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# Legislative Bulletin.................................................May 14, 2008

**Contents:**

**CONFERENCE REPORT H.R. 2419**---Food, Conservation, and Energy Act of
2008

H.R. 2419---Food, Conservation, and Energy Act of 2008 (Peterson-MN)

**[Order of Business]{.underline}**: H.R. 2419 is scheduled for
consideration on Wednesday, May 14, 2008. The rule for consideration of
the conference report to accompany H.R. 2419 (H.Res. 1189) waives all
points of order against the conference report and against its
consideration, and provides one hour of general debate equally divided
and controlled by the Chairman and Ranking Member of the Committee on
Agriculture.

**[Background]{.underline}**: H.R. 2419, commonly referred to as the
Farm Bill, authorizes most U.S agriculture and food assistance programs.
These programs were last extended by the 2002 Farm Bill, the Farm
Security and Rural Investment Act (P.L. 107-171), which increased
mandatory spending for farm programs by \$80.1 billion over ten years.
As a result, the farm sector is currently enjoying historic levels of
federal taxpayer support. This current extension comes at a time when
the financial state of the U.S. agriculture sector is thriving.
According to the USDA's Economic Research Service, net farm income is
forecast to be \$92.3 billion in 2008, an increase of \$3.6 billion from
2007 "and over \$30 billion above its average for the previous ten
years." Similarly, the value of farm business assets is set to increase
by 13.1% in 2008, of which farm real estate is expected to rise by
14.9%. Debt-to-asset ratios continue to decline from 9.9% in 2007 to
9.1% in 2008.

In addition, this new Farm Bill is being considered in the midst of
significantly higher food prices worldwide. Global food prices have
sparked riots in roughly thirty countries and led to hunger and
malnutrition in others. In the U.S., the *Associated Press* reports the
worst food inflation in 17 years with food prices rising 4% in 2007 and
4.5% in 2008, compared to an average of 2.4 percent over the last
fifteen years.

**[Summary]{.underline}**: H.R. 2419 revises agricultural programs such
as commodities, sugar, food stamps, conservation, specialty crops, etc.
Highlights of the conference report are as follows:

***[Cost]{.underline}**:*

-   **\$714 Billion in Total Mandatory Spending:** CBO estimates that
    the conference report provides a total of \$371.6 billion in
    mandatory spending over the 2008 to 2013 period and \$714.2 billion
    in mandatory spending over the 2008 to 2018 period. Total spending
    for programs under the Farm Bill exceeds CBO's March 2008 baseline
    by \$13.1 billion---\$3.6 billion is the amount the bill is above
    the baseline and the bill also uses an additional \$9.5 billion in
    offsets from custom user fees to offset \$9.5 billion in higher
    spending for Farm Bill programs.

-   **Cost in Excess of 2002 Farm Bill:** On an annual basis, H.R. 2419
    averages \$65 billion a year. By point of comparison, the 2002 Farm
    Bill cost \$270 billion over six years, an average of \$45 billion a
    year. On an annual basis, H.R. 2419 would exceed the 2002 Farm Bill
    spending by 44%. It is sometimes argued that the 2002 Farm Bill came
    in under budget. According to
    [CRS](http://www.congress.gov/erp/rs/html/RS22694.html), while
    spending on commodity programs came in \$22.7 billion less than
    projected, spending on nutrition came in \$28.7 billion more than
    projected. Overall, the 2002 farm bill cost \$6.1 billion or 2.3%
    more than the original projection of \$264.1 billion.

-   **PAYGO Violation:** The conference report violates PAYGO by using
    the fourteen-month old, March 2007 CBO baseline to score the
    budgetary impact of the bill. Under the March 2008 CBO baseline, the
    bill worsens the federal deficit by \$2.9 billion, and thus fails to
    comply with PAYGO.

> ***[Note:]{.underline}*** Unless otherwise stated, all budget figures
> in this document are based on the March 2008 CBO baseline.

