MARY CLARE JALONICK Associated Press Writer WASHINGTON (AP)
The Bush administration threatened to veto a multibillion-dollar farm package on Monday, saying the Senate bill doesn't cut farm subsidies enough and would threaten World Trade Organization negotiations. The veto threat came as the Senate started debate on the $288 billion bill, with opponents vowing to reduce the billions of dollars in annual subsidies paid to growers of corn, wheat, cotton, rice and other major crops. The veto threat came from acting Agriculture Secretary Charles Conner, who said he and other senior advisers to President Bush would recommend the action. The White House has not officially commented yet, but Bush threatened to veto the House version that passed in July. Conner criticized as "budget gimmicks" a delay in some payments to farmers until after the five-year life of the bill. He also criticized a proposed crackdown on tax shelters under the "economic substance" doctrine. According to that measure, for a company to claim a tax deduction for a specific transaction, the transaction must yield a profit or have some other clear economic benefit separate from the tax effect. "We believe this bill simply makes a mockery of the budget process," Conner told reporters. Conner also said the legislation would "paint a bull’s-eye on the back of American farmers" by raising some thresholds that trigger payments to farmers. That could threaten World Trade Organization talks, he said. Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said Monday he is "hopeful we will be able to work through many of the administration's concerns." The Senate legislation does attempt to limit subsidies by eventually banning payments to "nonfarmers" whose income averages more than $750,000 a year. The bill defines farmers as those who earn more than two-thirds of their income from agriculture. There would be no income-based limits on what a farmer could collect, though the bill would ban individual farmers from collecting payments for multiple farm businesses. The House measure would ban payments to all who earn an average $1 million a year or more. The administration has proposed reducing payments to individuals who make more than $200,000. The current cap is $2.5 million. Sens. Byron Dorgan, D-N.D., and Charles Grassley, R-Iowa, are planning an amendment on the Senate floor that would limit a married couple to $250,000 in subsidies per year. Current law allows $360,000 annually. The farm legislation would also extend federal nutrition programs, including food stamps, and boost conservation programs to protect environmentally sensitive land.