In budget, Obama throws gauntlet for farm-subsidy fight

Feb 26, 2009      Chicago Tribune

By Mike Dorning

Feb. 26, 2009 (McClatchy-Tribune News Service delivered by Newstex) -- WASHINGTON -- President Barack Obama's budget signals that he is ready to reopen an often-ferocious political battle over farm subsidies, proposing to cut aid to large farms that receive big government subsidy checks.

Obama's plans should come as no surprise to agricultural interests. As a candidate, he openly supported caps on subsidy payments in a debate on the eve of the Democratic caucuses in the farm state of Iowa.

But Thursday's budget statement puts him at odds with some of the most powerful interests within the farm lobby, which successfully fought off former President George W. Bush's efforts to trim farm subsidies even when Republicans controlled Congress and rarely rebuffed their president.

In 2008, Congress defeated a proposal that closely resembles the Obama plan to cap annual farm subsidy payments at $250,000.

Obama's budget also calls for eliminating one type of subsidy to farms with sales of more than $500,000 per year. That subsidy is in the form of direct payments, which are separate from the price supports that account for the bulk of agriculture assistance. An Agriculture Department spokesman said the limits would affect about 81,000 farms, or about 4 percent of all farms in the U.S.

These proposals would have the biggest impact on cotton and rice farms, which are typically larger operations clustered in California, Texas and the Southeast, said Otto Doering, an agricultural economics professor at Purdue University who has advised the Agriculture Department on three farm bills.

A separate Obama proposal to reduce subsidies for crop insurance would have the greatest impact on states in the Great Plains.

"It's going to be a real battle," Doering said. "This is a thing that will really split party lines. The Republicans who represent cotton and rice will go down fighting on this. Populist Democrats in the Plains states will also be opposed."

Doering noted that cotton and rice producers have been among the most politically effective interests in the farm lobby in recent years. One factor helping them is that members of Congress from regions where the crops are grown typically serve long careers in Washington and accrue seniority in the agriculture committees.

The subsidy caps nonetheless have a populist cast that offers some appeal to at least some farmers with small and medium-sized operations, particularly in corn and soybean growing regions in the Midwest.

"Today, we have a farm program that provides subsidies to big farms that then turn around and use that to drive family farms out of business," said Chuck Hassebrook, executive director of the Center for Rural Affairs in Lyons, Neb.

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