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Billions More Added to Farm Bill

Washington_A Senate panel approved billions of extra dollars for the farm bill Thursday as senators continue to squabble over how to pay agricultural subsidies and the nation's nutrition programs.

The politically popular legislation has become increasingly entangled in spats between members from different regions of the country in recent weeks, pushing the bill's passage closer to election season next year. The bill is a top issue for voters in most rural states.

The Senate Finance Committee found a way to add money to the bill, generating about $16 billion over ten years by tightening rules on tax shelters, among other tax measures.

About $5 billion of the extra money would go toward a fund for weather-related agricultural disaster assistance, while the rest of the money would go to tax credits for conservation, rural development and other farm programs.

The farm bill's baseline spending is already more than $280 billion over five years.

The finance panel is raising much of the money by cracking down on companies under the "economic substance" doctrine, which holds that for a company to claim a tax deduction for a specific transaction, that transaction must yield a profit or have some other clear economic benefit separate from the tax effect.

That provision could prove controversial when the bill hits the floor. Though it has the support of Iowa Sen. Charles Grassley, the top Republican on the committee, most of the panel's other Republicans voted against it.

Meanwhile, the Senate Agriculture Committee is still struggling to agree on how the larger farm bill should be written after the House passed its own version in July.

Iowa Sen. Tom Harkin, the Democratic chairman of that committee, postponed a scheduled Thursday consideration of the bill late Wednesday after GOP members of the committee objected. The Republicans said they had not yet seen the massive bill.

"It's a completely irresponsible way to legislate," said Republican Sen. John Thune, who represents farm-heavy South Dakota and sits on the committee. "This is probably the biggest thing that I'll vote for."

Harkin has also run into some trouble from Democrats, as members of the panel continue to disagree over how much to cut farm subsidies and the amount of money that will be distributed for conservation programs that protect environmentally sensitive farmland.

Senate Finance Committee Chairman Max Baucus, D-Mont., who is also a member of the agriculture panel, insisted that the money that comes from his committee go to the weather-related disaster fund, which is a priority for his state. Baucus is up for re-election in 2008.

The disaster trust fund would help reimburse farmers who have lost crops or ranchland because of weather. That assistance has been paid through emergency dollars in recent years, and has occasionally threatened to stall spending bills as Western and Midwestern members have made recovering those losses a priority.

Harkin has never really liked the idea of a permanent disaster fund, and has said he would prefer to use extra money for other priorities. But he has conceded in recent weeks that the disaster program would probably be part of the bill as Baucus and North Dakota Sen. Kent Conrad, also a member of both panels, have aggressively pushed for it.

Harkin spokeswoman Kate Cyrul said Harkin is continuing to negotiate with committee members and the bill consideration will likely happen after the Senate's Columbus Day recess next week.

© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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