Friday, April 15, 2005

More Positioning on Payment Limitations

Dan Morgan on the Washington Post Federal Diary does some inside farm politics:

Farm Subsidies May Not Face Limits ( "The Bush administration has signaled that it will not pressure Congress to enact limits on government payments to big farmers this year if lawmakers can come up with other ways to cut spending on agricultural programs by $5.4 billion."

The piece goes on to describe the current situation: the Secretary says USDA wants the reduction in payments, how we get there is negotiable; Ken Cook of EWG says "sellout", Sen. Grassley says USDA still supports me on reducing limitations.

Although there's a WTO deadline around July 1 that may come into play, I suspect the real deal comes at the end of the session, when appropriations have to be passed and legislating is done, bringing at least a temporary end to deal cutting. People like Lott and Chambliss can trade their votes on other issues for a compromise on payment limitation.

One thing to watch for real insiders: The President proposed a 5 percent cut in the program. One road to compromise would be to increase the percentage. The issue becomes for the agency in which order to apply the payment limitation, before or after reduction. In other words, if the limit is $300,000 and the gross payment before reduction is $400,000, if you reduce $400 K by 5 percent, it becomes $380,000, which is then reduced to $300,000 by the limitation. If you reduce the payment to the limitation of $300K, then apply the reduction of 5 percent, the net payment is $285,000.

We went through that issue in 1986, when the Gramm-Hollings-Rudman payment reductions applied across the board to civilian programs. It got tricky legally, but the attorneys okayed our applying the reduction after limitation. It's fair, but it's also a nightmare for the accountants. We, and GAO, finally decided in 1986 that our several billion dollars of payments couldn't be t properly accounted for. Just threw up our hands.

No comments: