Saxby Chambliss

Mr. CHAMBLISS

Mr. CHAMBLISS. Amendment No. 3671 is striking the farm stress program, and amendment No. 3673 is the OB/GYN liability reform.

Mr. CHAMBLISS. Yes.

Mr. CHAMBLISS. Sure. We will be happy to amend it.

Mr. CHAMBLISS. The request does not pretend to set the order, the vote of the respective amendments.

Mr. CHAMBLISS. Mr. President, I again ask unanimous consent that following the vote, which I understand is going to be at approximately 3:30 p.m., the following amendments be called up in this order: Senator Gregg's amendments Nos. 3671, 3673, and 3674; that debate be 1 hour equally divided; then following that debate, Senator Alexander on amendments Nos. 3551 and 3553 for 1 hour equally divided; and Senator Coburn on amendments Nos. 3530, 3632, and 3807, with 90 minutes equally divided; and that these votes will be stacked for sometime tomorrow.

Mr. CHAMBLISS. Madam President, I rise in opposition to the amendment offered by my good friends, Senator Lugar and Senator Lautenberg. The purpose of this amendment is supposedly to ``serve more farmers more fairly and be responsive to regional and national crises that endanger the continuing success of America's farmers.'' For farmers in my region and in my State, this amendment does the opposite of that: if enacted, it would seriously endanger the success of my farmers. This amendment removes the safety net that producers support, most of it immediately and the rest over a period of time. Here is what it does: phases out nontrade distorting direct payments that are critical for farmer financing and support; removes the availability of a nonrecourse marketing loan that producers rely upon to market their crops; removes countercyclical support that is necessary in times of low prices; allows, without the limitation contained in the committee-approved bill, production of fruits and vegetables for processing on any base acreage, which is a serious concern to the specialty crop industry. Madam President, 26 agricultural organizations have signed a letter urging Senators not to support this amendment because it eliminates the safety net provided to producers and shifts significantly more funding out of the commodity title. I ask unanimous consent the letter be printed in the Record.

Mr. CHAMBLISS. Mr. President, I wish to propose a unanimous consent request. First, I wish to let everybody know where we are. A vote was originally scheduled for sometime around 3:45 p.m. It is likely to be a little bit before that. My understanding is that Senator Lautenberg has some comments he wants to make on this amendment. I will make some comments. Senator Lugar may have additional comments he wishes to make before the vote. Following the vote on the Lugar-Lautenberg amendment, I ask unanimous consent that Senator Gregg be allowed 1 hour equally divided on his amendments Nos. 3671, 3673, and 3674; that following Senator Gregg, Senator Alexander have 1 hour equally divided on his amendments Nos. 3551 and 3552; that following Senator Alexander, Senator Coburn have 90 minutes equally divided on his amendments Nos. 3530, 3632, and 3807. Senator Harkin may have some Democratic amendments that we may place among those amendments.

Mr. CHAMBLISS. That is fine. I withdraw my request.

