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Obama Budget Takes Aim at Farm Payments

posted on March 6, 2009

Hello, I'm Mark Pearson. Government data released this week revealed America's work force is getting smaller, thanks to a tsunami of layoffs that is not predicted to ease anytime soon.

According to the Labor Department, U.S. employers slashed 651,000 jobs from their payrolls in February, pushing the national unemployment rate to 8.1 percent… its highest level in 26 years.

Both figures were worse than analysts expected and had bearish implications for Wall Street, where the Dow Jones Industrials traded briefly below 6,500. However, a late session rally capped a volatile week of trading Friday with a weekly loss of 429 points.

And the government tallied a record 31.8 million Americans receiving benefits from the Supplemental Nutrition Assistance Program, or SNAP, – formerly known as food stamps.

President Barack Obama has launched a multi-faceted assault to lift the country out of recession including: a $787 billion stimulus package of increased federal spending and tax cuts; a revamped, multibillion-dollar bailout program for the nation's troubled banks; and a $75 billion effort to stem home foreclosures.

This week, though, Republican leaders made a few headlines of their own, as they sounded the alarm on the President's record federal budget proposal.

Obama Budget Takes Aim at Farm Payments

President Obama's $3.6 trillion budget hit many lawmakers like a freight train this past week. The outline describes sweeping overhauls of America's health care system and a federally enforced cap-and-trade structure to monetize greenhouse gases and generate billions in new tax revenues. Republicans have come out in force to oppose the increased spending, additional taxes, and an estimated $1.6 trillion deficit.

Rep. John Boehner, House Minority Leader, R-Ohio: "The era of big government is back, and Democrats are asking you to pay for it. The administration's plan, I think, is a job-killer, plain and simple. And it raises taxes on all Americans while we're in the middle of a recession."

But while the Obama Administration and Democratic members of Congress pledge to authorize the budget in the coming months, the President vowed to slash some government spending.

President Barack Obama: "Over the last eight years, government spending on contracts has doubled to over $500 billion. Far too often, the spending is plagued by massive cost overruns, outright fraud, and the absence of oversight and accountability. We are spending money on things that we don't need, and we are paying more than we need to pay, and that's completely unacceptable."

One contract deemed unacceptable by federal officials originates from the Department of Agriculture. According to Ag Secretary Tom Vilsack, nearly $400,000 in contracts authorized during the Bush Administration now are labeled "inappropriate". Vilsack declined to specify further details, but did mention the contract involved "excessive" foreign travel payments to an outside consultant once affiliated with Iowa State University.

Sec. Tom Vilsack, USDA: "What the taxpayers need to know is that every single department of government has now been charged by the president to review in detail the nature of contracts that we've entered into in order to do what American families are doing. American families are sitting down today and trying to decide, "How do we save money? How do we eliminate unnecessary spending?" Their expectation is the government does the same.

USDA also has come under fire for additional belt-tightening proposals in the Obama budget. Under the new plan, farmers earning more than $500,000 in sales would not receive any direct federal payments.

Sec. Tom Vilsack, USDA: "I think the President's focus is directed at farms and ranches that have significant sales. Large income and large sales size farms. These are farms that receive a disproportionate amount of the direct payments. I think over a period of time the President believes, as he campaigned on, that those need to be adjusted."

The $500,000 sales limit sent shockwaves through much of the farm sector this past week. Obama has previously supported bipartisan legislation from Iowa Republican Charles Grassley that would limit payments to individuals making more than $250,000 in adjusted gross income or AGI. Grassley opposes the new method of payment limits despite endorsing the proposal's goal of trimming federal payments.

Critics of the Obama proposal prefer an AGI trigger for direct payments due to the unreliable nature of farm inputs and the skyrocketing costs of running a modern agricultural operation. According to USDA, more than 125,000 farms make annual sales exceeding $500,000.


Tags: agriculture Barack Obama government money news presidents Tom Vilsack USDA