-   **Budget Gimmicks:** According to the Administration, the conference
    report uses various timing shifts and early phase outs of various
    spending provisions that total \$8.5 billion.

***[Commodity Support Programs:]{.underline}***

Agricultural commodities are supported by 3 mechanisms: direct payments,
counter-cyclical payments, and marketing loan payments.

-   **Direct Payments:** Direct payments are fixed annual payments that
    are calculated based on the historical production of a commodity,
    not actual production. Historical production is comprised of base
    acreage and a set yield per acre. Direct payments are made only for
    certain commodities known as covered commodities. These commodity
    crops include, but are not limited to, upland cotton, wheat,
    soybeans, sorghum, oats, barley, corn, rice, and oilseeds. Peanuts
    are also considered a covered commodity, but dealt with under their
    own program. There is currently a prohibition against growing fruits
    or vegetables on covered commodity base acreage. H.R. 2419 leaves
    the direct payment rates the same as in the 2002 Farm Bill, but
    reduces percentage of base acreage that payments are made on from
    85% to 83.3% of base acreage, essentially reducing direct payments
    by \$313 million. It also prohibits USDA from advancing direct
    payments in 2012, unlike years 2008-2011.

-   **Counter-Cyclical Payments:** Counter-Cyclical Payments (CCP) are
    made based on historical production, like direct payments. Unlike
    direct payments, the amount of CCP varies with market prices and
    pays the difference between the target price (which is set in law in
    this bill) and the effective price (higher of the direct payment
    rate plus the higher of the national season-average market price or
    the national loan rate). CCP are not made if the effective price is
    above the target rate. H.R. 2419 ultimately increases target prices
    for many commodities, with the exception of upland cotton which is
    reduced. Commodities receiving increased target prices include
    wheat, grain sorghum, barley, oats, and soybeans. Target prices have
    been established for several new commodities including dry peas,
    lentils, small chickpeas and large chickpeas. Under current law,
    peanuts also receive a CCP, but through its own program.

-   **Marketing Assistance Loans/Loan Deficiency Payments***:* Marketing
    Loans are non-recourse, interest-bearing loans that producers can
    obtain by pledging harvested commodities as collateral. Loan rates
    are set in law, and based upon per unit of a commodity produced.
    These loans are intended to give producers some income between
    harvest and eventual sale to prevent commodities from being dumped
    onto the market at once and depressing market prices. Loan
    Deficiency Payments are direct payments, equivalent to marketing
    loan gains, made to producers who forgo nonrecourse loans, even
    though they are eligible. A marketing loan gain occurs when the
    market price of a commodity is lower than the loan rate at which the
    producer took out the loan. Because marketing loans are non-recourse
    loans, and failure to repay the loan would only result in forfeiture
    of the crop pledged as collateral to the government, a producer is
    able to repay the loan assuming the lower rate than the loan was
    taken out at and keep the difference. Both marketing loans and LDP
    are based on actual production of a commodity. Under the 2002 Farm
    Bill, marketing loans are available for all covered commodities,
    including peanuts, plus wool, mohair, honey, dry peas, lentils, and
    small chickpeas. H.R 2419 creates a loan program for large
    chickpeas, and ultimately increases marketing loan rates are
    increased for wheat, barley, oats, oilseeds, graded wool, and honey.
    No change occurs from the 2002 Farm Bill for corn, grain sorghum,
    upland cotton, extra long staple cotton, rice, and soybeans.
    However, under current law, extra long staple cotton is not eligible
    for LDP.

