Veto threat seen lever for farm-subsidy reform

By Charles Abbott

WASHINGTON (Reuters) - Thanks to a White House veto threat, Congress is on the path to an overall tightening of farm subsidy rules, said a staunch Senate advocate of payment limit reform on Tuesday.

Sen. Charles Grassley said he believed Congress would close loopholes that allow excessive payments and may lower the ceiling on payments per farm, now set at $360,000 a year, as part of an overhaul of U.S. farm law.

Those steps go beyond the White House goal of no subsidies to the top 2 percent of Americans. The White House says it will veto the farm bill if it raises taxes or allows payments to people with an adjusted gross income over $200,000.

"If we didn't have the White House threat of a veto, we couldn't do anything," Grassley, an Iowa Republican, said at the Reuters Regulation Summit. Instead, he said, "We're going to beef up what's in the House and Senate bills."

Grassley is one of nine Senate negotiators who will work with the House on a final version of the farm bill. There are several key disputes between the chambers, including subsidy rules, which have become the premiere test of farm law reform.

The House and Senate agreed in their bills to three reforms -- tracking payments to individuals, no longer allowing farmers to collect payments directly and through two affiliated operations and abolishing "commodity certificates" that can be used to evade the $360,000 limit.

The bills also revise payment limits but did not reduce them to the $250,000 "hard" cap proposed by Grassley and do not go as far as the administration to exclude high-income people from the farm program.

A lower payment limit is needed, said Grassley, and there should be a tighter definition of who is a farmer. At present, anyone who provides land, capital, equipment, labor or management qualifies for farm supports. Grassley and North Dakota Democrat Byron Dorgan say 1,000 hours a year of labor or management should be required for eligibility.  Continued...