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Critics of farm subsidies lower sights on reforms

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WASHINGTON — For the many critics of farm subsidies, including both President Bush and House Speaker Nancy Pelosi, this seemed like the ideal year for Congress to tackle the federal payments long criticized for enriching big farm interests, violating trade agreements and neglecting small family farms.

Many crop prices are at or near record highs. Consternation over the country's dependence on foreign oil has sent demand for corn-based ethanol soaring. European wheat fields have been battered by too much rain. And market analysts are projecting continued boom years for American farmers into the foreseeable future.

But as the latest farm bill heads to the House floor on Thursday, farm-state lawmakers seem likely to prevail in keeping the old subsidies largely in place, drawing a veto threat from the White House on Wednesday.

Faced with fierce opposition from members of the House Agriculture Committee, Pelosi and other Democratic leaders lowered their sights on reforms and are now backing the committee's farm bill, in part to protect rural freshmen lawmakers who may be vulnerable in the 2008 elections.

Instead, Pelosi helped to secure more modest changes, pushing the committee to provide $1.8 billion in new aid for fruit and vegetable growers, generating support from those farmers and deflating some of the opposition by lawmakers seeking reforms. At the same time, Pelosi pronounced the bill a "good first step to reform" by ending subsidies for the richest farmers — those earning more than $1 million a year — and closing a loophole that let some farmers exceed subsidy limits by owning partnerships in multiple farms.

"This bill represents reform," said Rep. Collin C. Peterson, D-Minn., chairman of the Agriculture Committee. "We have made changes that nobody thought that we could ever do."

A group of dissident lawmakers led by Rep. Ron Kind, D-Wis., and Rep. Jeff Flake, R-Ariz., is still pushing a plan to sharply curtail the subsidies.

But they have been largely outmuscled by the Agriculture Committee, whose 46 members make up slightly more than 10 percent of districts in the House yet took home more than 40 percent of all farm subsidies between 2003 and 2005, according to a database compiled by the Environmental Working Group, which opposes the subsidies.

Critics in Congress include fiscal conservatives who deride the payments as wasteful government spending and liberals who call them corporate welfare for agribusiness. All say the measure will simply perpetuate the overly generous subsidy system, at a point when American farmers are well-positioned to weather changes.

"At a time when farm prosperity is as good as it is right now, this is the time to reform," said Rep. Paul D. Ryan, R-Wis., a member of the dissident group. "If we can't reform these farm programs at this moment in our history, we will never be able to do it."

The group has proposed an amendment to the farm bill that would slash subsidies and increase spending on environmental conservation, rural development and nutrition programs, including food banks. It would cut payments to farmers earning more than $250,000 a year, similar to the income cap of $200,000 proposed by the Bush administration. It would also substantially limit payments that farmers receive under guaranteed loan programs.

The White House, in a strongly worded statement on Wednesday, said that Bush would veto the farm bill in its current form because it was too expensive and would require raising taxes while not doing enough to fix the subsidy programs.

"I find it unacceptable to raise taxes to pay for a farm bill that contains virtually no reform," the agriculture secretary, Mike Johanns, said in a conference call with reporters.

The effort by Kind, D-Wis., has exposed divisions among House Democrats, some of whom argue that he is causing an internal fight that could cost the party its new majority. The fear is that freshmen Democrats from rural swing districts could lose their seats if voters blame them for lower farm subsidies. Kind, however, rejected such assertions. "The vast majority of our new members benefit from our proposal," he said.

While the administration and congressional critics of the bill are pushing for some of the same reforms, the White House would extend and even increase so-called direct payments to farmers of corn, soybeans, cotton and other major crops that the dissidents in Congress find most troubling and hope to largely eliminate.

These payments, totaling more than $5 billion a year, are made even when farmers are earning sizable profits. Critics say they should be replaced with crop insurance and other revenue protections that pay only if farmers actually lose money.

The White House, however, favors these direct payments in part because they are based on past crop production, not on current crops or prices, meaning they have no impact on market conditions and do not violate world trade agreements.

The strategic maneuvering by the administration, and some unusual alliances on Capitol Hill, reflects the curious politics of farm policies, cutting across party lines and mirroring regional interests more than partisan loyalties.

The keen interest in the bill, even among urban lawmakers from districts without a single corn or barley field, underscores the vast scope of the farm bill, which includes not just agriculture policies but nutrition programs like food stamps, and an array of energy, land conservation, economic development and other programs.

For instance, Democrats proposed a tax increase to pay for the part of the farm bill that would increase food stamps by $4 billion.

The proposal would generate about $7 billion over five years by imposing taxes on some foreign corporations operating in the United States that do not pay taxes on certain rents, royalties and interest payments as a result of international treaties.

Republicans on the Agriculture Committee, who had been questioning where the money would come from, immediately began to revolt. Led by the ranking member of the committee, Rep. Robert W. Goodlatte, R-Va., they issued a statement saying they would vote against the bill.

Underscoring the wackiness of farm politics, other Republicans, who had no intention of ever supporting the farm bill, seized the opportunity to excoriate the Democrats for proposing a tax increase. They included the minority leader, John A. Boehner, of Ohio.

"When you throw in the tax increase, he'd probably vote against it twice if he could," said a spokesman, Brian Kennedy.