White House threatens veto for farm bill

WASHINGTON (Reuters) - The White House threatened on Wednesday to veto a broad agriculture law being drafted in Congress, which the administration said misses a major chance to overhaul U.S. farm policy in dire need of reform.

The Bush administration has argued that the House Agriculture Committee's plan for the 2007 farm bill -- which will set subsidy, biofuels, rural development, conservation and nutrition spending for five years -- increases taxes unnecessarily and uses accounting tricks to pay for programs.

"Myself, and the president's entire team of senior advisors, will recommend that he veto the bill if it is adopted in its current form," Agriculture Secretary Mike Johanns told reporters. "There are serious problems with the way this (House) bill was put together."

The farm bill package, passed last week under the leadership of committee Chairman Rep. Collin Peterson, would deny subsidies to people with an adjusted gross income above $1 million, which Johanns said would only be about 3,000 people. It also would require payments to be tracked to an individual.

The Bush administration has expressed concern that the House falls short on priorities such as renewable energy and rural development. It also said the bill does not sufficiently limit eligibility for government farm supports.

For its part, USDA has proposed denying commodity subsidies to people with adjusted gross income of $200,000 a year, impacting an estimated 38,000 of the wealthiest U.S. farmers.

The House is scheduled to begin debate Thursday on the bill, which replaces 2002 legislation expiring in September. The Senate has not yet begun work on its version.

But Peterson, a Minnesota Democrat, said the veto threat was "not the first time that the Bush Administration has turned its back on American agriculture."

He said the bill "represents a carefully crafted compromise that includes substantial reforms and new investments in programs that matter, including fruit and vegetable production, nutrition programs, conservation and renewable energy."

TAX-AND-FARM

A proposal from Democratic Rep. Lloyd Doggett would help pay for nutrition and food stamps by taxing U.S. plants of companies owned by firms located overseas. Republicans charge the increase would endanger tax treaties and raise the cost of doing business in the United States.

"In rejecting this bill, who is surprised that the Administration takes the side of CEOs who hold beach-side board meetings at the expense of nutrition programs to feed the least fortunate here at home?" Doggett said.

The senior Republican on the House Agriculture Committee said Republicans on the panel would oppose the legislation.

"Due to the inclusion of the tax increases, we are prepared to vote against this bill," said Virginia Rep. Bob Goodlatte, speaking for the 21 Republicans on the 46-member Agriculture committee.

A spokesman from the House Ways and Means Committee, which is charged with finding the money for nutrition programs, said a proposed farm bill offset plan largely mirrored legislation introduced by Rep. Doggett. Over the course of the five-year bill, the offset would generate $3.2 billion.

"Democrats are trying to sneak a far-reaching and potentially destructive proposal through the House," said Rep. Jim McCrery of Louisiana, the top Republican on the House Ways and Means Committee. "It is bad policy and bad politics."

Critics also believe that, without deep reform, the United States may see more challenges at the World Trade Organization court. U.S. farm subsidies already face two broad challenges from trading partners who believe they violate trade rules.

Rep. Ron Kind, a Wisconsin Democrat, and other lawmakers have proposed an alternate plan that would trim grain, cotton and soybean outlays by $12 billion through 2012. The savings would be shifted to other programs such as food stamps, land stewardship and aid to fruit and vegetable farmers. It also would use a cap for adjusted gross income of $250,000.

Johanns said Kind's amendment marked a real go at reform. "I believe that because of that they are going to pick up some support on the House floor," he said.