-   **Payment Limitations:** Under the 2002 Farm Bill, a person can only
    receive up to \$360,000 in farm program payments per year. The 2002
    farm bill also places caps on the different types of payments. It
    limits a person to \$40,000 for direct payments, \$65,000 for
    counter-cyclical payments, and \$75,000 for marketing loan gains and
    loan deficiency payments. The 2002 Farm Bill also established an
    income test, making people with an Adjusted Gross Income (AGI) of
    \$2.5 million or greater---unless 75% of their income is derived
    from farming---ineligible for farm program payments. However, these
    caps are not absolute. One of the ways these caps have been
    circumvented is through the use of the "spouse rule." Under this
    rule, a spouse is eligible to collect the various farm program
    payments up to the caps, just like the other spouse. Another way
    around these caps is through the use of the "three-entity rule."
    This rule allows a person to collect payments from up to three
    separate entities, with the ability to collect up to the caps for
    the first entity, and up to half of the caps on the second and third
    entity. H.R. 2419 revises several of these limitations. It does so
    by imposing an Adjusted Gross Income (AGI) cap of:

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-   \$500,000 for non-farm income;

-   \$750,000 for farm income. Beyond this, a producer is no longer
    eligible for direct payments.

The conference report preserves the 2002 Farm Bill's payment limitation
of \$40,000 for direct payments and \$65,000 for counter-cyclical
payments. It also eliminates the three-entity rule. However, H.R. 2419
removes payment limitations for marketing loan gains and loan deficiency
payments.

H.R. 2419 also establishes payment limitations for the new ACRE Program.
It puts in place a cap of \$32,000 for direct payments and \$73,000 for
counter-cyclical payments.

Some conservatives may be concerned that the changes made in H.R. 2419
do not constitute sufficient reform of commodity payments. The
conference report could still allow people with incomes of \$2.5 million
to collect subsides, as a couple could have non-farm income of \$500,000
per person (the maximum under H.R. 2419), and also have a farm income of
\$750,000 per person.

-   **Prohibition on Payments to 10 Base Acres:** H.R. 2419 prevents a
    farmer with less than 10 base acres from receiving direct payments,
    counter-cyclical payments, or average crop revenue election payments
    (except for socially disadvantaged and limited resource producers).
    Nationwide, this would impact more than 400,000 households. Some
    conservatives may be concerned that this provision would impact many
    small family farms while continuing to distribute federal payments
    to large farms.

***[Counter-cyclical Revenue Program:]{.underline}***

H.R. 2419 creates a new revenue-based, counter-cyclical program, the
Adjusted Crop Revenue Election (ACRE) program. CBO scores this program
as costing an additional \$6.52 billion over the 2008---2018 period.

This voluntary program will allow producers to enroll beginning with the
2009 crop year. Once a producer enrolls in the program, they must remain
in the program for the duration of the farm bill and forgo receiving
counter-cyclical payments, 20% of the direct payment rate, and 30% of
the marketing assistance loan rate. ACRE revenue payments are made on
85% of the acreage planted or considered planted to the covered
commodity or peanuts. For the 2009, 2010 and 2011 crop years, ACRE
payment acres are reduced to 83.3% of planted or considered planted
acres. All covered commodities and peanuts are eligible to participate
in the program.

The ACRE program will provide a revenue guarantee equal to 90% of the
5-year state average yield per planted acre (excluding the years with
the highest and lowest yields) of a commodity multiplied by the 2-year
national average price for the covered commodity. Once the ACRE
guarantee is established, it cannot vary by more than 10% from the
previous year's guarantee.

If the actual State revenue (yield per planted acre times the national
price) is less than the revenue guarantee, and if the producers suffer a
loss on their farm, then they will receive an ACRE payment equal to the
difference between the State revenue guarantee and the actual revenue
for the crop year up to 25% of the revenue guarantee.

*[**Sugar Program**:]{.underline}*

Under current law, the price of sugar is heavily regulated. USDA both
limits how much domestic producers may sell with mandatory "marketing
allotments" and how much foreign sugar may be imported with quotas in
order to keep prices high. In addition, domestic sugar producers are
eligible for non-recourse loans at a statutorily-set loan rate further
designed to prop up prices. Since USDA is required to operate the
program at "no cost," officials are required to manipulate the marketing
allotments and import quotas to ensure that the market rate is slightly
higher than the loan rate---so that producers do not have an incentive
to forfeit their crops as collateral to the federal government in place
of their loan obligation.

