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Dairy Spared Under Senate Budget Cut Plan

posted on October 21, 2005

Hello, I'm Mark Pearson.

The September economic reports are trickling in and nearly every one carries the thumbprint of Hurricane Katrina.

*The Conference Board's Index of Leading Indicators fell in September for the third straight month, thanks to rising energy costs related to Katrina. *Inflation at the wholesale level jumped by the largest amount in more than 15 years, again reflecting the soaring costs of energy. *And Federal Reserve Chairman Alan Greenspan warns the ever-tightening world oil market will act as a drag on near-term U.S. economic growth.

Nowhere is the impact of rising energy costs felt more sharply than in farm country. From harvesting crops to drying grain, profit margins for farmers are shrinking because of higher fuel costs. And pocketbook relief from Washington is N-O-T an option. That's because farm state lawmakers are under the gun from Congressional leaders to cut agriculture spending.


Dairy Spared Under Senate Budget Cut Plan

The assignment from the budget reduction masters in the Senate was to cut $3 billion from farm program spending over the next five years. For the Senate Agriculture Committee, that meant deciding which programs bore the brunt of the mandated cuts.

Sen. Saxby Chambliss, R-Georgia: "I do not relish // making these cuts. But I believe we owe it to the American people to trim mandatory spending."

In a plan authored by the staff of Committee Chair Saxby Chambliss, lawmakers this week approved trimming payments to farmers by 2.5 percent across the board. That would save nearly $1.3 billion over five years. Another $1 billion in savings would come from cuts in conservation program spending.

The bill spared two USDA-funded programs which previously had been targeted by budget hawks for reductions or elimination.

The first was the food stamp program, which just two weeks ago faced a cut of some $574 million. Chambliss said widespread concern from committee members led him to spare the program.

Also spared the chopping block was the contentious Milk Income Loss Contract program. Chambliss allowed its reauthorization at a cost of nearly $1 billion.

Western lawmakers introduced an amendment trying to kill the MILC program, but failed. They claim the program leads to overproduction and robs other farm subsidy programs of needed cash.

Sen. Mike Crapo, R-Idaho: "That $998 million price tag is achieved, is paid for by additional cuts to our commodity programs, additional cuts to our conservation title programs, and additional cuts to agricultural research."

Lawmakers from states with smaller dairy operations argued it was time for milk producers to benefit from the same type of counter-cyclical program employed by the farmers of other major commodities.

Sen. Rick Santorum, R-Pennsylvania: "Those of us in farm country who haven't been at the table here to get the farm subsidies for years and years get sort of tired of being told that just because our program is new on the block, that it should continue to fund all the programs that have been around forever where people have been at the trough for 70 years."

The mark-up bill now goes to the Senate Budget Committee, which must reconcile all spending measures to meet the required funding reductions.


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