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Geithner promotes farm subsidy cuts, Roberts ready to compromise with southerners

Timothy Geithner

Timothy Geithner

Treasury Secretary Tim Geithner today repeatedly cited farm subsidies as one type of government spending the Obama administration would like to cut to deal with the federal deficit, only days after Senate Agriculture Committee ranking member Pat Roberts, R-Kan., said he is ready to compromise with southerners on the farm bill in order to stop cuts to the crop insurance program, which the Obama administration has proposed.

When asked today to give examples of cuts to government spending that the Obama administration would favor, Geithner, the administration’s lead negotiator on the fiscal cliff, cited two: Medicare through greater efficiencies and increased premiums on high income individuals and farm subsidies.

“Just a couple of examples,” Geithner told CBS's Face the Nation: “Reforming farm subsidies — very important to do — lots of room to do sensible reforms in that context. And they can raise substantial amounts of money.”

“In health care, we propose to a modest increase in premium for higher income beneficiaries, and we propose ways to make the government much smarter about how it buys medicine for Medicare beneficiaries,” he said.

Geithner did not provide details of how the Obama administration would cut farm subsidies, but the president’s previous budget proposals have called for elimination of the direct payments program, some small cuts to conservation programs, and a “modernization” of the crop insurance program, that would include reductions in administrative costs and premium subsidies for the highest levels of coverage. The administration has said a combination of these cuts would save $32 billion over 10 years.

The farm bills passed by the Senate and the House Agriculture Committee eliminated the direct payments program and made changes to conservation programs, but did not make cuts in crop insurance.

The Senate farm bill cut the food stamp program by about $4.5 billion, and the House Agriculture Committee-passed bill would cut it by about $16.5 billion. The Obama administration has said it is opposed to any cuts to the program.

Geithner first mentioned farm subsidies as an area for cuts in a meeting on Thursday with Boehner.

Sen. Pat Roberts, R-Kan.

Sen. Pat Roberts, R-Kan.
On Friday, Roberts told Politico, “I’m willing to compromise on whatever they think they can get through and live with in regard to target prices. Because I have to have the crop insurance, or my guys are really going to suffer.”

Roberts and southern legislators in both the Senate and the House have been at loggerheads over the commodity title in the farm bill. Roberts favors a proposal northern growers like that eliminates target prices, and the southern rice and peanut growers favor a program involving target prices.

Both programs were included in the farm bill that Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and House Agriculture Committee Chairman Frank Lucas, R-Okla., presented to the supercommittee in charge of deficit reduction in late 2011.

But when the Senate passed its version of the farm bill, the target price program was not included. The House Agriculture Committee-passed bill includes it, and Lucas has said repeatedly that inclusion of the target price program is one of the two big issues that have to be settled if Congress is going to pass a farm bill. The other, he said, is how much to cut food stamps.

In the Politico interview, Roberts said, “There are a lot of things in the five-year farm bill that are absolutely essential. For me it’s crop insurance, because we’ve been through a two-year drought and now we’re headed for three. We would just be in terrible shape if we didn’t keep the improvements to crop insurance.”

“That’s where we are, and there shouldn’t be any fuss” about the commodity title, he said. “There is all this talk of the South vs. the rest of the country, or to be more accurate, me. I’m willing to compromise.”

Geithner said today that he believes the Republicans will eventually agree to increases in tax rates for the top 2 percent of income earners because the deficit cannot be seriously addressed without that revenue to the government.

Boehner rejected that idea, saying that Obama has to acknowledge House Republican sentiment. But some analysts said the situation is political theater that must play out before compromise can be reached.