March 2002: Will the GOP Rescue the Milk Tax?
Saturday March 30, 2002
By: John Frydenlund

March 2002: Will the GOP Rescue the Milk Tax?

As the 2002 Farm Bill conference begins, two major issues on the table are payment limits and dairy compacts.  It will be interesting to see whether Republican House conferees' zeal to protect huge farm subsidy payments from even the most modest limitations is so great that they are willing to reward turncoat former-Republican Sen. James Jeffords (I-Vt.) with a reincarnation of his pet program, the Northeast Interstate Dairy Compact.

The Senate-passed farm bill would reduce the annual payment limit that can be received under the federal farm program to $275,000.  The existing $460,000 limit was raised to $550,000 in the House-passed farm bill.  Most farm and commodity groups are apoplectic about any reduction in the payment limit, arguing that farmers will not be able to survive with smaller payments.

But the overwhelming percentage of government payments goes to the large farms rather than the smaller farms, which are most in need of assistance.  In fact, current farm policy allocates two out of every three farm subsidy dollars to the top 10 percent of subsidy recipients, while completely shutting 60 percent of farmers out of subsidy programs.

Although authority for the Northeast Interstate Dairy Compact was finally allowed to expire last fall and neither the House- nor Senate-passed farm bills would reauthorize the compact, the Senate-passed bill includes a new $2 billion dairy subsidy.

It is possible that Senate conferees will scuttle their modest reform of payment limits in return for getting the House conferees to allow the dairy compact to be resurrected.

If this happens, Sen. Jeffords will be the biggest winner in a victory handed to him by House Republicans eager to make farm lobbyists happy.  But, American taxpayers and consumers lose all the way around.

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