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Telenews Conference with Secretary of Agriculture Ed Schafer and Deputy Secretary Chuck Conner on 33 Day Extension of the Farm Bill

Washington, March 18, 2008

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MODERATOR: Good afternoon from Washington. I'm Larry Quinn speaking to you from the Broadcast Center at the U.S. Department of Agriculture. Welcome to today's news conference with Secretary of Agriculture Ed Schafer. Today's topic is the 33 day extension of the Farm Bill and what's next.

Joining the Secretary in the studio is Deputy Secretary Chuck Conner.

I'll remind reporters if you have a question to ask, please let us know that by pressing *1 on your telephone touchpad.

Now it's my pleasure to introduce Secretary of Agriculture Ed Schafer.

SEC. ED SCHAFER: Thank you. And good afternoon, everyone. Thanks for joining us here on this great day in America. We're pleased to have you on the airwaves. Before we get to your questions, I want to share a few thoughts with you today on the Farm Bill and where we are, how we got here, and where we're going to be a month from now.

And as was mentioned, I have Deputy Secretary Chuck Conner here who's my mentor on all things Farm Bill with me. Thanks Chuck, for joining us.

Last week the President signed a 33 day extension of the current law to allow Congress more time to reach an agreement on the Farm Bill. The President made it clear upon signing it, if the final bill that Congress delivers includes a tax increase or fails to provide reform for our farm policies it will be met with a veto. America's farmers deserve better than a series of short-term extensions here of our current law. They need to know what farm policy is going to be so that they can make sound business decisions about what to plant this year and how they are going to finance it.

If Congress fails to reach an agreement on a new Farm Bill that meets the standards that the President set out, he will ask Congress to extend the current law for at least one year. And we need to be clear, this is not the outcome we want to see, nor is it one we believe to best address the nation's long-term needs. The government has a responsibility to provide resolution for our farmers and ranchers and landowners and everyone who depends on the Farm Bill.

This Administration began working on delivering a forward looking set of farm policies to the American people almost three years ago. We held more than 50 Farm Bill forums all over the country. We collected more than 4,000 comments, and we used them as a basis for a detailed and comprehensive set of proposals we put forward in January of last year, almost 13 months ago.

Since then, to help move the bill forward, we have provided a full legislative language to Congress. We've agreed to a higher limit on adjusted gross income and to a higher level of overall spending than we first proposed. We've provided Congress with various spending reductions that could easily offset as much as $10 billion in additional spending on this bill. And we have met repeatedly with House and Senate leaders in an effort to find common ground that will help us move forward.

Unfortunately, the Farm Bills that passed the House and the Senate last year failed to address the issues of reform and instead raised taxes on the American people. Recent proposals from the Senate are looking around the $10 billion level for new spending of our farm programs, and we've outlined a path from the Administration to get there.

But at a time when we are enjoying a booming farm economy with record commodity prices, record farm income, record exports, it's simply unacceptable to provide spending that increases the size and scope of government while increasing taxes to the people who pay for it.

This is a time to bring reform to farm policy, so our farmers and ranchers will be better positioned to compete in the global economy in the years ahead.

And now it's up to Congress to put true reform on the table and deliver a bill that resolves the differences between the House and the Senate. As we have moved toward an effort, have increased the spending agreement, as we've looked at the reforms and have compromised on those issues, it's now time that the differences between the House and Senate be put on the table so that we can move toward a Farm Bill that the President can sign.

That means delivering a new Farm Bill that strengthens the existing safety net with a revenue-based counter-cyclical program and provides needed reforms.

It has to target support to producers who need it the most, and it has to increase spending on vital programs such as nutrition, conservation, research on specialty crops, purchases of fruits and vegetables for our nutrition program, and importantly renewable energy.

Funds for this spending must be made with offsets and not tax increases.

So that is where we are today. And now Chuck and I will be happy to answer any questions that you might have.

MODERATOR: We remind reporters as we prepare to receive your questions to press *1 on your telephone touchpad to indicate that you do have a question. And our first question today comes from Matt Kay of the Burns Bureau. Matt, go ahead.

REPORTER: Yes. Good afternoon. Thank you so much, Mr. Secretary. What in your view is it that is the core right now of this apparent stalemate? I know there's some progress on some of the spending offsets, but there still seems like a long way to go. Is this a fundamental difference over the tax issue as far as the Administration is concerned? Or is, do you think the hold-up now in the Congress is in intramural disputes over which tax changes should be made and who should control that money?

