Democrats work to save agribusiness subsidies

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WASHINGTON -- As Sens. Barack Obama and Hillary Rodham Clinton toured the land denouncing special interests, giveaways to the rich, home foreclosures, job losses and a middle-class squeeze, back in Washington House Speaker Nancy Pelosi and other top Democrats met behind closed doors on a plan to raise taxes and cut food-stamp money to protect billions of dollars for agribusiness, a sector of the economy that is booming.The negotiators agreed this week to find $10 billion in extra money in a last-ditch effort to save the farm bill, once seen as an opportunity to reform commodity programs and divert scarce funds to conservation, nutrition, organic research and fruit and vegetable growers who are locked out of the Depression-era programs. The money is needed to appease these interests while still maintaining the commodity subsidies. Yet in proposals so far, those areas get trimmed to keep the subsidies flowing.The subsidies demanded by the farm lobby would help big corn, wheat and soybean growers in areas where income is shattering records, credit is flowing and real estate values soaring.Because of government ethanol subsidies and rising demand for grain in developing nations, grain farmers are enjoying such whopping price increases that food inflation is becoming a worry. U.S. bakers are even urging a restriction on grain exports to try to dampen prices."The idea that we're going to raise taxes at a time of rising energy prices, rising food prices, a housing crisis, on the eve of a recession, to give unlimited subsidies to millionaires is absolutely disgusting," said Scott Faber, head of federal affairs for the Grocery Manufacturers Association. "It just defies logic. ... I can't imagine why Democrats and Republicans of conscience aren't screaming from the highest rooftops."The Bush administration promised to veto the House and Senate farm bills passed last year if they raised taxes, used budget gimmicks and continued sending aid to wealthy farmers. Both bills needed extra money to increase spending on conservation, food stamps and fruit and vegetables while still maintaining grain subsidies.If anything gets cut, support for the bill could collapse. To figure out how much extra money is needed, Democratic negotiators met privately in Pelosi's office Tuesday night, just before the Democratic presidential primary debate in Ohio.Off the table are the $5 billion in automatic payments sent to commodity farmers and landowners every year, whether the crops are grown or not. Other farmers do not get these payments. Married commodity farmers could get up to $120,000 a year in government checks if they earn less than $1.8 million a year.Negotiators also need money for a new $5 billion "permanent disaster" fund that would benefit a handful of Plains states whose farmers plow arid land, routinely see their crops fail and continue planting anyway, assured of federal aid.Even budget gimmicks such as pretending the automatic payments will disappear in 2016, only to reappear in 2017, don't make the numbers work.So the negotiators are looking to cut money that was added for food stamps and food banks. They may trim conservation funding, and ditch some research and marketing money for fruits and vegetables. They are scouring the tax code for ways to raise funds, such as squeezing more taxes from consumers' credit-card and debit-card transactions."This is crazy," said Rep. Ron Kind, a Democrat from Wisconsin farm country who is pleading with party leaders to reform the bill -- and to do so in the open, where everyone can see. "It's as if the Congress is operating in a vacuum, completely ignorant of what the market is doing."Among those meeting in Pelosi's office were House Ways and Means Committee Chairman Charles Rangel, the New York Democrat and food-stamp advocate, and Senate Democratic leader Harry Reid, the Nevadan who said he would "gag" if the economic stimulus package sent $600 checks to rich people.The Bush administration amended its veto threat, agreeing to spend an extra $6 billion in the bill, but was lambasted nonetheless by farm-state Senate Republicans for not agreeing to twice that much and refusing to raise taxes to pay for it.American Farm Bureau President Bob Stallman issued an urgent call to lobbyists: "I have talked to a lot of farmers and I can tell you, they don't really care whether something is a budget gimmick, or closing a loophole, or providing a tax credit," so long as subsidies aren't cut.(E-mail Carolyn Lochhead at clochhead(at)sfchronicle.com.)(Distributed by Scripps Howard News Service, www.scrippsnews.com.)