What Happens if Congress Doesn't Pass a Farm Bill?

Chicago -- This was supposed to be the week that Congress finally passed a new farm bill, to replace the one that expired six months ago.

It still might happen. But the behemoth $300 billion piece of legislation -- which covers not just commodities subsidies and payments to farmers, but also food stamps, nutrition programs, and numerous conservation and energy programs -- is having a rough time in congressional conference as leaders in both houses try to hammer out the differences between their two bills and figure out how to pay for the extra spending.

The idea that a farm bill might not get passed -- necessitating a one-year extension of the 2002 Farm Bill or, in the worst-case scenario, a reversion to the antiquated 1949 "permanent law" -- has numerous constituencies up in arms.

"The single most important thing that hungry Americans and food banks need right now is a farm bill," says Maura Daly, vice president of government relations for America's Second Harvest. Describing a "perfect storm" of spikes in food prices, decreasing food donations, and skyrocketing energy and health care costs, she says a simple extension of the 2002 bill would be unacceptable.

The Senate and House actually agree on a lot. Each has passed a farm bill that increases support for conservation, food programs, and "specialty crops" like fruits and vegetables, while leaving the central commodities portion largely unchanged, sticking with the same system of subsidies and payments to farmers despite an unusually strong call for major reforms this time around.

The bigger issue is not what's in the bill but how to pay for it. Pay-as-you-go rules mean that Congress has to find offsets for any additional spending it wants -- over the $280 billion "baseline" projected if current policies continued.

House and Senate proposals use savings and new revenue from motley sources -- customs and user fees, a credit-card compliance program that should improve collection of taxes, a change in brokerage reporting on certain securities transactions -- but each house has issues with the other's proposed offset, either to pay for other upcoming bills or to avoid anything that smacks of new taxes, something the House has said is unacceptable.

A contentious disaster program

In addition, a few programs have become points of contention: The Senate wants $2.5 billion in tax credits for things like biofuels, conservation, and depreciation in the value of racehorses -- an add-on that the House is balking at. The House proposed a bill that would include about $6 billion in new funding, but left off a $4 billion permanent disaster program that Sen. Max Baucus (D) of Montana, chair of the Finance Committee, has said is nonnegotiable.

As of Tuesday morning, an agreement still hadn't been reached, though Senator Baucus and Rep. Charles Rangel (D) of New York, chairman of the House Ways and Means Committee, were planning to sit together to try and hash out the differences.

The disaster program is controversial among observers, too.

"It's the only improvement in the safety net for farmers," says Katy Ziegler, vice president of government relations for the National Farmers Union, which announced last month it would prefer no farm bill to one that excluded a permanent disaster program. "If farmers don't have a crop, the safety net is irrelevant."

Others say the disaster program is among the worst in a slew of bad ideas, since it encourages farmers to cultivate marginal land -- in particular, ecologically valuable grasslands -- that should never be used for agriculture.

"It's kind of a one-two punch for the environment," says Sara Hopper, an attorney at the Environmental Defense Fund, noting that the Senate reduced spending on conservation programs for the disaster program. "Not only are you taking away money desperately needed for conservation, but you're putting it into a program that actually encourages intensive agriculture on marginal lands."