Mr. CHAMBLISS. Senator Lugar's amendment replaces the current safety net with several measures--two of which are related to crop insurance and revenue protection. I greatly appreciate Senator Lugar's interest in expanding crop insurance coverage, because there are very few farmers in my State who are even eligible to purchase the coverage Senator Lugar uses as a component of his safety net. I appreciate his interest in expanding the Group Risk Income Protection--GRIP--and Group Risk Protection--GRP-- which are county-level revenue plans of insurance, but I have serious concerns about building the safety net around these programs as a replacement to traditional commodity programs. While GRIP and GRP may be popular, workable programs in Indiana, they are not in Georgia. Of the 159 counties in my home State, these policies are only offered in: for soybeans, 7 counties; for corn, 9 counties; for wheat, 4 counties; for cotton, 16 counties; for peanuts, about 25 counties. In Georgia in 2006, only 47 of these policies were sold and earned premium; 47 for the whole State out of over 13,000 total policies sold and earning premium. Only seven of those triggered indemnity payments. One of those 47 producers called my office and said he wished he had never taken it because it did not provide individualized coverage. Let's look at participation in States in which this coverage is more widely available. Nebraska in 2006 sold 576 GRIP and GRP policies of the 90,896 total policies sold and earning premium. That is less than 1 percent of all policies. Kansas in 2006 sold 110 GRIP and GRP policies out of a total of 117,984. Again, less than 1 percent of all policies. South Dakota in 2006 sold 20 GRIP and GRP policies out of a total of 59,648 policies. Again, less than 1 percent of all policies. North Dakota in 2006 sold 9 GRIP policies and 0 GRP policies out of a total of 69,539 policies. Again, less than 1 percent of all policies. Illinois and Indiana have a different experience: 20 percent in each of these States were GRIP/GRP policies. I am very glad these products are viable risk management tools in Illinois and Indiana and possibly other States, and I want those folks to continue to use them. But I wonder why producers in these other States aren't purchasing these products. And I question how prudent it is to include these products as a significant component of a replacement so-called safety net when few producers are voluntarily purchasing them in most places except Illinois and Indiana. Again, while I appreciate Senator Lugar's interest in expanding this coverage, I do not support it as a replacement to the safety net provided in the committee-approved bill, which contains a safety net that producers have voiced support for and works especially for my home State. Crop insurance has experienced tremendous growth and success since the enactment of the 2000 reform bill. In 2007, farmers insured more than 271 million acres, with an estimated crop loss liability of $67 billion. In my home State in 1994, only 38 percent of eligible acres were insured; and in 2006, 89 percent of eligible acres were insured. In the committee-approved farm bill, over $4.7 billion has been taken out of the crop insurance program to fund other farm bill priorities. These savings were achieved to answer criticisms of the program and improve operational efficiency. We have tried to manage these funding reductions in a way that will not unduly harm the program or the delivery system. Because crop insurance is a Federal program that is supported through a blend of private and Federal reinsurance and delivered through private insurance providers and a network of agents nationwide, we have to be careful in making any changes to the program. There must be sufficient financial incentives for providers and agents to provide appropriate service to their customers yet not so lucrative as to waste taxpayer dollars. The financial strength of the insurance providers is critical to the reinsurance community providing financial and risk- bearing support to the insurance providers. Commercial reinsurance helps assure the economic stability and continuity of the insurance providers in delivering and servicing the crop insurance policies. By requiring a ceding of 30 percent of risk by companies to USDA and a much deeper cut in the administrative and operating--A&O--expense reimbursement to providers than the committee-approved bill and the House-passed bill, Senator Lugar's amendment will have serious negative effects on the delivery system that could impact service and the availability of coverage in many States. After the House passed its farm bill this summer, the reinsurance community sent me a letter expressing concerns about significant cuts the House made to the A&O expense reimbursement as well as the required increased quota share by USDA. For reference, the House cuts were greater than those in the committee-approved bill but less than what Senator Lugar proposes. Specifically, the letter signed by 13 reinsurers states that the House's proposed reduction in A&O will further strain the insurance providers' ability to properly deliver and service the crop insurance program. The letter notes that there is a justifiable and widespread concern that even fewer insurance providers will exist in the future. There are 16 approved insurance providers nationwide. That does not mean 16 providers in every State--some States have as many as 16, others have less. This issue raised by the reinsurance community should be concerning, especially for those of us whose States have fewer insurance providers than the current nationwide total. The letter states that if reinsurers sense that insurance providers will be unable to subsidize further the costs of processing and claims settlements, reinsurers will likely exercise extreme caution in providing private reinsurance. Creditworthiness is paramount for reinsurers, which do not need and do not want to support thinly capitalized and/or overleveraged insurers. The letter also maintains that allegations about the insurance providers earning excessive profits in recent years are unwarranted and inaccurate. Madam President, I ask unanimous consent to have this letter printed in the Record.

Mr. CHAMBLISS. Mr. President, reserving the right to object, I inquire of the Senator, is this an amendment that was not on our list that we have already received unanimous consent on?

Mr. CHAMBLISS. An independent study was recently shared with my staff about the profitability of the Federal crop insurance community. National Crop Insurance Services, NCIS, is an international not-for- profit organization representing the interests of more than 60 crop insurance companies. Representatives of NCIS recently shared the results of an independent study of the Federal crop insurance program compared to the Property & Casualty, P&C, insurance industry for the period of 1992-2006. Key findings include: The Federal crop insurance program is not as profitable as the P&C industry and writing Federal crop insurance entails greater risk; under the current standard reinsurance agreement, SRA, which is the contractual agreement between USDA and approved insurance providers for delivering the program, A&O reimbursements continue to be below actual Federal crop insurance expenses incurred by private insurers. Although the latter finding indicates crop insurance companies' costs are not fully covered by the Federal Government, the committee-approved bill contains an A&O reduction of 2 percentage points below the rates currently in effect for policies except in a State in a year in which the loss ratio is above 1.2. The policy basis for this was to answer criticisms concerning costs of A&O reimbursements while providing an exception in cases where loss adjustments and claims processing will be much greater. We believe this is a balanced approach to reducing A&O expenditures. The crop insurance industry and the crop insurance program make a significant financial contribution in the committee-approved bill, but not to the detriment of the delivery system as under Senator Lugar's amendment. While there are parallels between conservation provisions in this bill and those in the committee bill, there are important differences. The committee bill is more comprehensive and incorporates important new emphases on forestry, specialty and organic production, wildlife, and pollinators, among others. The committee bill addresses the significant challenges in existing programs that stakeholders have identified, such as the appraisal process in WRP and FPP, CSP scope and delivery, third party eligibility in GRP, and delivery of technical assistance. The committee bill includes new flexibilities to improve and accelerate program delivery through improvements to technical service provider provisions, producer group participation, and partnerships and cooperation. For all the above reasons, I respectfully request that my colleagues vote against this amendment.

