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Background

Bonus Subsidy: Background

April 26, 2006

In March, 2006, the Senate Appropriations Committee added a number of controversial1 spending items to the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror and Hurricane Recovery 2006.

One major amendment is a disaster aid package for agriculture that is estimated to cost $3.9 billion. According to the Congressional Research Service (CRS), this disaster aid will be additional to the $1 billion in emergency agricultural assistance already provided for 2005 in a previous emergency supplemental (Public Law 109-148)2, and "includes an estimated $1.5 billion in various types of crop disaster payments, $619 million in livestock assistance, and $1.5 billion in 'economic loss' payments to certain growers of government-supported crops who have been adversely affected by high energy costs." CRS notes that the amendment also provides an estimated $35 million in emergency funds for USDA's Tree Assistance Program to reimburse costs of replanting trees, bushes and vines, and $17 million in emergency conservation assistance and $109 million for emergency watershed protection. "For fruit, vegetable, livestock and dairy producers," CRS states, "the Senate bill provides a combined total of $100 million to the states, with the condition that the funds be used in some manner to support these commodities."3

Without question, agricultural disaster assistance is appropriate for many parts of the country that experienced weather-related crop, livestock or tree losses in 2005 or, as in the case of North Dakota, where bad weather seriously disrupted planting of winter wheat in 2005 that will be harvested this year. It is also true that energy costs increases for all of agriculture in 2005.

Nevertheless, the disaster assistance proposed by the Senate appropriations committee comes as U.S. agriculture posted its second highest net farm income in history in 2005 and taxpayers provided a record $23 billion in subsidies.


Footnotes

1See for example: Riedl, Brian M. and Alison Acosta Frazer. April 17, 2006. "The Senate's Deadly Sin: Larding Up Emergency Appropriations." The Heritage Foundation. WebMemo #1038. (http://www.heritage.org/Research/Budget/wm1038.cfm). Also see: Wolf, Richard. April 24, 2006. "Emergency spending bill spotlights GOP division." USA Today.

2Department of Defense, Emergency Supplemental Appropriations To Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 2006. Signed into law Dec. 30, 2005. (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi ?dbname=109_cong_public_laws&docid=f:publ148.pdf)

3Chite, Ralph M. April 10, 2006. "Agricultural Disaster Assistance." CRS Report for Congress.