The Bush Administration sent the House and Senate Ag Committees its "Parameters of a Successful Farm Bill." The parameters outline the offsets the administration would be willing to accept and the reforms needed to complete the farm bill.
The Administration says it's willing to consider spending up to $10 billion over baseline: "Any agreement must also eliminate budget gimmicks, including, but not limited to, shifting payments outside the budget-scoring window, unrealistically terminating new programs and benefits in individual years, or requiring directed scoring." The reforms outlined for Congress were:
- Payment limitations. The current Adjusted Gross Income (AGI) limitation must be lowered and include a hard cap at no more than $500,000. The Administration originally proposed an AGI cap of $200,000.
- Commodity support programs. Loan rates, target prices and MILC (milk income loss contract) payment rates should not be increased above current law. The final agreement must also eliminate new subsidy programs and exclude commodity-storage payments.
- Beneficial Interest. The marketing-loan program must be reformed by eliminating provisions that allow producers to lock in subsidy levels only to hold and later sell the crop at higher market prices.
- Revenue-based countercyclical program. The current price-based countercyclical program should be replaced with a revenue-based program that better targets farm support, includes a revenue-guarantee cap and doesn't duplicate crop-insurance assistance.
- Dairy support program. USDA must continue to have the authority to adjust dairy component prices ("tilt") to limit buildup of Commodity Credit Corporation dairy stocks.
- Sugar support program. The final agreement must eliminate the sugar-to-ethanol program, as well as the requirement that allotments not be less than 85% of the estimated quantity of sugar for domestic human consumption. Under the proposed sugar-to-ethanol program, USDA wouldn't be permitted to dispose of excess sugar through uses other than ethanol production, even if those uses would reduce taxpayer costs.
- Crop insurance. Crop insurance companies should not be permitted to collude during the renegotiation of the standard reinsurance agreement.
- Elimination of planting restrictions. Fruit and vegetable planting restrictions should be lifted to eliminate any question that direct payments are "green box" in light of recent World Trade Organization rulings.
- Food aid flexibility. Any final agreement must include the Administration's proposal authorizing up to 25% of P.L. 480 Title II food-aid assistance for local purchase. In addition, any requirement restricting emergency food aid must be eliminated. This restriction will cut off U.S. food aid to up to eight million people, significantly undermining the ability of the U.S. to save lives in emergency situations.