WASHINGTON – The Senate approved a 2005 Budget Resolution that could reduce government outlays on farm programs while increasing defense spending and making it easier to pass new tax cuts.

The non-binding resolution, which passed by a vote of 57-45, includes an amendment authored by Sen. Charles Grassley, R-Iowa, which supposedly would free up $1.2 billion by imposing new payment limitations on farm program spending. The savings would go to conservation and nutrition programs.

Senate Democrats, claiming that the Republican-sponsored resolution would provide for additional tax cuts at a time when the federal deficit is projects to exceed $500 billion, offered amendments calling for increased spending on domestic programs and homeland security.

The Senate rejected those amendments, passing a resolution (S Con Res 95) that would limit 2005 discretionary spending to $821 billion, $2 billion less than the President's budget, and give procedural protection for a five-year tax cut package. Procedural protection means the latter would not be subject to a 60-vote requirement for passage.

During the two days of floor debate, Sens. Thad Cochran, R-Miss., and Saxby Chambliss, R-Ga., criticized the Grassley payment limit amendment, saying it would treat farmers in certain regions unfairly.

Chambliss used an amendment, which would require benefits from ethanol tax subsidies to be included as benefits for purposes of applying limitations on farm program benefits, to illustrate the inequity of lower limits on crops with high production costs.

Under Grassley’s latest proposal, Congress could reduce limits on direct payments to $20,000 from $40,000; reducing limits on counter-cyclical payments from $65,000 to $30,000 and including the value of certificate redemptions and forfeitures in a $100,000 limit on marketing loan gains.

The non-binding resolution would require enabling action from the Agriculture Committees of both Houses.

Long an opponent of unreasonable, inequitable limitations on farm program benefits, Chambliss noted that the substantial benefits from tax exemptions on ethanol production are not included in current limits or in the Iowa senator's proposal.

Sen. Cochran said the 2002 farm bill included strict limits, added a new adjusted gross income test and created a special commission, which recommended that any changes to limitations not be made until the next farm bill. He also reminded his colleagues that the Budget Resolution was not an appropriate vehicle to mandate changes to current farm law.

Though non-binding, the budget resolution does provide Appropriations committees a figure that limits total discretionary spending. That amount is allocated among 13 subcommittees, including agriculture. The resolution also establishes a total figure for tax cuts but does not specify which cuts are to be made.

The Senate resolution includes a provision that will allow approval of up to $82.1 billion in cuts by a majority vote. Without the procedural protection, any legislation authorizing extension of expiring tax cuts could face a 60-vote hurdle.

e-mail: flaws@primediabusiness.com