H.R. 2419 raises the loan rate by three-quarters of a cent from 18.0
cents under current law to 18.75 cents by 2011 for per pound of raw cane
sugar (a 4% increase), and from 22.9 cents to 128.5% of the loan rate
for the raw cane sugar beginning with the 2009 crop year for refined
beet sugar. In addition, the conference report requires at least 85
percent of U.S. sugar consumption to come from domestic producers and
creates a new sugar-to-ethanol program. These two latter provisions are
designed to address concern about increased sugar imports from Mexico
(which are no longer restricted under NAFTA as of 2008) and other CAFTA
countries as the U.S. continues to liberalize the sugar trade. Since
these imports would cause a drop in the price of sugar and make it
difficult for USDA to operate the program at no cost, as producers dump
their sugar on the government, H.R. 2419's new sugar-to-ethanol program
would require the purchase of "surplus" sugar for sale to ethanol
producers.

Some conservatives may be concerned that the entire framework of the
sugar program is designed to protect the producer at the expense of the
consumer, and that by increasing these protections and subsidies
further, H.R. 2419 only serves to increase artificially high sugar
prices. Some conservatives might also note that the consumers who will
be impacted the most from such increases are those who are low-income
and operating on fixed income, facing the prospect of higher prices for
bread, cookies, crackers, candy, soft-drinks, and other food products
that use sugar. According to the Organization for Economic Cooperation
and Development, the current sugar program costs consumers roughly \$1.5
billion per year in higher sugar prices, and one estimate has already
concluded that H.R. 2419 will increase that annual amount by \$400
million.

***[Conservation]{.underline}***:

Overall, the Conservation Title of the Farm Bill scores as a \$2.93
billion increase over the 2008---2018 period compared to CBO's baseline.
Specifically, of note:

-   **Conservation Reserve Program:** H.R. 2419 reauthorizes the
    Conservation Reserve Program through FY 2012 and reduces the maximum
    number of acres in the program from 39.2 million to 32 million from
    2010 through 2012. The reduction in total acreage scores as savings
    of \$1.32 billion compared to the CBO baseline.

-   **Socially Disadvantaged Farmers:** H.R. 2419 reauthorizes
    Conservation Reserve Program transition incentives for new and
    socially disadvantaged farmers at a cost of \$25 million compared to
    the CBO baseline.

-   **Wetlands Reserve Program:** H.R. 2419 reauthorizes the Wetland
    Reserve Program, which gives farmers money to preserve privately
    owned wetlands at a cost of \$1.46 billion compared to the CBO
    baseline. This section caps the program at 3.04 million acres of
    wetland and limits payment contracts to 30 years.

-   **Conservation Security Program:** H.R. 2419 reauthorizes the
    Conservation Security Program, which gives money to farmers to
    promote conservation on private working lands, at a cost of \$1.98
    billion compared to the CBO baseline. This section caps the program
    at 12.7 million acres a year with a maximum subsidy of \$18 per
    acre.

-   **Farmland Protection Program:** H.R. 2419 reauthorizes the Farmland
    Protection Program, which provides matching funds for farmers to
    purchase development rights to keep functional farmland in
    agricultural use, at a cost of \$665 million compared to the CBO
    baseline.

-   **Grassland Reserve Program:** H.R. 2419 reauthorizes the Grassland
    Reserve Program, which gives money to farmers to protect grasslands
    on their property, at a cost of \$307 million compared to the CBO
    baseline. This section caps the program at 1.2 million acres.

-   **Environmental Quality Incentives Program (EQIP):** H.R. 2419
    reauthorizes the Environmental Quality Incentives Program (EQIP),
    which provides money to farmers to promote "agricultural production
    and environmental quality" simultaneously, at a cost of \$2.86
    billion compared to the CBO baseline.

-   **Chesapeake Bay Watershed Program:** H.R. 2419 provides the
    Chesapeake Bay Watershed Program, which provides financial and
    administrative support for Chesapeake Bay restoration (overseen by
    the EPA), at a cost of \$432 million compared to the CBO baseline.

