Statements on Introduced Bills and Joint Resolutionsby Senator Chuck Grassley
Posted on 2013-02-12
GRASSLEY (for himself, Mr. Johnson of South Dakota, Mr.
Enzi, and Mr. Brown):
S. 281. A bill to amend the Food Security Act of 1985 to restore
integrity to and strengthen payment limitation rules for commodity
payments and benefits; to the Committee on Agriculture, Nutrition, and
Mr. GRASSLEY. Mr. President, I rise today to talk about the farm bill and then specifically about reforming payment limits for farm programs.
As one looks back to the fall of 2011 and the failure of what was referred to as the ``supercommittee,'' we saw many committees continue on with business as usual afterwards. However, one committee's members took it upon themselves to continue efforts to tackle spending and propose meaningful cuts--the Senate Agriculture Committee.
For that matter, the House Agriculture Committee worked towards that end as well. I commend Chairman Stabenow and then Ranking Member Roberts for corralling the many ideas of the members of the committee to write a bill that cut $23 billion.
We were able to work in committee to get the bill done. We were able to work in a bipartisan manner to get the bill across the Senate floor. It is how legislation is supposed to be considered and debated in the Senate.
One of the measures in last year's farm bill was my proposal reforming payment limitations in the farm program.
Adopting reforms to payment limitations contributed to the $23 billion in savings. Beyond just being a part of saving money, these reforms help ensure farm payments go to those who they were originally intended--small and medium-size farmers.
In addition, the reforms include closing off loopholes so nonfarmers can't game the system. I will come back to my proposed reforms in a minute after I say just a few words about the overall farm bill picture.
As we all know, Congress was not able to complete work on the farm bill last year. But that is not for a lack of desire by either the Senate nor the House Agriculture Committees. There remains a desire to get a 5-year bill passed.
Supporters of the farm bill need to take a hard look at what challenges were presented last year to getting the bill done. We need to forge ahead knowing some tough decisions need to be made.
For the Senate, we need to consider whether it is realistic that we only reduce $4 billion out of the nearly $800 billion nutrition title. More can and should be done. The nutrition title comprised by far and away the largest expenditure in the bill.
There are more reforms we can make to programs such as food stamps, and they are reforms that cut down on waste, fraud, and abuse in the program but also safeguard assistance for people who need it.
There are other programs we need to take a fresh look at. Should we accept the status quo on the sugar program? How do we handle dairy policy? What policy can we implement in the commodity program that won't distort planting decisions but maintains an effective safety net? These are some of the many issues we need to debate again and decide. I, for one, hope we are able to start soon and work together to get a 5-year bill completed this year. Our farmers and rural communities deserve to have certainty.
When we do move forward on drafting a new farm bill, I will again be pushing for the reforms to payment limitations. That is why today I am introducing the Farm Program Integrity Act of 2013 with Senators Johnson of South Dakota, Senator Enzi, and Senator Brown.
The proposed legislation strikes a needed balance of recognizing the need for a farm safety net while making sure we have a defensible and responsible safety net.
In case there is any doubt, we do need a farm program safety net. For those who argue we do not need a safety net for our farmers, I argue they do not understand the danger of a nation which does not produce its own food.
Take Germany and Japan during World War II, for instance. There came a point where their soldiers had difficulty fighting because they didn't have food to eat. So today their respective governments maintain vigorous support for their farmers.
It is a matter of social cohesion as well. Without a secure source of food, we jeopardize our very way of life. Look around the world where there is hunger and you see rioting, stealing, and other acts of violence. We need our farmers to keep producing our food.
For all the advances in modern agriculture, farmers are still subject to [[Page S659]] conditions out of their control. Just look at the drought that still grips much of the U.S.
Without an adequate safety net, some farmers would be left with no ability to make it the following year. That would mean potentially less food being produced for an ever-increasing world population. That is a scary prospect.
While farmers need a safety net, there does come a point where a farmer gets big enough and financially secure so that he can weather tough times without much assistance from the government.
Somehow, though, over the years there has developed this perverse scenario where big farmers are receiving the lion's share of farm program payments. We now have the largest 10 percent of farmers receiving nearly 70 percent of farm payments.
There is nothing wrong with a farmer growing his operation, but the taxpayer should not be subsidizing large farming operations to grow even larger. By having reasonable caps on the amount of farm program payments any one farmer can receive, it helps ensure the program meets the intent of assisting small and medium-size farmers through tough times.
My proposed caps on payments will also help encourage the next generation of rural Americans to take up farming.
I am approached time and again about how to help young people get into farming. When large farmers are able to use farm program payments to drive up the cost of land and rental rates, our farm programs end up hurting those they are meant to help.
It is simply good policy to have a hard cap on the amount a farmer can receive in farm program payments. We will keep in place a much needed safety net for the farmers who need it most. And it will help reduce the negative impact farm payments have on land prices.
Our bill sets the overall cap at $250,000 for a married couple. In my State, many people would say this is still too high.
But I recognize that agriculture can look different around the country, and so this is a compromise.
