Death Tax, Pigford Payments, and The Lame Duck Session

The United States CapitolCongress will look – and theoretically behave – much differently in January. With a Freshman class loaded with new Republican Representatives, many from rural districts, Speaker-elect John Boehner (R-Ohio) is expected to wield a very firm, and much more fiscally conservative, gavel than outgoing Speaker Nancy Peolosi (D-Calif). Until then, however, Congress can, and likely will, act on several issues in a Lame Duck session.

On the horizon for agricultural interests are two unrelated but equally interesting issues. The first are tax issues. From the Estate Tax to a tax extenders package involving credits for ethanol and biodiesel, Congressional inaction could lead to the largest tax increase in the history of the Republic come January 1st. The Estate Tax alone will rocket from complete exemption this year to a rate of 55% on estates larger than $1 million. Reforming or repealing the “Death Tax” is the top priority of many key agricultural trade groups like the American Farm Bureau Federation and the National Cattlemen’s Beef Association. A coalition of farm advocacy groups are expected to make a major push on Capital Hill next week as Members of Congress return from the long holiday weekend.

The other issue, potentially more controversial than tax questions, involves settlement of the infamous Pigford Case. Dating back to a 1999 court settlement to resolve discrimination claims filed against USDA between 1983 and 1997, drama over the Pigford Case and handful of companion settlements continues. The original Pigford settlement came from claims that minority farmers received lesser financial support in farm loans and payments compared with their white counterparts.

As FoxNews reported this week, about $1 billion has been paid in the first round of settlements already. But Congress pushed a second round of payments for so-called Pigford II cases — to pay for those who did not meet the original submission deadline in 2000. Congress authorized $100 million for new payments in a 2008 farm bill and then added more than $1 billion to that this year after Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced a new settlement with black farmers in February. That’s the amount that was funded by the Senate on Friday and moves next to the House.

Fiscal conservatives in Congress, however, raised concerns this week that the USDA claims and settlement processes are rife with fraud, incompetence, and corruption. While the Senate approved a $4.6 billion package to settle the Pigford case, a case involving similar allegations involving Native American farmers, and a group of lawsuits involving water rights on Native American lands, Republican legislators are concerned about whistleblower reports questioning the integrity of the settlement distribution.

Speaker Pelosi vowed to swiftly approve the package and get it to the President’s desk for signature, but GOP lawmakers like Michelle Bachman (R-Minn) and former House Ag Committee Chair Bob Goodlatte (R-Virg) plan to question the numbers from USDA on settlement claims. The red flag issue? Census data records the number of farms operated by black farmers at about 33,000. To date, close to 94,000 claims have been filed in the Pigford case. Sound fishy? Perhaps.

USDA, for its part, says the numbers don’t have to add up because family members, descendants, and retired farmers are all eligible to claim the minimum payment of $50,000. Sources tell me that minimum payment track – one of two tiers of settlement funding – is the big concern because it requires very little proof of actual discrimination or injury. The second, higher tier of funding requires substantially more information from claimants demanding payment.

It is unclear as of yet how much political will the incoming Congressional Republicans will muster to clamp down on fraud and mismanagement in such a racially charged scenario. Depending on what happens in the Lame Duck Session, however, we may never find out.

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About Andy Vance

Grains and Biofuels Editor at Feedstuffs, the weekly newspaper for agribusiness, and resident blogger at If the pen is truly mightier than the sword, I may be the most dangerous man I know...

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