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Critical First Step for Reform

By Lola Wheeler
July 27, 2007

Today, the new leaders in the House of Representatives took the right step at the right time to begin making amends for the travesties of the previous leaders in the House! A small step towards righting some wrongs committed by the previous Congress.

What was the previous moral travesty?

What wrongs had been committed? Last year, in February 2006, the Republicans then in power in Congress (including my own congressman, Jerry Moran, K-01) voted in lockstep with one another to make deep cuts in Medicaid, Medicare, veterans benefits, student loans and the Food Stamp programs.

Last year's Congress made those cuts to safety net programs right at a time when wages in the U.S. were declining, housing costs were escalating and more and more jobs were being shipped overseas. Just when the safety nets were needed the most, Congress ripped them to shreds. In my opinion, that action was morally wrong. It made me sad for my less fortunate neighbors. That 2006 action caused me to feel such pain for our country and the direction it was moving in.

So, it was a discouraging day in congressional history, topping off five years of sad and discouraging actions in Congress.

Those 2006 cuts to safety net programs totaled more than $50 billion dollars and directly hurt our less fortunate neighbors - those that are the least able to stand up for themselves.

The Food Stamp Program was developed to safeguard the health and well-being of recipients by raising the levels of nutrition among low income households. With food stamp benefits, eligible households could obtain more nutritious diets with increased purchasing power at regular grocery stores.

Food stamp benefits were designed to keep hungry people from starving. Food Stamps could not be easily abused. The rules for eligibility have always been stringent and the stamps themselves could only be used for the purchase of food to be prepared at home, certain prepared foods, or for seeds to grow the you own food in your own kitchen garden.

The 2006 cuts to the Food Stamp program directly harmed truly needy people.

What did they do with the $50 billion dollars they took from our disadvantaged neighbors? Did they pay down the national deficit with it? No. They simply used the cutbacks in our safety net for the poor to pay for the occupation of Iraq.

The Iraq War is costing upwards of $100 billion extra per year.

So, the previous leaders in Congress robbed the poor to pay the rich. They took food from the Food Stamp program in order to pay Halliburton, ExxonMobil and Bechtel.

Today, the new Congress made some amends for the previous Congress!

Today, my heart is lighter and not completely broken anymore. My hope is rekindled. My belief in government slightly renewed.

Our Congress passed the Farm Bill! The new Congress passed a more morally sound Farm Bill as a beginning effort to repair the tears to our nation's safety net programs. The measure, which was passed on a 231-191 vote, devotes more money to conservation, renewable energy, nutrition and specialty crop programs than in the past.

Speaker Nancy Pelosi calls the measure a "critical first step for reform."

This Bill does not increase our national deficit.

The Democratic leaders have said that they want to "pay as they go," meaning that they don't want to grow the national deficit anymore. Six years ago, when George Bush first took office, we had a surplus in our national treasury. Now, that surplus is gone and our debt has increased beyond any previous debt in history.

How will the cost of the new Farm Bill be paid? The leaders in Congress found a way to recoup lost revenues - that is, to bring in revenues that have been avoided by many corporations doing business in the U.S.

To make this possible, the Farm Bill also included a new rule that will close a tax loophole affecting foreign companies that have U.S. subsidiaries in places like Bermuda.

This new rule is important. For many years now, U.S. companies have been able to move "off shore" by creating shell "corporations" in places like the Bahamas - just to avoid paying U.S. income and corporate taxes. Please keep in mind that many of these are companies that previously paid taxes until they established a headquarters in the Caribbean.

Most of the companies in question are actually American companies with names that you would recognize - they just decided not to pay taxes anymore.

Did you know that 20 years ago that 27% of our tax revenues were paid by American corporations and that individual tax payers (you and me) provided the other 73% of the money that was used to run the country?

There has been a definite trend in the last 10 years - individual tax payers have been paying higher and higher percentages of the bills for the federal government while corporations have been paying less.

Last year, American corporations only paid less than 7% of the revenues (down from 27%) and individual tax payers had responsibility for a full 93% of the tax bill.

In light of the ever decreasing taxes being paid by corporations, it should anger us all that other American companies are able to open a little office in the Bahamas, get an incorporation paper there, and then, suddenly stop paying U.S. taxes, even though their businesses, plants and profits still occur in the United States.