Just as important to setting a hard cap on payments is closing off loopholes that have allowed nonfarmers to game the farm program.
The bill being introduced today will do this by cutting off the ability of these nonfarmers from abusing what is referred to as the ``actively engaged'' test.
In essence, the law says one has to be actively engaged in farming to qualify for farm payments. However, this has been exploited by people who have virtually nothing to do with the farming operation yet receive payments from the farm program.
Our Nation has over $16 trillion in debt. We cannot afford to simply look the other way and let people abuse the farm program.
The Farm Program Integrity Act of 2013 is the same in purpose as what it states in the name. This is about increasing the integrity of the program.
My colleagues here in the Senate agreed with me last year as we included these pivotal reforms in the farm bill. I am confident these reforms will garner similar approval in the 113th Congress.
I mentioned earlier how we need to assess some of the challenging areas of farm policy as we look to pass a 5-year farm bill, and some tough decisions need to be made.
However, my proposed reforms regarding payment limits do not pose a tough decision. They are common sense and necessary reforms.
Mr. JOHNSON of South Dakota. Mr. President, I rise today to join with my friend and colleague from Iowa, Chuck Grassley, in introducing the Farm Program Integrity Act of 2013, which would establish commonsense, meaningful farm program payment limitations. I am pleased that Senator Sherrod Brown and Senator Mike Enzi are also joining us in this effort. At a time when our country faces significant budgetary constraints, it is important that we look for bipartisan and commonsense approaches to restructuring programs in such a way that improves their effectiveness while also reducing the deficit. Our legislation will do that, and our approach has already garnered widespread support.
The current structure of our farm support program has, in a number of ways, failed rural America. In 2008, the largest 12.4 percent of farms received 62.4 percent of farm program payments, according to the United States Department of Agriculture's Economic Research Service, USDA ERS. With such a disproportionate share of the program going to the largest, most capitalized operations, the small and medium-sized family farmers are squeezed out of the business. The farm bill is intended to provide programs that function as a safety net for farmers, but it has instead become a cash cow for the few large producers. We must maintain a safety net for producers, but the system must be targeted to family farmers instead of large agribusinesses.
The 2008 farm bill took some important steps to strengthen the integrity of our farm support system. The bill established an income threshold for program eligibility in which payments are limited to producers with less than $500,000 in non-farm Adjusted Gross Income, AGI, and $750,000 in on-farm AGI, for a total limit of $1.25 million AGI. Additionally, the law eliminated the triple-entity loophole and required that payments go to a specific individual through direct attribution. These were important first steps. However, there is much more we must do to restore integrity to our farm programs.
Under the current law, we have a system of support for producers in the form of direct and counter-cyclical payments. Direct payments are capped at $40,000 and counter-cyclical payments are capped at $65,000; additionally, there is no cap on marketing loan gains and loan deficiency payments, and thus, there is effectively no total limitation. This is unacceptable. Without a cap on payments, the Federal Government is subsidizing producers to get bigger, which in turn makes it more difficult for the smaller family farmers, and particularly young and beginning producers, to survive.
Last June, we took some meaningful steps in the Senate to address the structure of our farm support system. Senators from both sides of the aisle came together to pass the Agriculture Reform, Food, and Jobs Act, S. 3240, commonly referred to as the farm bill, with broad support. The bill, as passed out of the Senate Agriculture Committee, contained a hard cap of $50,000 on payments under the new Agriculture Risk Coverage, ARC, program, a program developed to replace the antiquated direct and counter-cyclical programs.
The committee-reported bill also contained important language to close loopholes that have allowed ``paper-partners,'' or individuals not directly engaged in the farming operation, to receive farm program payments. The bill created an important new standard for determining who qualifies as a farm manager. In addition to the language incorporated into the underlying bill, Senator Grassley and I also offered an amendment during floor consideration to cap marketing loan gains and loan deficiency payments at $75,000. Our amendment passed overwhelmingly with 75 votes.
The House Agriculture Committee marked up and reported its own version of the farm bill reauthorization. Unfortunately, the House leadership refused to bring the bill to the floor before the end of 2012. As a result, Congress was left in the position of having to pass an extension of the 2008 farm bill, and push off work on a full reauthorization, including the important reforms we included in the Senate-passed bill, until the 113th Congress.
The legislation we are offering today combines the cap on farm program payments and language to close loopholes from the Senate-passed bill. As Congress proceeds with reauthorizing our farm programs, I will continue pushing to ensure that we finally provide for meaningful payment limitations and target assistance to small and medium-sized family farms.
As the most important industry in South Dakota, agriculture is the economic engine that drives our rural communities. Without viable family farmers and ranchers, our small towns and Main Street businesses would face significant financial hardships. I have worked with Senator Grassley on this issue for a number of years, and I'm proud to once again join with him today to continue this important fight.
[[Page S660]] ______ By Mr. REED (for himself, Mr. Grassley, and Mr. Leahy): S. 286. A bill to enhance civil penalties under the Federal securities laws, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.