Farm Bill Confrontation Looms as President Balks at Legislation

Posted on May 9, 2008 by Dennis Pfaff

Prospects for a new farm bill that, among other arguably more controversial provisions, trims the federal subsidies for some forms of ethanol, remained uncertain at week's end because of continued criticism from President Bush.

That was despite support from a variety of leading lawmakers and interest groups ranging from House Speaker Nancy Pelosi to the American Farm Bureau Federation.  Both issued statements endorsing the legislation that emerged earlier this week out of congressional negotiations and appeared headed for votes in both the House and Senate (see Pelosi statement here; Farm Bureau statement here).

Sen. Tom Harkin, the Iowa Democrat who chairs the Senate Agriculture Committee and the House-Senate conference panel that came up with the compromise bill, announced the agreement on a bill Thursday (access statement here). 

According to news reports, the bill includes provisions calling on the federal government to buy surplus sugar and sell it to ethanol producers, where it would be used in a mixture with corn. It also would cut a 51-cent-per-gallon ethanol tax credit that supports blending fuel with the corn-based additive to 45 cents. It would favor putting additional money into cellulosic ethanol, which is made from material such as grasses and woody plants (see Associated Press dispatch here).

Those latter provisions were the same or similar to earlier versions of the bill (see Climate Law Update story here).


The White House ripped the legislation, releasing a statement (see text here) that called it "bad for American taxpayers," and saying the bill would increase spending by as much as $20 billion and failed to include what it called "much-needed farm program reforms." Although much of the statement focused on subsidies to wealthier farmers at a time of record crop prices, it also singled out the sugar-to-ethanol provision for special criticism:

"The farm bill not only fails to reform the sugar program but actually increases government intervention to drive up sugar prices. This law would support sugar at nearly double the world market price and control supplies to assure that domestic growers meet 85 percent of domestic consumption. Any excess supply, which could be available for food production, would be owned by the government only to be auctioned to ethanol facilities at a huge loss."

In her statement praising the legislation, Pelosi also cited some of the bill's aspects related to fuels production:


"To help transition biofuels from corn, the farm bill reduces the current tax credit for corn-based ethanol and creates a new tax credit to promote the production of cellulosic biofuels."


What happens next is not certain, although Pelosi's hometown newspaper, the San Francisco Chronicle reported that Bush's opposition "sets up an effort" by Democrat Pelosi and congressional Republicans to override the president's likely veto (see story here). The Chicago Tribune reported that lawmakers planned to take up the bill next week and send it to the president's desk (see story here), and the Washington Post agreed that  a vote could be held next week (see story here). 

(White House photo)
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Farm Bill Faces Uncertainty, Would Cut Ethanol Subsidies

Posted on April 29, 2008 by Dennis Pfaff

A compromise farm bill that reportedly includes some sharp reductions in subsidies for some forms of ethanol underwent heavy criticism Tuesday from President Bush. At a news conference, he called the overall multi-billion-dollar measure a “massive, bloated” bill that would do little to solve the problem of rising food prices (see White House transcript here).

That cast uncertainty on the legislation, which emerged with some fanfare late last week from behind-the-scenes negotiations between key lawmakers. Among the notable features in the bill, according to news reports (see Reuters story here), was a 6-cent-per-gallon cut in federal tax credits for ethanol. That would take the incentive down from 51 cents to 45 cents. However, Reuters reported the bill would also create a $1.01-a-gallon subsidy for ethanol distilled from cellulose, found in grasses, woody plants and crop residue.

Last week, the bill, which also contains incentives for public nutrition programs, took life with a boost from Senate Agriculture Committee Chairman Tom Harkin, D-Iowa. He said the compromise legislation, among other things, "invests heavily in renewable energy and will help bring the promise of cellulosic biofuels to reality by providing grants and loans to move from corn ethanol to other renewable feedstocks." Access the full text of Harkin's statement here.

 

  

  

Bush, however, on Tuesday ripped the bill for not doing enough to cut subsidies for wealthy farmers:

"The bill Congress is now considering would fail to eliminate subsidy payments to multi-millionaire farmers. America's farm economy is thriving, the value of farmland is skyrocketing, and this is the right time to reform our nation's farm policies by reducing unnecessary subsidies. It's not the time to ask American families who are already paying more in the check-out line to pay more in subsidies for wealthy farmers. Congress can reform our farm programs, and should, by passing a fiscally responsible bill that treats our farmers fairly, and does not impose new burdens on American taxpayers." 

Whether Bush's remarks were enough to derail the bill was a matter of some debate. Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation told Bloomberg she believed the chances of a presidential veto were about 30 percent (see story here).    

Meanwhile, some critics of subsidies for corn-based ethanol weren't persuaded by the bill's cut in subsidies.

"I guess you could say [it] is a step in the right direction but it certainly does not go far enough," Scott Openshaw, communications director for the Grocery Manufacturers Association, told Climate Law Update Tuesday.  The trade group represents the food, beverage and consumer products industries and has pushed for an elimination of corn-to-ethanol subsidies, believing they contribute to higher commodity prices.

"We kind of feel like it's bad to take your lunch and put it in your car," Openshaw said. However, he praised the legislation's support for cellulosic ethanol, which is made from non-food plant material.

A spokesman for the Renewable Fuels Association, representing the ethanol industry, could not be reached for comment Tuesday. The organization has vocally defended ethanol, including that made from corn, from charges it is contributing to skyrocketing food prices and other global ills(see recent RFA background statement here; see Climate Law Update story here).

(White House photo: President Bush at April 29 news conference)
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