Mr. CHAMBLISS. Senator Harkin and I have worked diligently over the last 4 weeks to get where we are today, and we have winnowed this list down to 20 amendments on each side. If we make an exception on one side, I obviously have a lot of folks who would like to add an amendment to the list. We simply cannot do that. We have to cut it off. Regrettably, I object.

Mr. CHAMBLISS

Mr. CHAMBLISS. Reserving the right to object, would the Senator mind amending his unanimous consent request to provide for Senator Nelson to speak for 5 minutes and Senator Martinez to speak for up to 5 minutes?

Mr. CHAMBLISS

Mr. CHAMBLISS. I ask unanimous consent that reading of the amendments be dispensed with.

Mr. CHAMBLISS. Mr. President, I ask unanimous consent that the amendment be set aside.

Mr. CHAMBLISS. Mr. President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. CHAMBLISS. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. CHAMBLISS. Mr. President, on behalf of Senator Cornyn, I ask unanimous consent to set aside the pending amendment and to call up amendment No. 3687.

Mr. CHAMBLISS. Mr. President, I want to respond quickly to the Senator from Minnesota who has filed one of two amendments to the issue of payment limits in this bill. It is important we understand the history of payment limits. This has always been a controversial issue in every farm bill. This is my third farm bill, and certainly we had significant reform in the 2002 farm bill over the 1996 farm bill. Here we are again with the same argument being presented, that farmers ought not to be entitled to significant payments from the Federal Government in very tough times when prices are low or yields are low, which is absolutely the direct intention of a farm bill. My friend from Minnesota referred to two things I want to agree with. The first is, the 2002 farm bill spent approximately $17 billion less through the first 5 years than what was originally projected. The reason there was less money spent than was projected by the pundits in 2002 is the fact that the 2002 farm bill was market oriented. We provided farmers and ranchers with tools through utilizing their credit measures, as well as crop insurance measures, as well as other marketing tools that were incorporated into the 2002 farm bill that caused prices to not necessarily rise, but when supply rose, demand was there to meet that supply. Therefore, the ultimate amount of money coming from Washington into the hands of farmers and ranchers was $17 billion over 5 years less than what was projected. How does that impact payment limits? It has a direct impact on the payment limit issue because that simply is a part of the reason that an additional amount of money within that $17 million was not spent. We made significant reforms in the 2002 farm bill to ensure, with every precaution we could possibly take, that payments going from Washington to any State in the Union went into the pockets of farmers. We did everything we could to ensure that. But in spite of trying to do that, there were abuses and I acknowledge that. There are always going to be abuses. This doesn't apply to just farm programs. It unfortunately applies to about every Federal program. I see my friend from Arkansas on the Senate floor. She and I have worked diligently over the last several months to try to make additional reforms to the payment limit issue from the 2002 farm bill into this farm bill. Once again, we have made significant reforms. We have reduced that AGI limit down to $1 million in 2009 and $750,000 for each year after that. So somebody who is a hobby farmer who has a high income that, in our opinion, does not deserve payments is not going to get those payments. Somebody who gets dirt under their fingernails and, frankly, if they make more than $750,000 a year, it means they have worked hard as a farmer to generate that kind of income on an operation. I assure you, if they make $750,000 this year, they could lose every bit of that next year. So to say we ought to take a farmer who makes $750,000 in 1 year, where he has gambled all of his life's savings to invest in his crop, which undoubtedly would have been millions and millions of dollars for him to generate that kind of income, that we are going to strip him of any entitlement to payments in the next year, when he may lose everything he has saved up all of his life, I don't think is looking out for the best interests of farmers and ranchers from an overall standpoint. We did make changes in the bill this time on payment limits. We reduced the $360,000 cap down to $100,000. We eliminated the three- entity rule. If you had told me 10 years ago that in 2007 we were going to be eliminating the three-entity rule in the payment limit provision, I would have told you that you were as crazy. If you told me that 5 years ago, I would have said say there is no way we would eliminate the three-entity rule. That has kind of been a standard under the payment limit provision. But we have decided it is in the best interest of agriculture that it be eliminated. We worked very hard to make sure we try to be fair to farmers and try to encourage family farmers to continue. The main reason we have always had the three-entity rule is to allow for the children of farmers to begin operating as farmers without having to worry about the significant capital investment that their parents have had to make over the years because they simply cannot do it. A young farmer simply cannot make that investment. Well, we have eliminated that three-entity rule that has been very advantageous to young farmers. We are replacing it with some other measures that will allow young farmers to get into the business with their parents and come back to that family farm, which I think all of us would like to encourage. My family happens to be the beneficiary of that exact situation--not my immediate family but my son-in-law. I am very excited about the fact that he is back in his family farming operation. We did add a $2.5 million AGI test to the 2002 farm bill in response to media criticism that high-income individuals were receiving conservation and commodity program payments. We sought to ensure that benefits were denied to wealthy individuals who did not rely on farming for their livelihood but that they remain available to farmers and ranchers so long as--and I emphasize this: so long as--75 percent of their income is derived from farming, ranching, or forestry. In the bill reported out by the Senate Agriculture Committee, there is a provision that reduces the income level for determining program eligibility by 70 percent over a period of 2 years. By 2010, if income exceeds $750,000--down from the current level of $2.5 million--the individual is not eligible for payments unless two-thirds of that individual's income is derived from farming, ranching, or forestry. Through a deliberate and balanced approach, the Agriculture Committee brought reform to the AGI means test by further targeting program benefits to those individuals who depend on farming for their livelihood. Even though the committee has approached this matter with caution, there are simply no reliable statistics that determine the actual impact of the new AGI level. Further modifications of the AGI means test beyond those approved by the committee would be risky and very disruptive to the American farmer. Specific concerns with an even more restrictive AGI means test would include the following: An overly restrictive AGI ceiling disregards the financial reality of commercially viable farms. The