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Tentative deal on farm bill would boost food stamps, maintain subsidies
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House and Senate negotiators reached a tentative deal Friday on a $290 billion, five-year farm bill that would increase spending on food stamps and other nutrition programs while mostly maintaining existing farm subsidies.
The outline includes a $861 million increase for nutrition programs over 10 years, partly paid for by slashing crop subsidies by $400 million and cutting a program to pay farmers for ruined crops by $250 million. Even though the bill covers five years, budget analysts estimate programs over a decade.
It also includes a $3.8 billion disaster relief program for farmers, scaled back from the $5 billion proposed by the Senate. The bill would cost $10 billion more than allocated by budget committees last year.
THE BREAKTHROUGH
A breakthrough came when lawmakers agreed on a $1.7 billion package of tax breaks -- including depreciation incentives for racehorse breeders sought by Sen. Mitch McConnell, R-Ky., -- and on how to finance the overall package.
GOAL: COMPLETED BY MAY 8
Senior Democrats expressed optimism that they would soon send the measure to President Bush, who has not indicated whether he will support it. "I don't think there's any question now that we can get this done by the eighth of May," said Rep. Collin Peterson, D-Minn. He hoped the bulk of the deal -- details of which will be hashed out over the weekend by aides -- would be ratified Monday. Rank-and-file lawmakers must still vet the deal.
WINNER: PETERSON
It marks a significant victory for Peterson, who took over the top post on the Agriculture Committee last year with a reputation as an advocate for rural America, particularly his rural northwest Minnesota (Seventh) district.
For the past year, he has been at the vortex of talks to balance the interests of farm lobbies and reformers bent on weaning agriculture from subsidies. He brokered a complex farm deal last summer, only to watch it fall apart in partisan divisions over funding.
He has faced intense pressure to broker another deal that would pass muster with White House budget cutters. The alternative, he said, was to watch farm programs expire and revert to policies enacted in the 1930s and 1940s. The current bill expired in October but has been extended.
WINNER: NUTRITION
Sen. Tom Harkin, D-Iowa, the Agriculture Committee chairman, said that with the increases two-thirds of farm bill resources would go to nutrition.
LOSER: ETHANOL TAX CREDIT
To close stubborn funding gaps, negotiators agreed to cut an ethanol tax credit that has previously been seen as untouchable. They sliced $1 billion in support for blending fuel with the corn-based additive, lowering the per-gallon credit from 51 cents to 45 cents.
IN PROGRESS: FARM SUBSIDIES
Provisions limiting farm subsidies for the wealthy were still being finalized. Among the most criticized is the $5.2 billion a year in "direct payments," which are disbursed to farmers at a time of record profits for farmers. The proposed cut in those payments -- a relatively modest $400 million over 10 years -- is unlikely to quiet critics.
Under the deal, the government would limit payments to high-earning "nonfarmers," who make a small portion of their income from farming. It would not impose income limits on wealthy farmers, Peterson said. Bush has called for limits for farmers who earn more than $200,000 annually.
MINNESOTA'S STAKE
Analyzing IRS data from 2004, the latest year available, University of Minnesota economist Kent Olson found that a $200,000 income limit would apply to fewer than 1,800 Minnesotans -- or about 2.4 percent of all individual farm returns that year. Minnesota has received more than $9.5 billion from government farm programs in the past decade, the fifth most in the nation.
NEWS SERVICES, KEVIN DIAZ
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