-   **Desert Terminal Lakes Program:** H.R. 2419 provides \$175 million
    for the Desert Terminal Lakes Program, which provides money for
    **three** lakes (Pyramid, Summit, and Walker) in Nevada.
    *[Note:]{.underline}* Nearly every dollar of this program is [spent
    via
    earmarks](http://www.usbr.gov/mp/lbao/desert_terminal/desert.html).

***[Nutrition:]{.underline}***

-   **Overall:** H.R. 2419 increases federal nutrition spending by
    \$11.34 billion from 2008-2018. This increase is on top of the
    average \$29.7 billion per year provided for nutrition programs
    under the current farm bill. It should be noted this portion of the
    current farm bill was 19.4% more expensive than CBO estimated in
    2002---\$29.7 billion per year as compared to \$24.9 billion per
    year.

-   **Food Stamps***:* H.R. 2419 increases and indexes for inflation the
    standard deduction, the monthly amount of income that is disregarded
    when calculating a household's food stamp benefit levels (costing
    \$6.79 billion). The minimum food benefit would be increased to 8%
    of the cost of USDA's thrifty food plan---the estimated minimal cost
    of an adequate diet (costing \$344 million). The conference report
    also excludes the full cost of dependant care from income tests
    (costing \$570 million). H.R. 2419 also loosens the allowable
    financial resources a beneficiary can possess without losing food
    stamp eligibility, including certain retirement and education
    accounts (costing \$1.53 billion). H.R. 2419 also renames the food
    stamp program as the "supplemental nutrition assistance program."

> Some conservatives may believe that, while well-intentioned, the food
> stamp program is essentially a welfare program. For instance,
> according to the Congressional Research Service, a dollar in food
> stamps results in only 17-47 cents of new food spending because while
> the food stamps must be spent on food, providing it frees up money
> that recipients would have spent on food to spend elsewhere.

-   **Emergency Food Assistance Program**: H.R. 2419 provides \$1.42
    billion over eleven years for the Emergency Food Assistance Program
    (TEFAP), which provides funding to states in concert with food banks
    to tap federal commodity stocks.

-   **Fruits and Vegetables/School Lunches:** H.R. 2419 creates a new
    program to make free fresh fruits and vegetables available through
    the school lunch program, costing \$1.2 billion over eleven years.

***[Research:]{.underline}***

-   **Mandatory Funding for Organic Agriculture:** H.R. 2419 provides
    \$78 million in mandatory spending, from 2008 to 2012, for the
    Organic Agriculture Research and Extension Initiative. According to
    the Joint Explanatory Statement, this program will "examine optimal
    conservation and environmental outcomes for organically produced
    agricultural products and to develop new and improved seed varieties
    that are particularly suited for organic agriculture."

-   **Mandatory Funding for Specialty Crop Research Initiative:** H.R.
    2419 provides \$230 million in mandatory spending, from 2008 to
    2012, to "disseminate science-based tools to address the needs of
    specialty crops and their regions."

-   **Mandatory Funding for Beginning Farmer and Rancher Development
    Program:** H.R. 2419 provides \$75 million in mandatory spending,
    from 2008 to 2012, for a grants program targeted to beginning
    farmers and ranchers.

***[Energy:]{.underline}***

-   **Commercial Biofuel Production:** H.R. 2419 reauthorizes loan
    guarantees to support the construction of commercial biofuel
    production factories and plants at a cost of \$320 million compared
    to the baseline.

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-   **Bioenergy Program for Advanced Fuels:** H.R. 2419 reauthorizes the
    Bioenergy Program for Advanced Fuels at a cost of \$300 million
    compared to the baseline.

***[Tax Provisions, Offsetting Receipts:]{.underline}***

-   **Ethanol:** H.R. 2419 reduces the value of the ethanol tax credit
    from 51 cents a gallon to 45 cents a gallon and creates a new
    "cellulosic biofuel producer credit." This would provide a
    non-refundable income tax credit of \$1.01 for each gallon of
    qualified cellulosic fuel production. The conference report also
    pushes back the expiration date of the 54 cent per gallon ethanol
    tariff by two years, from 2008 to 2010.