Many of these "sham" companies are multibillion dollar operations with primary profits produced in the U.S., with board of directors made up of U.S. citizens, and with owners and shareholders primarily residing in the U.S. as U.S. citizen - yet the corporations pay no taxes in the U.S.

Why fix the tax loopholes for tax evaders now?

So, why did the Democratic leaders in Congress decide to address this issue now? Why not now? Many would say that it's long overdue. U.S. corporations that rely upon our U.S. infrastructure and benefits should not be allowed to skirt their tax responsibilities by setting up a shell game. It's not right that their middle class employees have to pay taxes but the corporation can set up an empty office in the Bahamas and say since their head office (albeit empty) in in the Bahamas, then, they no longer need to pay taxes.

Why close the loopholes now? Because the new leaders in the house (unlike the previous leaders) believe that government should pay as it goes, rather than borrow money from China to fund our government.

What does this have to do with the 2006 cutback in Food Stamps?

Democrats in Congress decided that in order to fund a $4 billion expansion of nutrition programs, including reinstating lost food stamp benefits, they would close a tax loophole affecting foreign companies that have U.S. subsidiaries in places like Bermuda.

Rep. Earl Pomeroy, a Democrat from North Dakota, questioned the political judgment of House Republicans who opposed closing the loophole yesterday:

"They'd rather protect the tax cheaters in Bermuda than help the farmers of this country. Man, I'd hate to go home and try to sell that one, because if that's not priorities tipped on their head, I don't know what is."

And why did they attach this to the Farm Bill?

They attached the tax loophole rule to the Farm Bill because they wanted to pay for the Food Stamp repair and Food Stamps have always been a part of the Farm Bill.

I'm happy with this Farm Bill!

This Farm BIll cuts subsidies to the wealthiest farmers, expands a healthful snack program to all 50 states, and make unprecedented investment in fruits and vegetables.

I am in favor of how this legislation aims to ban subsidies to farmers whose income averages more than $1 million a year, down from the current limit of $2.5 million. It also would stop farmers from collecting payments for multiple farm businesses.

The measure also directs the Agriculture Department to investigate which estates have received payments on behalf of dead farmers and recoup the money. The department sent $1.1 billion in farm payments to more than 170,000 dead people over a seven-year period, congressional investigators reported this week.

However, I would have liked to have seen more rules to prevent large multinational food producing corporations from collecting government subsidies. I am against large companies getting subsidies from tax payers. I do not believe that subsidies should benefit grain companies such as Archer Daniels Midland Co. and Bunge Ltd.

While I don't like everything in the bill, I do understand that it is difficult to turn something this big on a dime.

And, there are improvements in emphasis that I definitely like. This new bill cuts back on subsidies to large farmers (those making over $1 million in profits per year), repairs the 2006 cuts in Food Stamps and places greater emphasis on conservation and the environment. Discerning grocery shoppers will also appreciate the requirement for meats to be labeled with country of origin and livestock producers will appreciate the added assistance in implementing the new rules.

Leader Pelosi said,

"This signals change and shows a new direction in our farm policy... More needs to be done, but we have gone in the right direction for change and for reform."

Subsidies under the current farm bill are estimated to average about $12 billion a year. They would fall to about $7 billion annually under the House bill, which projects high commodity prices and less need for government payments. Overall spending goes from $49.5 billion a year to $56.8 billion because of increased funding for conservation and nutrition.

But, all and all, I like that more money is being invested in vegetable and fruit crops, nutrition programs and Food Stamps. I really, really like the closing of the loopholes that will now require sham shell companies to pay their full share of taxes.

The overall measure was a huge victory for farmers.

Now, the Farm Bill goes to the Senate and we will need to watch it closely.

George Bush is threatening to veto the Farm Bill if it makes it to his desk intact. The Bush administration is complaining that the House farm bill spends too much on farm subsidies and that food stamp entitlements and other nutrition programs administered by the Agriculture Department are a much bigger piece of the pie.

However, I personally think that George Bush has no business complaining about $56 billion that goes to pay for nutrition, food for the needy, family farmers and school lunch programs - when George Bush has spent over $500 billion in Iraq.

Surely, if we were not in Iraq spending all that money - we'd have a little left over for the hungry and for ensuring that our American food supply is healthy and wholesome.

Iraq or food?

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