House Ignores Administration Protest

October 4, 2001

Hardly had the House begun debate on the farm bill when the Bush administration belatedly issued its "Statement of Administration Policy" in which it stated that it does not support H.R. 2646 and urged the House of Representatives to defer action on the bill. The Administration was strongly criticized by both Republican and Democratic supporters of the bill. Both House Agriculture Committee Chairman Combest and Ranking Democrat Stenholm were critical of the leadership of USDA for failing to provide any suggestions during the Committee's long process of writing the bill. By waiting until the House bill was on the floor to state its position, the Bush Administration has probably forfeited its chance to have much impact on the outcome of the farm bill in the House of Representatives.

Secretary of Agriculture Ann M. Veneman also issued a statement that said in part, "We urge the House of Representatives to defer action on H.R. 2646 and craft a policy that better strengthens rural America, protects the environment, invests in core infrastructure programs that protect food and agriculture, and aggressively expands markets for our producers." Those points reflect USDA's principles made public last month.

"The concern with H.R. 2646 is that it does not adequately reflect many of these changes and new opportunities," said Veneman. "Particularly, it does not help farmers most in need, encourages overproduction while prices are low, jeopardizes U.S. markets abroad which would hurt our producers, and boosts federal spending by $70 billion over the next ten years at a time of budget uncertainty. Given the state of the nation, consideration of large new financial commitments that do not require immediate action are not timely."

In its statement, OMB outlined four major objections:

–The bill encourages overproduction while prices are low. "A direct consequence of American farm policy for many decades has been excessive production and low prices," the statement said. Overproduction would result from "increased production-based payments to farmers" based on per bushel and grown at above-market prices.

–The bill fails to help farmers most in need. Rather than address the unmet needs of farmers truly in need, the bill would "continue to direct the greatest share of resources to those least in need of government assistance," namely large commercial farms that can profit without the payments.

–The bill jeopardizes critical markets abroad. The bill would "depart" from a pro-trade direction "by significantly increasing domestic subsidies to levels that would undermine our negotiating position in the next round of World Trade Organization negotiations." Even with language that would restrict future counter-cyclical payments to the WTO cap levels, "this legislation calls into question the nation's commitment to free and open trade, hampers its ability to meet existing trade obligations and reduces our ability to further expand opportunities for our producers in growing world markets."

–The bill increases federal spending at a time of uncertainty. Current "economic uncertainty makes this the wrong time to lock in $170 billion in long-term spending," said OMB. "More time is needed for the fiscal picture to clear. In the near term, the administration is focusing on recoery and national security. During this period, spending in other important areas must be balanced against these priorities."

OMB suggested the administration and Congress take the next year to "develop a farm policy that better serves and balances these interests." The current farm law does not expire until 2002.