Iowa benefits from wind energy credit, farm bill extensions

But many unhappy with final 'fiscal cliff' compromise

Published: January 3 2013 | 7:00 am - Updated: 28 March 2014 | 9:19 am in
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WASHINGTON — By Washington standards, this week’s fiscal cliff bill was a true compromise — nobody won, and almost everyone disliked the end result.

For Iowa, the benefits include a nine-month extension of the current farm bill, which dates back to 2008 but expired on Oct. 1, and a similar extension in dairy programs that would have expired at midnight on Monday. A wind energy tax credit that Gov. Terry Branstad and Sen. Chuck Grassley, R-Iowa, had championed also was extended for a year.

The wind industry employs more than 6,000 Iowans and provides almost 20 percent of the state’s electricity. A provision allowed projects under way before Jan. 1, 2014, to qualify for credit. State Sen. Rob Hogg, D-Cedar Rapids, a strong promoter of wind energy, said the extension buys time for Iowa lawmakers to push through a permanent credit for the industry.

“The production tax credit rewards the production of clean, homegrown electricity that imposes no costs for national security and no costs for air pollution,” Hogg said in a statement.

But there was also much to hate in the final bill, so much so that Grassley and Sen. Tom Harkin, D-Iowa, were among the only eight senators to oppose the bill.

Grassley called the bill “a fiscal farce to raise taxes and hurt economic growth.” Harkin said it “fails to address our number one priority — creating good, middle class jobs in Iowa and throughout the country.”

Specifically, for Iowans, the bill contained no disaster relief for livestock farmers hit hard by last year’s drought, while it unexpectedly continued subsidies to farmers that had been eliminated in versions of the bill passed last year by the Senate and the House Agriculture Committee.

Iowa Farm Bureau Federation President Craig Hill said he was “shocked and surprised” that the reauthorized direct payments to farmers were included in the legislation.

He said the reauthorization of the $5 billion per year direct payment program, which pays about $500 million a year to Iowa farmers, left him feeling “a little unsettled.”

“The money could have been better spent,” particularly in light of the nation’s ongoing fiscal crisis, Hill said.

Created in 1996, direct payments are provided to owners of farm land that historically has been used to grow corn, cotton, rice, soybeans or wheat. President Barack Obama’s proposal to abolish the program even had the support of the American Farm Bureau.

The average per acre direct payment is about $24 for corn and in the $10-to-$12 range for soybeans, according to David DeGennaro, a legislative analyst for the Environmental Working Group, a major critic of farm programs.

The average for rice and cotton, however, is about $100 and $75, respectively, which explains why Southern farmers fought to keep the payments and why Senate Minority Leader Mitch McConnell, R-Ky., wanted them as part of the farm bill extension, DeGennaro said.

On the other hand, Hill said farmers were relieved that the legislation will provide a permanent 40 percent tax rate on estates worth more than $5 million ($10 million per couple). Some proposals had called for a 55 percent rate with an exemption of only $1 million.

The extension of federal crop insurance subsidies and minor adjustments to the estate tax “give farmers the certainty they need going into the 2013 planting season,” Hill said.

Grassley said Wednesday that senators would have to start over from scratch on a new five-year farm bill that gives farmers more certainty when planning their crops and budgets.

For the same reason of uncertainty, Harkin called the bill “a minimal and deficient nine-month extension (that) ill-served farmers, rural communities and tax-paying consumers” and “discarded numerous substantial reforms and improvements that were worked out through months of bipartisan cooperation.”

Those who voted for the bill were equally unhappy with it. In the House, Eastern Iowa Democratic Reps. Bruce Braley and Dave Loebsack both supported it, for example, but Loebsack said the deal is “not what I would have preferred” and Braley said it is “far from perfect.”

Both Democratic congressmen said the benefits – namely, preventing a middle-class tax increase— simply outweighed the drawbacks. Des Moines-area Republican Rep. Tom Latham voted no, saying the bill “asked everything of taxpayers while not forcing Washington to even begin a single step toward curbing its spending addiction.”

National Milk Producers Federation spokesman Chris Galen on Wednesday said the extenions approved the the fiscal cliff legislation changes little.

“People are really disappointed that all the work we put in in 2012 and the years before that, in the wee hours of the year they end up with the status quo,” Galen said.

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