Farm bill highlights rich-poor debate

At the heart of the standoff between the White House and Congress over a $307 billion farm bill is the question: Should taxpayers subsidize rich farmers – and who counts as rich?

What income levels qualify – or disqualify – Americans from federal aid programs has figured in several clashes between the Bush administration and the Democrat-controlled Congress.

The farm bill on the way to the president's desk this week limits eligibility for farm subsidies to individuals with an adjusted gross farm income of less than $750,000; $1.5 million for couples. That's down from the $2.5 million for couples under current law, but President Bush wants the eligibility cap for farm subsidies to be much lower: $200,000.

"At a time of record farm income, Congress chose to .... require the American taxpayers to subsidize the incomes of married farmers already earning up to $1.5 million per year and expand government control over farm programs," said the White House in a statement Thursday.

The farm bill passed both the House and Senate last week with veto-proof majorities, 81 to 15 in the Senate and 318 to 106 in the House. The bill cuts traditional crop insurance programs by $3.8 billion and authorizes a $10.3 billion increase in nutrition programs.

With crop prices soaring, the prospect of billions in subsidies to farmers could have been a tough sell. But supporters bolstered chances of passing the bill by increasing the minimum monthly benefit for food stamps and indexing household asset limits. Nearly two-thirds of all spending in the bill is for nutrition programs, a move supported by lawmakers from urban areas.

Democrats won control of the House and Senate in 2006 in part by calling for a rollback of tax breaks for the rich. But the definition of rich has varied widely.

Last week, Senate Republicans challenged Democrats concerning their budget resolution plan, which does not extend the Bush tax cuts.

"It's not just the rich who would see their tax bills increase by an average of $2,300; it's taxpayers making as little as $31,850 and couples earning $63,700," Senate Republican leader Mitch McConnell said on Thursday.

During the crafting of an economic stimulus bill in January, Sen. Max Baucus (D) of Montana, proposed a $500 rebate to all taxpayers, in a bid to win GOP support. Senate Democrats squelched the plan.

In the end, the $168 billion stimulus plan, which passed with bipartisan support, set a cap at $75,000 in adjusted gross income. That's the point at which $600 rebate checks for individuals start phasing out; at $87,000, they drop to zero. The $1,200 rebate for couples starts phasing out at $150,000 and zeros out at $174,000. Some 130 million families are expected to receive stimulus checks.

For those facing foreclosure, "rich" is a $730,000 mortgage – up from a previous cap of $417,000 for an owner-occupied home. That's the proposed limit to qualify for new federally insured loans, included in a pending housing bill that Mr. Bush has also threatened to veto.

In another clash, Democrats failed in a bid to expand eligibility for the State Children's Health Insurance Program to families earning up to 400 percent above the federal poverty level (FPL), or $82,000 annually. Bush vetoed the bill, and in a Feb. 5 vote the House failed to override.

States are prohibited from extending Medicaid to children in families with incomes above 250 percent of the FPL. The needs of the poorest families must first be met, the president says.