Paul Ryan on Farm Bill Reauthorization

By Congressman Paul Ryan

Farm Bill Reauthorization

The farm bill is the most important piece of legislation affecting our nation’s farmers. It sets policy and covers a wide range of programs, including price support programs, conservation programs and nutrition assistance. While the 2002 farm bill expired in September 2007, it was extended temporarily while the 2008 farm bill was negotiated.

In Wisconsin, the importance of agriculture to our economy cannot be overstated. There have been many changes in the 2008 farm bill that will affect our agriculture sector. Several specific programs important to Wisconsin’s dairy program were changed – the milk income loss contract program (MILC); the dairy price support program (DPSP); and the federal milk marketing order program. Specifically, in the MILC program the payment percentage rate increased to 45%, from a previous level of 34%. Additionally, due to rapidly increasing feed costs, it allows the target price to be adjusted in response to rising feed costs.

Additionally, the federal government’s largest land retirement program, the Conservation Reserve Program (CRP) also saw changes. The CRP provides payments to farmers to take highly erodible or environmentally sensitive cropland out of production for ten years or more. It was first enacted by Congress in 1985 to help control soil erosion, stabilize land prices and control excessive agricultural production. Since then, the program’s purposes have been expanded to include environmental goals.


On May 14, 2008, the House passed the conference agreement on the 2008 farm bill by a vote of 318-106. The next day, the Senate passed the same bill by a vote of 81-15. On May 21, President Bush vetoed the legislation. Both the House and the Senate voted to override the veto, and the conference bill became law on May 22, 2008. However, an enrolling error resulted in one title of the bill (Title III, Trade) being omitted from the version that was sent to the White House, and the newly enacted law contains 14 of 15 farm bill titles. To rectify the error, the House and Senate again passed the 2008 farm bill.

As said earlier, the farm bill is one of the most important pieces of legislation that the Congress considers. It is extremely broad, covering energy, trade and disaster assistance programs. Unfortunately, I had several concerns about this bill, and I could not support the bill that came before me.

I believe a farm bill should be designed to assist family farmers in times of need, rather than direct most of the subsidies to very large, corporate farming operations. We need to pass a farm bill that also gives the U.S. the ability to open up new export markets for our products. Unfortunately, this bill does the opposite.

When the farm bill originally came before the House floor, I supported the bipartisan Kind-Flake Fairness in Farm and Food Policy Amendment. This amendment adopted the USDA’s proposals to make the marketing loan program more efficient and market oriented and included no tax increases. This amendment would have also shifted savings into deficit reduction and provided more funding for conservation and nutrition programs. Finally, the amendment would have addressed trade distorting subsidies. Unfortunately, this reform-minded provision failed by a vote of 117-309 on July 26, 2007. Other key provisions of the amendment would have:

  • Replaced Depression-era price guarantees with a modern revenue-based safety net that better protects family farmers from declines in crop prices and crop yields compared to the current price-based payments.

  • Denied subsidies to large commercial farmers with average annual adjusted gross income greater than $250,000 and limited annual subsidies to $250,000 per entity.

  • Gradually reduced direct payments for commodities, which were intended as “transitional” temporary payments under the 1996 Farm Bill, but have since been extended and increased. Limited-resource farmers would have been exempted from these changes.

  • Created optional Risk Management Accounts that would be available to every farmer and rancher and would work together with crop and revenue insurance already held by about 80 percent of producers. These “rainy day” accounts would have helped farmers set aside savings during profitable years to supplement their income during downturns.

  • Reformed crop insurance and reduced excessive payments to crop insurance companies that administer the program.

  • Reduced the deficit by $1.9 billion over five years and by roughly $14 billion over 10 years – without resorting to budget gimmicks or tax hikes.

  • Dedicated part of the savings generated by reforms to conservation and nutrition programs.

It is these type of fiscally sound reforms that I believe are necessary to the agriculture sector of our economy and I hope that they will be implemented in future agriculture legislation.

