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Will the farm bill go over the fiscal cliff?

A bipartisan group of senators have sent a letter to Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell calling for passage of the farm bill before the end of the year.

According to the senators, the Senate-passed farm bill should be included in an end-of-year legislative package. In the letter dated Friday, the senators wrote that the difficulty of enacting a farm bill before the end of this Congress grows with each passing day, urging Congress to do the responsible thing and pass a full, five-year farm bill. As such, they ask the Senate leaders to consider folding the Senate’s strong bipartisan bill in any year-end package. The letter, organized by Senate Finance Chair Max Baucus of Montana and North Dakota’s John Hoeven, was signed by 33 senators. Ag Committee Chair Debbie Stabenow and Ranking Member Pat Roberts did not sign. Stabenow and Roberts have reportedly made a compromise offer to the House Ag Committee that was rejected by Chairman Frank Lucas and Ranking Member Collin Peterson as inadequate.

The USA Rice Producers Association is pointing out that those senators who signed the letter to Reid and McConnell were from northern states, and say the Senate farm bill is tilted toward northern interests at the expense of rice, peanut and other farmers in the South. They go on to call it strongly discriminatory from a geographical standpoint. The rice producers cite the Congressional Budget Office in suggesting the Senate bill would reduce the safety net for rice producers by more than 64%.

National Farmers Union President Roger Johnson is calling for the House and Senate to negotiate the commodity title of the farm bill and work to find a compromise. He said if the Senate version is forced on everyone, it will leave a lot of bitter feelings. According to Johnson, a bill shoved down someone else’s throat is not helpful long-term to the industry.

But some of the senators who did sign the letter in support of moving the Senate-passed farm bill are defending their position. Baucus said the farm bill is a jobs bill, and said there is no excuse to put rural jobs on hold any longer. Hoeven said the Senate’s farm bill would not only help farmers and ranchers, but also save $23 billion toward the deficit.

An offer from House Speaker John Boehner could push the federal debt limit fight to the end of next year and is breathing new life into stalled talks over the year-end fiscal cliff. It remains a possibility that any fiscal cliff legislation could include the farm bill. Boehner’s proposal would reportedly generate about two-trillion dollars in savings over the next decade. The amount is split between new taxes and spending talks. The offer would generate as much as $460 billion over the next decade by allowing the George W. Bush-era tax cuts expire on income over $1 million per year. The remaining tax revenue would be generated through a rewrite of the tax code aimed at limiting deductions and other tax breaks. For everyone else, the Bush tax cuts would be extended.

But Boehner wants something in return for the higher tax rates for millionaires. He wants changes to federal health and retirement programs, and is looking for $1 trillion in total savings. The President has offered $600 billion in spending cuts, with $350 billion coming from health programs and none from Social Security. As for the issue of taxes, President Obama has called for the Bush tax cuts to expire for income over $250,000 per year. The Joint Committee on Taxation says the move would raise $830 billion over the next decade. He is also looking to raise taxes on inherited estates and new limits on tax breaks for the wealthy, to bring total new taxes to $1.6 trillion dollars. White House officials dropped their tax demand to $1.4 trillion last week.

According to some Democrats – Boehner’s proposal to set the income threshold for tax rate hikes at $1 million would sacrifice too much money. A threshold of $375,000 or $500,000 might be more acceptable. If an agreement is reached, people on both sides of the aisle say it would probably include a postponement of automatic spending cuts. While there’s still hope of a resolution by Christmas, those close to the talks say a lot of work is still needed before Obama and Boehner seal a deal.