-   **Qualified Forestry Conservation Bonds:** H.R. 2419 includes a tax
    provision that allows \$500 million worth of tax-advantaged
    "Qualified Forestry Conservation Bonds" to be issued by the
    Secretary of the Treasury. This tax provision is so narrowly crafted
    that the application of the bonds could only be used for one
    specific property, which is predominantly in the state of Montana
    (Senator Max Baucus is the sponsor of the provision). This provision
    is similar to section 12808 of the Senate-passed bill. Rep. Eric
    Cantor offered an MTI to instruct conferees to *not* include this
    provision in the conference report.

-   **Increased Civil and Criminal Penalties*: ***According to CBO, H.R.
    2419 increases federal revenue by \$394 million over the 2008 to
    2018 period from increased civil and criminal penalties on market
    manipulation.

-   **Extension of Custom User Fees:** H.R. 2419 extends custom user
    fees, otherwise set to expire in 2014, to 2017. Though these fees
    would not otherwise expire for six years, this provision is included
    in the farm bill to "pay for" the additional spending above the
    baseline. CBO scores this provision as reducing direct spending
    (through negative spending in the form of offsetting receipts) by
    \$9.5 billion over the 2008 to 2018 period.

***[Other Provisions:]{.underline}***

-   **Davis-Bacon:** H.R. 2419 would extend the controversial
    Davis-Bacon wage requirements to ethanol projects under the loan
    guarantee program. Specifically, the Davis-Bacon Act requires that
    each federal government contract worth over \$2,000 for the
    construction, alteration, or repair of public buildings or public
    works (including airports and public housing) set the minimum wages
    to be paid to laborers and mechanics employed under the contract at
    no less than the **locally prevailing wages** paid on projects of a
    similar character (as determined by the Secretary of Labor).

-   **Dairy Policy**: H.R. 2419 extends the Dairy Support program
    through the end of 2012 and requires the Secretary to support the
    price of cheddar cheese, butter, and nonfat dry milk by having the
    government purchase such products at prices set in the bill. The
    bill also establishes a dairy forward pricing program, which
    authorizes milk producers to voluntarily enter into formal price
    contracts with milk handlers for milk that is not class I. The bill
    also extends the Milk Income Loss Contract (MILC) Program, the dairy
    export incentive program, and the dairy indemnity program through
    2012.

-   **McGovern-Dole Program:** H.R. 2419 creates a new entitlement for
    the McGovern-Dole International Food for Education and Child
    Nutrition Program, which has previously received discretionary
    funding. Specifically, H.R. 2419 provides \$84 million in U.S.
    foreign aid to foreign countries to establish nutrition programs. In
    FY 2008, this program received \$99 million through the
    appropriations process.

-   **Specialty Crop Block Grant:** H.R. 2419 provides \$365 million
    over five years in mandatory spending for the specialty crop block
    grants program, an increase of \$246 million above current law.

-   **Mandatory Funding for Pest and Disease Program:** H.R. 2419
    creates a new entitlement program, at a cost of \$177 million over
    five years that would conduct pest detection and surveillance
    activities in coordination with state departments of agriculture.

-   **Sheep and Goat Industry Improvement Center Earmark:** H.R. 2419
    provides \$1 million in mandatory funding in FY 2008 for the
    National Sheep and Goat Industry Improvement Center, an earmark
    sponsored by Senator Max Baucus, and also authorizes a total of \$50
    million over the 2008 to 2012 period for this center (subject to
    appropriation).

-   **Mandatory Country of Origin Labeling:** H.R. 2419 requires
    mandatory country of origin labeling for beef, lamb, pork, chicken,
    goat meet, fruits, vegetables, macadamia nuts, and peanuts.

