GOP Ag Aid Package Announced;
Panned By Those Who Want More

WASHINGTON — A Republican-backed $3.9 billion emergency agriculture relief plan unveiled last week is drawing praise from some quarters but criticism from others, particularly among farmers used to the type of government subsidy programs ended by the 1996 Freedom to Farm bill.

Kansas wheat farmer Tom Giessel says he's had to pinch pennies to keep his farm afloat and needs quick help from Congress. But Giessel isn’t satisfied with the current plan.

"It's kind of like giving somebody a breath mint after you eat a meal," said Giessel, who used donations from his community to pay for a recent trip to Washington to lobby lawmakers for help. "This is a small drop in the bucket."

Instead, the Larned, Kan., farmer says he prefers a Democratic proposal that increases government price supports, a return — at least temporarily — to the type of farm program to which Giessel and many other "program crop" producers had long been accustomed.

The GOP answer "doesn't address the issue of low commodity prices," Giessel said.

Congressional Republicans introduced their plan last Thursday in hopes of stemming the downward farm economy, which has been reeling from natural disasters, crop disease and low prices.

Under the GOP proposal — expected to be part of the 1999 agricultural spending bill — $1.5 billion would be given to farmers hit by crop losses this year; $675 million would help farmers in Minnesota and the Dakotas struggling from years of crop disease and flooding; and $75 million would go to livestock producers who lost feed and forage this year.

The proposal also would provide $1.6 billion for a 29 percent increase in the declining annual payments "program" farmers were granted under "Freedom to Farm" as a way of weaning them off longstanding subsidies.

House Agriculture Committee Chairman Rep. Bob Smith, R-Ore., an author of the proposal, said a "calamity in farm country across this nation" means, "we have to act now."

The Democrats have unsuccessfully pushed a $7 billion plan that includes a provision to lift limits on marketing loans for farmers and extend the terms of those loans from nine months to 15 months, something farmers like John Diettrich of Tilden, Neb., say is crucial to any package.

Diettrich said the Republican plan would mean about $6 an acre more for the 4000-acre corn and soybean farm he runs with his brother. He prefers an increase in the loan rates, as Senate Democrats have proposed, that would give him an additional $45 per acre.

"Lifting the caps raises the prices," Diettrich said.

Others found some solace in the GOP plan. "Our producers need an economic shot in the arm," said Larry Wooten, of the North Carolina Farm Bureau in Raleigh, N.C. "We're not convinced that marketing loans and those type things are going to be the answer. Our farmers need some sort of direct payment."

Sen. Pat Roberts, R-Kan., and other GOP leaders say their proposal, coupled with measures to open trade markets and offer tax relief, will mean good news for farmers.

"This package offers our agriculture producers relief while we continue to push for much-needed improvements to U.S. trade and tax policies," Roberts said.

Senate Democrats say they'll try to put more money into the relief plan.

The $3.9 billion in the GOP plan would be divided this way:

— $1.65 billion would added to the annual "market transition" payments that farmers are guaranteed under the 1996 farm law, a 29 percent increase over the $5.6 billion already due producers. The bonus is designed to compensate for plunging grain prices.

"That's going to help. That's direct cash," said Dwight Aakre, an agricultural economist at North Dakota State University.

— $1.5 billion to cover crop losses this year. Most of this would likely go to areas of the South and Southwest that were hit by drouth.

— $675 million, $175 million more than the Senate approved earlier, to compensate farmers who have lost crops to disease over the past years. Virtually all of that money is expected to go to Minnesota and the Dakotas. The Agriculture Department would write the programs' rules, but growers are expected to get payments equal to 25 percent of their crop-insurance claims during that period.

— $75 million for livestock feed assistance.

Northern Plains farmers "did very well in the whole scheme of things," said Rep. Collin Peterson, D-Minn.

Omitted from the plan were two Senate-approved provisions sought by livestock producers. One would require meat to be labeled as domestic or imported. The other would set up a three-year pilot program requiring any buyer, seller or marketer to report sales of livestock or meat to the Agriculture Department.

Democrats were pushing a $7 billion plan that including boosting government price supports by about 60 cents on wheat and 30 cents on corn, or about $5 billion overall.

Republicans, who view that approach as a repudiation of the market-oriented 1996 farm law, say it could spur excess production and eventually drive prices down further.

Increasing loan rates, as Democrats want to do, is a dead issue for this year because of Republican resistance, said Peterson, a member of the House Agriculture Committee.

Agriculture Secretary Dan Glickman said he was pleased that Republicans recognized there was a farm crisis but said, "This package is not enough."

The North Dakota Grain Growers also said the money was insufficient. "It's not that we're not grateful. It's just that it isn't enough," said Allan Skogen, the group's vice president.

Montana Sen. Conrad Burns, the lone Republican to support the Democratic plan when it was voted down earlier in the week, said he would try to put additional cash for farmers in other bills.

Like other Republicans, he said Congress should also pass new tax breaks for farmers and also lower trade barriers for U.S. exports.

"While this is a positive step, I still think Congress and the administration must do more for family farms, or there won't be any family farms left," Burns said.

A companion piece to the current farm aid package, though not specifically described as such, is a Republican-led effort to return a small part of expected budget surpluses in the form of overall tax reductions. It is directed at taxpayers as a whole, but some provisions would be specifically beneficial to agriculture. Democrats generally oppose the measure.

Elements of the five-year, $80 billion tax cut bill moving in the House:

— Marriage Penalty. The standard deduction would be raised for 48 million married taxpayers, about half of whom pay more than they would if they were single. The tax cut averages about $243 per return, and six million taxpayers no longer would have to itemize their income tax returns.

— Health Insurance. Implements the 100 percent premium deduction for the self-employed right away, instead of waiting until 2007. Saves 3.3 million taxpayers, many of them small-business operators and farmers, an average of $382 next year.

— Savings. Exempts from taxes the first $200 that individuals and $400 that married couples earn in combined interest and dividend income, affecting some 68 million taxpayers next year.

— Education. Extends current tax-exempt status for public-school prepaid tuition plans to private colleges and universities.

— Senior citizens. Increases the amount of outside earnings a person can have before losing Social Security benefits because of accelerating income limits.

— Inheritance Taxes. Accelerates the planned phase-in of a $1 million credit from the so-called "death tax," scheduled to occur in 2006. The current credit is $625,000.

— Farmers. Makes permanent income averaging for farmers, letting them smooth out income ups and downs, and increases the time period, or "carry-back," during which a farmer can claim deductions due to bad weather or disease.

— Families. Ensures that the alternative minimum tax cannot reduce a variety of education and child care credits, providing one million taxpayers an average benefit of $813 next year.

— Business. Extends several expiring tax and trade provisions, including a research and development credit supported by numerous companies.