Direct Subsidy Caps
As you probably know, Obama recently called for ending subsidies to agribusinesses that don't need them in his State of the Union. While I am for some form of subsidy reform, I think Obama was incredibly naive in proposing it as he did in the State of the Union. Peterson's remarks show why.
First off, changing the subsidies now means re-opening the farm bill. Peterson said "We fought the fights." In other words - the farm bill is a done deal until it comes up again. He added, "I think the administration now realizes that some of these ideas don't hold water... My sense is, when they [the Senate and House] roll out these budgets, I really don't expect them to wade into the farm bill." By "hold water" I think he means that Obama now realizes the extent of opposition he is facing to get his proposed changes passed. And he's not interested in expending that much political capital on it. It would be a big, time consuming loser like Bush trying to privatize social security.
About the actual proposal, Obama wanted to end direct payments to any farmer making over $500k in revenues, regardless of their costs. And it's not impossible for someone to have $500k in revenues but $600k in costs. Direct payments are just ONE form of subsidies so these farmers wouldn't be totally screwed out of government payments, but I'd like to see some guarantee that no farmer will end up in the red before I support any subsidy caps.
Peterson said a cap at $500k affects "all the real farmers. The only people it doesn't affect aren't farmers." In other words, if you're growing stuff for sale and making less than half a mil on it, you're not a farmer in Peterson's book. Offensive, but not a shock.
Peterson continued that he assumes what they THOUGHT they were doing was using adjusted gross income, and "that wouldn't have been out of the ballpark." (I think the current limit is $750k. In other words if your net income from farming is $750k, you don't need help from Uncle Sam.) Peterson also said he's open to lower limits on non-farmers but "It's not going to save a lot of money."
Cap & Trade
As you know, Obama's talking about a cap and trade system for carbon emissions. What I believe he means - and what I hope passes - is a system in which no polluting is free. If you want to pollute, you pay. It's essentially a carbon tax. Peterson said,
The jury's out on that because nobody knows exactly where this is going... We see sufficient momentum here that we have undertaken an effort to define how agriculture can fit into any climate change bill that comes out... We feel like we need to get ahead of this and lay out how agriculture can reduce our carbon footprint.
In other words, Peterson isn't ready to dig his heels in and oppose a cap and trade system YET because he's hoping he can turn it around to agriculture's benefit. He hopes that farmers can get paid for sequestering carbon under any new system. So do I.
Food Safety
Apparently Stenholm recently said that the USDA is best suited for all food safety (not the FDA). Peterson said he agrees but it's "not realistic." He's planning hearings on food safety in the ag committee at the end of March. That will begin the ag committee's work in coming up with its own food safety bill (as opposed to all of the food safety bills that are currently coming out of the Energy & Commerce committee).
Peterson said that "maybe USDA should regulate everything from the farm to the processing plant and then the FDA should regulate everything after that from the processing plant to the end of the food chain." He added, "I'm not sure that the FDA is capable of doing anything." He thinks "This idea that you're going to put them [FDA] out on the farm and have any kind of good outcome" is a bad idea.
NAIS
Peterson's staunchly pro-NAIS but he started by saying, "I understand the concern of the producers, my mindset growing up on a farm is probably closer to theirs than they would believe."
He added, "For slow moving diseases like bovine TB, it's not as critical... But if you get FMD [foot and mouth disease], there is no way we have any ability to get ahead of this thing... it will kill our export markets." He believes it will cost $30 to $100 billion if we had an FMD outbreak, far greater than the cost of NAIS. Which is a nice thing to think about for Big Ag, but that STILL doesn't convince me that 4-H kids need to tag their cows for the state fair.
Perhaps most notably, Peterson said, "We don't need to pass legislation to have a mandatory system. The secretary has the authority to do a mandatory system, right now." I would hope that this means he won't want to pass any bill. Particularly because he said, "I don't think this is gonna be dealt with legislatively." He added that it will be the USDA and Homeland Security who make the decision whether NAIS is necessary. |