Senator from Minnesota mentioned that AGI is basically the net profit, that it covers all payments for fuel and nitrogen and equipment. That does cover the cost of fuel and nitrogen and all the labor and all the other input costs. But out of AGI no equipment payments are covered, no land payments are covered, no interest payments are covered, no payments for the purchase of any additional real estate are covered. So $750,000 is a lot of money--there is no question about it--but here you have an individual who has invested millions of dollars into their farming operation, who has generated $750,000 of AGI, and without looking at the books of that individual, I can tell you from my almost 40 years of experience in agriculture that individual has either a cotton picker that costs $250,000 they have to pay for, a corn combine that costs $200,000 they have to pay for, a couple of tractors that probably cost in the range of $100,000 they have to pay for. They have land rent--well, rent would be deducted. They have land payments that have to be made. So to say that somebody who has that kind of income just ought to be severely penalized because they are a big farmer is not the way farm bills have ever operated, and I do not think it is the way this farm bill needs to operate. Do we need to make sure farm payments go the farmers? You bet we do. We are doing everything we can to see if we cannot make sure that happens. Secondly, a problem with the AGI test is that if the exclusion for people who depend on farming and ranching is ended, then it indicates that the purpose behind the means test has changed from excluding millionaires who happen to own a farm to specifically targeting farmers and ranchers. Thirdly, an unreasonable AGI means test creates uncertainty for growers and their lenders by creating a ping-pong effect of being eligible 1 year and being ineligible the next, making it difficult or impossible for lenders to measure with any degree of certainty the future cash flow of thousands of farm and ranch families in order to make both short- and long-term lending decisions. I have already discussed that in some detail, and I will not go into that any further, but that is a critical aspect of this when you have folks who are gambling all of their life savings that the Good Lord is going to provide them with enough rain and that the prices are going to be there at the end of the day to be able to justify the annual investment they have just made. Again, proponents of an AGI means test state: Of all schedule F filers, only 1.2 percent--or 25,000--had an AGI of $200,000 or more and received farm program payments. This statistic fails to reflect the fact that most operations that could be most directly impacted by the AGI means test do not file schedule F tax returns. Therefore, this statistic seriously underestimates the number of producers and, perhaps more importantly, the share of acres or production that would be left unprotected. Furthermore, those percentages are deceptive because the population of schedule F filers is not limited to producers currently eligible for title I program benefits. Next, building on the information provided by the Internal Revenue Service, a recent study by USDA's Economic Research Service used survey data to estimate the impact of the AGI means test on producers organized as partnerships and corporations. The study estimates that 2.5 percent of farm partnerships and 9.7 percent of farm corporations could be subject to the proposed cap. Furthermore, the ERS estimates that 9.3 percent and 8.5 percent of cotton and rice farms, respectively, would exceed the AGI limit. It is important to note that these impacts are estimates based on a small sample of producers and not based on actual IRS data. An unreasonable AGI means test would make U.S. farm policy unpredictable, inequitable, and punitive for thousands of American farm and ranch families, especially tenant and beginning farmers and ranchers, as well as lenders, landowners, Main Street businesses, and rural communities. One statistic you will hear me talk about again during the course of this debate comes from a study done by the College of Agriculture in my home State at the University of Georgia, where, according to the research recently produced in a study, it was determined that $1.05 in taxes--taxes--is returned to the Federal Government for every $1 of agricultural farm payments that have been made across America. That is a pretty significant statistic when you think about what happens on Main Street rural America as a result of farm payments that are made. An overly restrictive AGI rule would make it difficult or impossible for farm and ranch families to lease land where their eligibility for any 1 year may be in doubt and force a change to cash rent, shifting all risk to the tenant as opposed to a share rent that allows the landlord to share in the production risks. If a landlord wants to help out a young farmer, under this amendment they simply would not be able to do so because they are not going to take that risk. They would be foolish to take that risk. Further tightening of the AGI rule severely inhibits ordinary commercial activity involving the sale of land and other assets, which would jeopardize benefit eligibility. AGI rules clamp down on spouses who take off-farm jobs to help provide family income, especially in years where little or no take-home pay is generated from the farm or ranch, to provide health insurance for the family, or simply to continue a profession, such as teaching. Lastly, estimates of the impacts of an AGI means test focus on the percentage of producers who will be affected. However, these estimates do not address the true impact of the means test because they fail to address the percentage of acres or production that will be affected. For example, the Census of Agriculture indicates that the largest 10 percent of cotton and rice producers account for 30 percent to 50 percent of cotton and rice production in many States. I would dare say, the statistic, again, you will hear as we continue further debate on this amendment--as well as the Dorgan-Grassley amendment--is that about 80 percent of production agriculture in the United States is generated by approximately 20 percent of America's farmers and ranchers. So who should get the biggest benefit of agricultural programs that are available to farmers? Is it the 20 percent that take the least risk, have the least chance of suffering a significant loss, or should it be those farmers who are willing to take the risk, invest all of their life savings on an annual basis in their operation, with the idea they will have that safety net underneath their operation in the event they suffer a disaster as a result of weather, a disaster as a result of price, or a disaster as a result of insect infestation or some other disease infestation that might occur? So this amendment simply is not realistic when it comes to American agriculture production for either a small farmer or a large farmer because if you take an AGI test and you look at how much money that farmer--be it a small farmer or large farmer--has to pay for land they hope they will own one day, for equipment, and the other deductions that have to come out of that AGI, all of a sudden there is an entirely different picture out there that is actual and is not imagined. So I am opposed to this amendment. At the proper time, I am sure we will talk more about it. We will look forward to additional debate and for an ultimate vote on this amendment.