SEC. SCHAFER: It seems to us here that while the Administration has moved forward several times both in spending limits and in reform issues, we still continue to see a huge gulf between the House and the Senate. They are arguing about jurisdictional issues. That's an important factor. And it always, you know it's boiled down to how much you're going to spend and how you're going to pay for it.

We feel that we've put a lot on the table there, and now it's time for Congress to come together and iron out their differences so that we can get close enough to craft a bill that the President can sign.

REPORTER: And if there was a request for another short-term increase, let's say to the beginning of May, would the President oppose that?

SEC. SCHAFER: You know, I don't know. We'd have to see whether we'd recommend in signing one or not. We had a lengthy discussion about signing this attempt, and you know the reality is we just can't keep signing short-term extension after short-term extension after short-term extension.

Farmers and ranchers need to know under which programs they are going to be operating. They've got to make planting and financial decisions. It's time. It's too late now in some places. And it's not responsible government to do that, and if we have to move back to the old bill, which nobody wants to do, we're just going to have to do that to get the comfort in the agriculture arena so they can operate their businesses over the next year.

MODERATOR: Our next question will come from Chuck Abbott, and he'll be followed by Philip Brasher. Chuck, go ahead, please.

REPORTER: Thank you, Mr. Secretary. You've talked about putting more money on the table. I've heard that the Administration now is to the point of saying $8 billion, but then to get the remaining $10 [billion] that Congress wants that you guys are asking for more reform. I'm interested if that's correct and what more reform you want—and as a side note because you say "no taxes."

What about some of the tax provisions that the Senate Finance Committee developed on equipment depreciation and a lot of its proposals on biomass tax initiatives, which pretty much balance off and could be argued to be a net zero? Would those be acceptable?

SEC. SCHAFER: Well, Chuck, you know, you can always say net zero, let's increase our spending and increase our taxes. (laughs) You know? That's a net zero according to the way they score it on the Hill. But that doesn't work here with the Administration.

I think importantly here, you know, the President has said, 'If we're going to go forward with increases in spending, they have to come with reforms.'

We've moved from $4.5 billion to $6 billion over baseline, we've identified and agreed with $6 billion worth of spending that between the Congress and the Administration there's a gap here, and we've outlined a way for the Congress to raise, if you will, or to fund $10 billion. And we've given them way more than that in acceptable funding mechanisms.

It seems to me that, while no funding mechanism is without some kind of an issue for somebody, now is the time for Congress to come together and say—

If we're going to have a $10 billion level, if we're going to agree to $10 billion, which they said they did, then they have to put the funding sources on the table to do so, and we'll make the appropriate conversations then about what's going to be acceptable to the Administration.

MODERATOR: I want to remind reporters so that we can get a maximum number of questions from reporters then to limit the follow-up. Our next question is from Philip Brasher. He'll be followed by Jerry Hagstrom. Philip?

REPORTER: Yes, Mr. Secretary. On the issue, you said earlier that any increased spending has to come from offsets. They have insisted in both the House and the Senate, and they're still insisting, on using timing shifts of various kinds to defray money on a baseline budgeting period. Is that acceptable to the Administration? Is there any way in which you're going to object to that, because that's quite a bit of money which one could argue is not really paid for.

SEC. SCHAFER: I think I'm going to let Chuck handle that because, you know, every Farm Bill we've seen over the past million years (laughs) you know has had some kind of offsets in it. And Chuck being the expert and the experienced person he is, maybe you could give us some insight on that?

DEPUTY SEC. CONNER: Phil, we do have concerns on what Congress is labeling "timing shifts." I mean, these are really ways to get around the budget and to spend more money than what Congress has budgeted for the Farm Bill, and this causes us concern.

I will tell you, Phil, and you've heard us say before, as we traveled the countryside talking to farmer after farmer about the Farm Bill, not once did they suggest that the accounting for the Farm Bill ought to be done in this kind of way. You know, farmers are about as honest and straightforward as, you know, any people you're ever going to encounter in this country. And I believe they want their Farm Bill to be truly accounted for, the real cost of the Farm Bill to be stated, not to be hidden through some kind of a scorekeeping budget game.

And so when you're talking about timing shifts, hiding money, smoke and mirrors, however you want to label it, this is something that causes us concern, and I believe causes a lot of farmers concern out there too.

