September 28, 2011
www.gfb.org
Vol. 29 No. 39
OBAMA PROPOSAL WOULD CUT DIRECT PAYMENTS, RAISE ESTATE TAXES President Obama’s proposed deficit reduction plan released Sept. 19 included a number of provisions that would affect the agriculture industry and it drew criticism from members of the House and Senate Agriculture committees. Obama’s plan, which he says would reduce the federal deficit by $4.4 trillion over the next 10 years, included more than $1.2 trillion in discretionary spending cuts already ratified in the Budget Control Act. The proposal includes $257 billion in cuts from mandatory programs outside of health care. Called “Living Within Our Means and Investing in the Future,” the president’s plan would eliminate $3 billion per year in direct payments, reduce support and payments for crop insurance companies, change support and payments for producers by $8.3 billion over 10 years, reduce conservation funding by $2 billion over 10 years and extend mandatory disaster assistance. It also calls for $1 billion in new fees to finance inland waterways. In a joint statement, House Ag Committee Chairman Frank Lucas (R-Okla.) and Senate Ag Committee Ranking Member Pat Roberts (R-Kan.) said the president’s proposal demonstrates a lack of knowledge about production agriculture and how the changes would impact farmers. “Cutting $8 billion from the crop insurance program puts the entire program at risk,” Lucas and Roberts wrote. “We have heard again and again from producers that crop insurance is the best risk-management tool available. In jeopardizing this program, the president turns a deaf ear to America’s farmers.” Obama also proposed increasing the capital gains tax rate for individuals making more than $200,000 per year and for couples making more than $250,000, and it would return the estate tax exemption to $3.5 million per person with a top rate of 45 percent. The tax measures in Obama’s proposal would undo provisions in a law passed in December 2010, which set estate tax exemption at $5 million per person with a top rate of 35 percent through 2012. Visit http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pd f to view the president’s budget proposal in its entirety. Direct payments also would be eliminated under a bill introduced on Sept. 23 by Sens. Sherrod Brown (D-Ohio), John Thune (R-S.D.), Richard Durbin (D-Ill.) and Richard Lugar (R-Ind.). S. 1626, would establish the Aggregate Risk and Revenue Management (ARRM) program. ARRM would eliminate direct and counter-cyclical payments, as well as the Supplemental Revenue Assistance Payments (SURE) program, and amend the Average Crop Revenue Election (ACRE) to make it based on planted acres rather than base acres.