Letter Opposing the "Farm, Nutrition, and Bioenergy Act of 2007"

July 26, 2007

TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, urges you to oppose H.R. 2419, the "Farm, Nutrition, and Bioenergy Act of 2007" (Farm Bill), because it fails to achieve meaningful reform of our nations' outdated agricultural policy, distorts international trade, and raises taxes in order to pay for the programs it authorizes.

The Farm Bill perpetuates a farm subsidy system that is patently inequitable and benefits only a handful of Americans, with more than half of all subsidies going to just 20 congressional districts. The Congressional Budget Office estimates that the Farm Bill will cost American taxpayers an astounding $286 billion over five years, and $614 billion over ten years, yet it will only benefit a small fraction of U.S. citizens. Likewise, the bill in its current form will continue to hamper our nation's ability to gain greater international market access because of the trade distorting agricultural programs.

The Chamber opposes a variety of provisions in the bill, including but not limited to those that expand the scope and application of the Davis-Bacon Act; increase sugar price supports; impose an import assessment tax on dairy products; mandate country of origin labeling; and prohibit states from modernizing their Food Stamp Programs with the assistance of private sector companies.

Perhaps the most egregious provisions in the Farm Bill, however, are the "pay fors" that will adversely impact U.S. businesses and the economy. The first provision is a tax on foreign-owned companies doing business in the United States that will be used to offset the excessive agriculture spending programs in the Farm Bill. This tax jeopardizes jobs, investment in the U.S., and ultimately will harm the U.S. economy. It also violates a number of international tax treaties with countries around the world, which means we can expect retaliatory tax treatment for U.S. companies doing business abroad.

The second provision is a tax (euphemistically called a "conservation of resources fee") on oil and gas produced from deepwater leases on the Outer Continental Shelf and Alaska. This tax, initially proposed in H.R. 6, the "Creating Long-Term Energy Alternatives for the Nation Act of 2007," will discourage production, hamper the capital investments needed to meet the nation's growing energy needs, and penalize millions of Americans who are employed by, depend on, or have a stake in the success of U.S. oil and natural gas companies.

Finally, the Chamber strongly supports the farm program reforms advocated Rep. Kind, which would reduce direct payments to farmers, create voluntary Risk Management Accounts, and link counter-cyclical payments to a crop's national revenue rather than a government target. The reforms included in the Kind amendment are a good first step in transforming our nation's antiquated approach to agriculture into a sensible national policy.

With farmers enjoying record crop prices, this year's farm bill was an opportunity to modernize our farm policies, wean farmers from market-distorting subsides, and immunize the United States from potential World Trade Organizations challenges. Unfortunately, this bill does none of those things. Therefore, the Chamber urges you to oppose the 2007 Farm Bill, and will consider including votes on, or in relation to this bill, in our annual How They Voted scorecard.

Sincerely,

R. Bruce Josten