MODERATOR: Jerry Hagstrom will have the next question. He'll be followed by Jackie Fatka. Jerry?

REPORTER: Good afternoon. Rather than a follow-up, I'm going to ask two quick questions. The first is, Senator Grassley says there does seem to be basic agreement on $5 billion in offsets and that it's the other $5 billion that are the problem. Is that the case that you've generally agreed to this first $5 billion?

And secondly, there are about 60 tax measures in the Senate bill that seem to be unrelated to the funding of the bill. Have you taken a position on those measures and whether the Administration could support them or not?

SEC. SCHAFER: Jerry, on your first question, I believe that the figure is about $6 billion. We've looked at, you know we've put a lot on the table for funding sources. The Senate and the House have put a lot of stuff on. You know, we've said some of the stuff you've put forward we agreed to, and I think it's a bit more than $5 billion. So I think we're close to this issue.

As the second part goes, I think the answer is yes. We have addressed those issues, because the President has said over and over and over again, 'If I see a Farm Bill that has tax increases, then I'm going to veto it!'

So whether they are large or small, whether they are relevant or not, whether they include agriculture or don't, the point is no bill is going to cross the President's desk that has tax increases in it.

MODERATOR: The next question comes from Jackie Fatka and she'll be followed by Jutta Henning. Jackie?

REPORTER: Hi. Thanks. You continue to state that you want reform with a revenue-based countercyclical program. Is that a make or break for the President's signature on this bill? And how likely do you think it will be for a revenue-based program to be in there? And also with the disaster program, is that something that the Administration would not want to see in a final bill?

SEC. SCHAFER: Chuck, do you want to jump in at least on the first question?

DEPUTY SEC. CONNER: I'll take the first question for you, Jackie. Let me just say, we do continue to believe that revenue based is an important concept. And I will just tell you, we look at it something like this. If you are a farmer in America today, and you plant your 2008 crop and don't harvest any crop associated with that, for you it doesn't matter whether the price of wheat is $12 a bushel or $2 a bushel; you don't have anything to sell, and you're going to be in a world of hurt. And you know, under the way our current programs operate, that producer is going to be left out in the cold. He's not going to have very much help at all from this Farm Bill.

We just fundamentally feel that's wrong. And you know, this is a concept we've talked about now for almost three years, because we started hearing about it at our very first Farm Bill listening sessions when producers came to the table and said, "You know this generous Farm Bill that everybody talks about really didn't do anything for me because I didn't harvest a crop."

And that seems to me to be the people that we ought to be helping the most in our farm policy, and we're going to continue to press this issue because of that.

MODERATOR: Jutta Henning has a question. She'll be followed by Jim Berger. Jutta?

REPORTER: This is Jutta Henning from Inside U.S. Trade. I'm wondering if you could elaborate your call in the House and Senate to work out their differences and to put the numbers on the table. I'm a bit at a loss. You said it's now for Congress to say if they want the $10 billion bill they should put the funding mechanisms on the table. I'm at a loss. Are you not working with them? Is this a call for them to send you a bill and dare the President to veto it? Or, I'm a bit puzzled on whether you could elaborate on that.

SEC. SCHAFER: Well, thank you, Jutta. I appreciate the opportunity.

First, let me get back to the second part of Jackie's question or her second question which involved the disaster payment issue. You know, the Administration has said that the new bill should include a good safety net program. We all recognize that agriculture, in order to provide an abundant and safe food supply in this country, needs the safety net programs; and we're committed to them from an Administration's standpoint. How they are going to come out with the balance of risk management, of some disaster part dollars, the regular subsidy programs, you know, we don't know. But the point is, we're not going to spend too much money to be able to have a disaster program on top of everything else.

So safety net programs are important, the Administration has called for them, and how they get shaped up in the end here and what you call them we're not sure how that's going to be.

But, importantly, all of us recognize that safety net programs for our farmers, ranchers, and operators out there are very important.

Now, Jutta, to your comment, you know, 'What's with the $10 billion?' Here's why it's hung up in the House and the Senate. The Administration has moved toward that level. We've outlined a path to get to the $10 billion. And there continues to be fights between the House and the Senate and within the House and the Senate about jurisdictional issues, whether it's going to be in the tax or revenue committees, whether it's going to be in the agriculture committees, who's going to have control, who's going to operate, who's going to make the final decisions.

