treaties.

There we have the crux of the Farm Bill problem. Republicans Hate Taxes ( I suspect as much as they Love Subsidies) … even closing loopholes to help to pay for the subsidies. Futher, they Hate Welfare (unless its Corporate Welfare which is synomosis with Subsidies.)

There is reason why Congress's approval is so low ... all they want to do is reward potential contributors and not be fiscally responsible in ensuring that our citizen’s receive the essential needs of substance.

SIDEBAR : Romney and Giuliani both complained that foreign governments pay subsidies. Therefore, if America didn’t do also, American farmers would be a competitive disadvantage.
Yet, neither recognize that many of these same governments also provide health care for their citizens … thus the logic would be that American business should not have to provide health care for their employees but instead it should be provided through the government. Don’t US companies that provide health care benefits operate at a competitive disadvantage to their competitors?
Oh, uh … I can see another “subsidy” program in the making.

Winners and Loser : Farm Bill, Death Tax, Politicians versus Me, the taxpayer

Gil Gutknecht aptly called the US Senate “the graveyard of all good ideas” and this week the Senate applied a lethal Double Dose to two good pieces of legislation. Gutknecht was part of the 109th Do-Nothing Congress and the Senate seems to be acting to ensure that the 110th does no better.

Senate Agriculture Committee Chairman Tom Harkin said Thursday that "If we can't get a farm bill through the Senate that came out of the committee without one dissenting vote ... If we can't do that then what's the use trying to do it next year with the same Senate?" and effectively postponing the legislation until after the 2008 election And Republican House members seem to be in agreement. So lobbyists will continue to make contributions until the legislation is resolved. And that’s why there will not be any legislation this term … the politicians win.

We may – or may not – like the Farm Bill, but to pass it along to the next Congress and President is not only shameful but woefully irresponsible.

On Wednesday, the Senate held hearings entitled “The Federal Estate Tax: Uncertainty in Planning Under the Current Law.” What is at stake is potentially $24 Billion in revenues, but the statements by Senators Max Baucus and Chuck Grassley indicate a strong opinion that this tax loophole be continued. Ironically, Warren Buffet appeared at the hearing and spoke of continuing the tax. The argument is full of dramatic misinformation that these taxes are largely unfair inheritance taxes paid by hard-working owners of small and medium companies. In reality most estates don't owe any estate tax at all. Gutknecht like to talk how people like Buffett would create trusts and nonprofit groups to avoid paying inheritance taxes. That’s true and a separate argument … (why isn’t the same argument made when nonprofit groups are created to avoid paying ordinary income which is commonplace with sports stars? Yes, those monies can support a number of great charities (for example, the Pohlad Family Foundation)
and we thank them … but we helped created their wealth by our support) There are a number of tax planning strategies (generation skipping trusts, etc.) and a number of significant exemptions that apply such that the number of estates that actually are taxed are relatively small in number. The tax only applies to the amount over the exemption (for example in 2009, the provision is for a $3.5 million exemption).
The people who potentially may pay it are the super-rich. For example, here is a list of 24 individuals from anti-estate-tax families on the Forbes 400 list, 20 owe their good fortune to their forbearers, since only four represent the first generation of family wealth. In fact, since they inherited their wealth, they received step-up tax cost basis thereby reducing the capital gains tax (talk about double-dipping on the taxpayers !) These people are lobbying Congress hard (i.e. making contributions to their "favorite" candidates ... fyi - Mitt Romney's first TV commercial was about the unfair death tax.) And that’s why there will not be any legislation this term … the politicians win.

So this week, the politicians have won twice … by doing nothing … delaying and denying good legislation. So who lost … that would be the taxpayers. As long as the politicians don’t act, the unfair tax system remains in effect and working Americans pay while good programs are not enacted. The national debt rises and the US dollars loses value.

The House has done a good job getting a Farm Bill passed as well as the Temporary Tax Relief Act of 2007 (H R 3996) that would do a number of things including revising the Alternative Minimum Tax (AMT) that impacts working middle class families. But that Senate's inaction proves the axiom is correct : “the graveyard of all good ideas”.
How will Norm Coleman explain how he sat on the Agriculture Committee that passed the Farm Bill, yet he could not get it passed by the entire Senate ?