Rising Health Savings Costs

The high cost of health insurance is one of the leading problems facing individuals and small business owners, including farmers. One important step towards giving people more opportunities to manage their health care needs was the creation of Health Savings Accounts (HSAs). HSAs allow small business owners and individuals to purchase health coverage to fit their individual needs. HSAs allow Americans to set pre-tax dollars aside at their own discretion in order to save and pay for their health care costs. An HSA participant carries a high deductible insurance plan that is used primarily for serious illnesses, while routine medical costs, even Medicare costs, are paid for out of the individual's HSA. Individuals, employers, or even family members can contribute money to an HSA, and these accounts are portable from job to job. HSA-eligible plans can be carried over each year, and are comprehensive, including benefits such as prescription drug coverage, hospitalization, and doctor benefits.

Reliance on HSAs has grown dramatically since they became a viable option for health coverage. In November 2004, about 438,000 individuals were covered by HSA-type insurance plans as compared to the roughly 6.1 million people who are now receiving health insurance through these plans. More impressive, however, have been the number of new HSA enrollees who were previously uninsured. In fact, twenty-seven percent of eHealthInsurance’s HSA plan purchasers in 2008reported being uninsured prior to buying their HSA plan.

Given these encouraging results, I introduced legislation into the House in September 2006 that provided individuals and business with the flexibility they needed to fully realize the potential of their HSAs. I was pleased when this bill was included in the Tax Relief and Health Care Act of 2006 which the President signed into law on December 20, 2006.

The President's Fiscal Year 2010 Budget Proposal

In his address to Congress, the President said that the answers to America’s troubles “exist in our laboratories and our universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.” But his specific policies, and the hard reality of the numbers that constitute his budget, clash with the rhetoric. The budget’s worst feature is its collection of heavy tax increases, imposed in the midst of an economic recession, weakening the prospects for sustained economic growth and job creation. These levies, totaling $1.4 trillion over 10 years, allegedly target “the wealthiest Americans,” but in fact will hit small businesses and investors, precisely the people whose enterprise is needed to restore the economy. Most of these so-called wealthy taxpayers are small business owners, who create 60 percent to 80 percent of the jobs in the U.S. The President’s “cap-and-trade” proposal heaps at least a $646-billion tax increase on families’ natural gas, electricity, home heating, and gasoline bills; and it will further erode job growth in the U.S. manufacturing sector, putting American companies at a further competitive disadvantage with China and other countries.

The budget shifts Department of Agriculture funding away from farm subsidies and directs them toward food welfare programs. The most significant changes in farm subsidies include a reduction of direct payments to farmers making more than $500,000; a reduction in crop insurance premium assistance; and the elimination of payments for cotton storage.

Stimulus Package

I am extremely troubled at the direction in which our country is headed. The mounting economic hardships throughout Southern Wisconsin – from mass layoffs to growing insecurity – have been downright gut-wrenching. Families are finding it more difficult to make ends meet while they watch their savings evaporate. And this story is being played out in households all across America.

President Obama signed H.R. 1, the American Recovery and Reinvestment Act, into law on February 17, 2009. H.R. 1 is an effort to jump-start our economy. I could not support this effort. I believe that the Stimulus Package is a trillion dollar spending bill that repeats the mistakes of flawed economic doctrines which deepened our depression in the 1930s and shackles future generations with crippling debt. At a time when our country is losing tens of thousands of jobs a week, H.R. 1 makes matter worse with a fiscal response that is slow, wasteful, and ineffectual.

Sustained economic growth cannot come from Washington; but rather from the creativity and entrepreneurial spirit of the American people. With tremendous fear and uncertainty in the market, Congress can provide lasting tax certainty by dropping its promise to raise taxes at the end of next year on investment, savings, businesses, families, and workers. Fast-acting tax policies should focus on boosting incentives for expanding business operations and creating good-paying jobs. We should allow immediate expensing on all new investments and lower our job-killing corporate income tax – currently the second highest in the industrial world. Additionally, common sense regulatory reform that concentrates on openness and transparency should be enacted to address what got us into this mess in the first place.

Congressman Paul Ryan serves Wisconsin’s 1st Congressional District. To contact him by phone in Washington, D.C., call (202) 225-3031. Or visit Paul Ryan at www.house.gov/ryan

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