That needs to be sorted out in the House and the Senate. They have intramural worries and they have collegial worries between the two houses. And frankly we can't go anywhere unless they come up with a solid effort that says "this is what we stand for," so that we're negotiating not with three legs of the stool and amongst themselves but with two parties here that can come to an agreement and get the job done for farmers and ranchers across this country.

MODERATOR: Jim Berger has the next question, and he'll be followed by Jeff Nalley. Jim?

REPORTER: Yes, thank you. I just want to get back to Jackie's question on revenue based counter-cyclical. I understand that even today the scoring keeps going up and down on that program. Are you in good shape on that, or is it shrinking?

SEC. SCHAFER: I don't know. Maybe, I've been out of the office all day. Maybe Chuck's got some insight on your report for the day.

DEPUTY SEC. CONNER: Well, I think there are a variety of ways of having a revenue- based counter-cyclical, and Congress is exploring a number of those. Some I think save money, some have additional money depending upon the trigger levels. I think for us obviously in our own recommendations we put forth a solid plan that I think provided a better safety net. By providing a better safety net, we were also able to save a little bit money in that process.

And so I think our own proposal demonstrates that you can put forth a plan that represents a better safety net, that is really there for the producers when they have a major crop disaster, but at the same time saves a little money in the process because you're not paying producers a lot of money when they've harvested record crops, as is often the case under the current Farm Bill.

MODERATOR: Jeff Nalley will be next. He'll be followed by Jeff Ishee, Jeff?

REPORTER: Mr. Secretary, thank you for your time. The Administration has already been mentioned a willingness to compromise from a $200,000 adjusted gross income to $500,000, but also understand that there's compromise or an idea in Congress that would cut payments for farmers who have less than 20 acres. They'd still be eligible for conservation but not for program payments on that. What are your thoughts there, and if you're already this deep into '08, how long will it take you to implement this new policy whenever it is signed by the President?

SEC. SCHAFER: Well, I think, you know as far as the 20-acre limitation, just speaking for myself as Secretary, it just makes a lot of sense. We need to find active farming, people who are engaged in the effort of farming, people who affect the farming and agriculture economy. You know, under 20 acres is hobby type stuff, and you know unless they are growing gold on that 20 acres it just doesn't make a lot of sense for us to be supporting those types of operations with taxpayers' dollars. So, you know, I support the 20-acre limitation. I believe the Administration is there as well.

And you know, those kinds of things make some sense. They don't save tons of money, however. And we have to be looking at reforms that make some difference here in order to fund the required programs that are on the table.

As far as getting it done, you know, the mission at USDA is to implement the new Farm Bill. We're prepared to do it. We are in the process of training people, making sure our IT systems work, that the officer be able to deliver. And you know once we get that public policy we have to translate it into the marketplace, and we'll translate it as fast as possible.

REPORTER: Jeff Ishee has the next question. He'll be followed by Peter Shinn. Jeff?

REPORTER: Good afternoon, gentlemen. Jeff Ishee with Virginia Farming Television. My question is for Mr. Conner. I'm trying to get some historical perspective here, and I know you've been involved with numerous Farm Bill negotiations in the past. How does this particular year, the 2007-2008 Farm Bill, compare to previous years? The negotiating process itself.

DEPUTY SEC. CONNER: Yes. Well, I would just say, Jeff, the Farm Bill, any Farm Bill has never been easy to pass in Congress. And you know, I was just relaying a story earlier about the '85 bill and how delayed it was and the implications of that delay. And so you know, this process has never been easy. I think what is different about this bill though is that when Congress made a decision early on with both the House and the Senate to bring taxes into the equation of the Farm Bill, that really did complicate this process and make it much more difficult to pass a Farm Bill.

You know, you bring in a whole other set of committees, of jurisdiction, people that don't necessarily have strong agricultural backgrounds. They have a totally different set of interests they are bringing to the table than perhaps the House and the Senate Agriculture Committees. And that's a huge complicating factor.

And I think that has been one of the key reasons that we've seen a slow-down, perhaps almost a stalemate in this process at this point, has been these jurisdictional fights that have been occurring in Congress between the various committees of jurisdiction that now have a stake in the Farm Bill.

MODERATOR: Peter Shinn will be next, and Peter will be followed by Alison Winter. Peter, go ahead.

REPORTER: Well, thank you very much, Larry. And Mr. Secretary and Deputy Secretary Conner, thank you. I wanted to ask just your bottom line assessment whether or not either of you gentlemen feel that it's likely that a Farm Bill will indeed be done in anything like a reasonable timeframe in the next month or so.