-   **Mandatory Funding for Outreach and Technology Assistance for
    Socially Disadvantaged Farmers:** H.R. 2419 provides \$75 million of
    new entitlement funding for this program, which according to the
    USDA, "provides funds to organizations to conduct outreach and
    technical assistance to encourage and assist socially disadvantaged
    farmers and ranchers to own and operate farms and ranches and to
    participate in agricultural programs."

-   **Creates Agricultural Disaster Assistance Program:** H.R. 2419
    creates, at an estimated cost of \$4.65 billion, a Supplemental
    Agricultural Disaster Assistance trust fund, which would provide
    payments to farmers and ranchers who suffer loses in areas that are
    designated disaster areas by the USDA.

***[Possible Conservative Concerns]{.underline}**:*

-   **Higher Spending and Budget Gimmicks:** The bill provides \$714
    billion in mandatory spending over the 2008 to 2018 period. Many
    conservatives argue that this high level of spending is unjustified
    given the high level of commodity prices. The price of food is
    expected to rise by about 5% in 2008, the largest increase
    since 1990. The Department of Agriculture estimates that 2007 net
    income was \$87.5 billion, *48 percent* above the previous year's
    level of \$59 billion. According to the Heritage Foundation, since
    the 2002 Farm Bill, farm income has more than doubled.

-   **Lack of Sufficient Reform:** Some conservatives may be concerned
    that the changes made in H.R. 2419 do not constitute sufficient
    reform of commodity payments. The conference report could still
    allow people with incomes of \$2.5 million to collect subsides, as a
    couple could have non-farm income of \$500,000 per person (the
    maximum under H.R. 2419), and also have a farm income of \$750,000
    per person.

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-   **Davis-Bacon:** Many conservatives may oppose the expansion of
    Davis-Bacon and would argue that Davis-Bacon increases the cost of
    federal projects and forces private companies to spend hundreds of
    millions of dollars in administrative costs.

-   **Ethanol:** Some conservatives may have concerns that the farm bill
    extends tax and tariff subsidies for ethanol, while keeping in place
    the ethanol mandate. The price of a bushel of corn is around \$5,
    which is nearly triple the level of two years ago. 25% of all corn
    in the U.S. goes to ethanol.

-   **Trade:** Some conservatives may believe that this Farm Bill will
    make it harder for the United States to successfully conclude future
    trade agreements Nowhere is this more apparent than with the Doha
    negotiations within the WTO.

**[Committee Action]{.underline}**: H.R. 2419 was introduced on May 22,
2007 and was subsequently ordered to be reported by the House
Agriculture Committee, by voice vote, on July 19, 2007. It subsequently
passed the House on July 27, 2007 by a vote of [231 to
191](http://clerk.house.gov/evs/2007/roll756.xml), and went on to pass
the Senate by a vote of [79 to
14](http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=1&vote=00434)
on December 14, 2007.

**[Administration Position]{.underline}**: Though a SAP is not yet
available, the Administration has indicated it will veto the
legislation.

**[Cost to Taxpayers]{.underline}**: CBO estimates that the conference
report would lead to mandatory spending of \$714 billion over eleven
years (\$3.7 billion above the baseline).

**[Does the Bill Expand the Size and Scope of the Federal
Government?]{.underline}**: Yes, the conference report contains new
intergovernmental and private sector mandates, creates various new
entitlement programs, and spends \$714 billion over the 2008 to 2018
period.

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: Yes.

**[Does the Bill Comply with House Rules Regarding Earmarks/Limited Tax
Benefits/Limited Tariff Benefits?]{.underline}**: The [Joint Explanatory
Statement](http://agriculture.house.gov/inside/Legislation/110/FB/Conf/statement_of_managers.pdf)
contains a list of 21 earmarks.

**[Constitutional Authority]{.underline}**: The conference report to
H.R. 2419 fails to cite constitutional authority.

**[RSC Staff Contact]{.underline}**: Brad Watson,
<brad.watson@mail.house.gov>, (202) 226-9719