Mr. CHAMBLISS. I thank the Senator from Idaho. Amendment No. 3711 to Amendment No. 3500 On behalf of Senator Lugar, I ask unanimous consent to set aside the pending amendment and call up amendment No. 3711.

Mr. CHAMBLISS. I ask unanimous consent the reading of the amendment be dispensed with.

Mr. CHAMBLISS. I suggest the absence of a quorum.

Mr. CHAMBLISS. Mr. President, I see she has left the Chamber now, but to my colleague from Arkansas, who has been such a great fighter for farmers and ranchers all across America for all my years in the Congress--and I had the privilege of serving with her in both the House and the Senate--I associate myself with her earlier comments. She is dead on target when it comes to not just the issue of payment limits, which she spoke a lot about, but the issue of the underlying bill, the substance of this bill and the benefits of this bill to farmers and ranchers all across America. I appreciate her great work. In a bipartisan way, she and I have worked on virtually every part of this bill. She is a true champion for the American farmer. I suggest the absence of a quorum.

Mr. CHAMBLISS. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CHAMBLISS

Mr. CHAMBLISS. Mr. President, I ask unanimous consent that Alan Mackey and Patty Lawrence, detailees from the U.S. Department of Agriculture, my committee staff, be granted the privileges of the floor for today's session and for the remainder of the debate on this bill.