And then secondarily, would it not be in some ways advantageous to you to have a one or two-year extension so you could focus on some other priorities and so President Bush could as you say sprint to the finish?

SEC. SCHAFER: Yes. Speaking of sprinting to the finish (laughs), you know here's our perspective. If we recommend a signing of an extension of the current Farm Bill, we leave too much on the table. You look at what's going on, most operators in this country fare better with the new Farm Bill legislation than they do with the current Farm Bill legislation. If we extend, we leave on the table specialty crops, and not only specialty crop subsidies but research in the specialty crops area which we need for better nutrition to fight the obesity epidemic in this country.

If we extend the current Farm Bill, we leave on the table increased costs for nutrition and nutrition assistance. If we extend the Farm Bill, we leave on the table the energy provisions here for renewable energy, and we will be one or two years behind the eight ball on that, something that can change the face of agriculture and rural America in this country. We'd set it aside for a too long period of time.

There are too many things here in the new farm legislation that we need to set it aside. So I am optimistic that the members of Congress will understand that. They do understand it; I know they do. But as they come together, I am optimistic that we will see a Farm Bill come together that all can support and be proud of and that will move us into a future-looking, forward-leaning agriculture policy in this country, which we desperately need to do.

MODERATOR: Alison Winter is next, and she'll be followed by Alan Bjerga. Alison?

REPORTER: Hi. Thanks for doing this call. I wanted to follow up on Jerry's question on the other tax provisions in the bill. You said that you'd oppose any tax increases, but some of those tax things that were added on were not in themselves increases. There's like tax credits for people who improve endangered species habitat on their land and tax credits for renewable energy. Does the Administration have a position on adding any of those things on to the Farm Bill?

SEC. SCHAFER: Well, you know, I think, Alison, people define taxes in different ways. But the reality is, if you take money out of the economy and use it to expand government is what the President is saying we're not interested in doing. You know, tax credits are debatable whether they actually cost you or not. Certainly they cost you in revenues. And when they cost you in revenues, is that a tax or isn't it?

You know, and I think the philosophy of the Administration here is, you know, we're not going to recommend any kind of support for programs that move money out of the private sector, out of the economy, into expanding government. So, you know, rather than debating the specifics, what we're looking for is Congress to come to the table to say, "We're going to spend $10 billion or whatever it is, and here are our funding sources." And then we can come together and figure out how this thing is going to work.

MODERATOR: And our final question today comes from Alan Bjerga. Alan?

REPORTER: Yes. You were talking earlier about how of the $10 billion that you're looking at over, it sounds like you're very close to agreement on close to $6 billion on it. And so there's a small amount that you're sort of drawing your line on. In the context of the government in general, there's been all sorts of areas where the government has expanded its reach in the last several years and will continue to until the end of the Administration. Why is the Administration so set on making its sort of stand against big government on the Farm Bill?

SEC. SCHAFER: Well, you know, Alan, I think the issue here is that now is the time. The President has put us on a course to balance the budget in 2012. We think that's important. And he's stood firm this year on whether we're going to increase government, increase scope, increase costs, etcetera, etcetera.

You know, several pieces of legislation, you know, he's come to the conclusion that we're not going to expand it. And you know why? Because when we went across this country and talked to people all over about what we want in new Farm Bill legislation, nobody said, "Hey, let's build government bigger and better and spend more money to do so and take it out of my pocket to fund it." You know, that just wasn't the message that we heard from the American people. And if it happened, this would be the first Farm Bill that raised taxes since 1933. It doesn't make sense in this arena, and especially when the agriculture economy is booming, when things are good out in Ag Country, and taxpayers are stretched thin already, to then say, 'Well we want more money from you to encourage an agriculture community that's doing really well.' Raising taxes is not the way to do that.

MODERATOR: We thank reporters for participation today and your questions. Mr. Secretary, any final thoughts today?

SEC. SCHAFER: Well, thank you for joining us. It's an exciting time. And I think Chuck and I both agree that the leaders are committed here in Congress, that they are trying to resolve their differences. And hopefully as they come together we can all come together here to provide good legislation that meets the requirements of the President, but, and most importantly, delivers a strong safety net and support program out there for our operators across this country.

MODERATOR: Secretary of Agriculture Ed Schafer.

I'm Larry Quinn bidding you a good afternoon from Washington.