GRASSLEY: You know, everybody around this town is talking about
green energy so, obviously, a person like me that hasn't known much
about it until just now because, until now, nobody referred to ethanol
as green energy -- I've known about ethanol for how long?
But, anyway, it seems to be a new word around here, and I'm glad
to use it, but I've been acquainted with it as the father of the wind
energy tax credit, as a person participating in ethanol for a long
Whether it's ethanol, biodiesel, or wind energy, those of us
involved in agriculture have been leading the way on this subject for
years. Now, with much of Congress and President Obama happily on
board the renewable revolution, I hope that we see continued action to
promote renewable energies.
We heard a lot during the campaign about green energy. President
Obama's energy plan indicated a desire to work with Congress and the
auto companies to ensure that all new vehicles have flex fuel vehicle
capability and to do that by the end of his first term of office.
Last week during this address to Congress, the president was
quick to mention that his administration would not walk away from the
domestic auto industry. As American taxpayers are asked once again,
then, to help retool the domestic automakers, it appears to be an
opportune time to secure a commitment from the auto industry about
their production of flex fuel vehicles as well as the industry's
support for blends of ethanol and gasoline that are above 10 percent.
So today I'm sending a letter to ask the president to consider
these requirements for any future taxpayer bailouts. If U.S.
taxpayers are being called upon to bail out the auto industry, to
underwrite their retooling, it seems only reasonable that we can
expect them to manufacture vehicles that full utilize homegrown
biofuels and enable our efforts to eliminate our dependence upon
QUESTION: Good morning, Senator Grassley.
Something else that President Obama mentioned in his speech was
the direct payments to what he called large agribusinesses. Do you
support his budget proposal to eliminate direct payments to any farm
with more than $500,000 in gross revenue?
GRASSLEY: The answer is no. But for those of you that have
followed me for the last several years, you know I am for great and
restrictive limits on how much one operation can get. That's best
expressed through the $250,000 hard cap that I've put in place. And,
of course, he does have that in his program.
So from that standpoint, he and I are on the same page. We're
not off the page. I'm not off the page with him on the $500,000, but
it can't be on gross income. It's got to be on net income for farmers
or let's say adjusted grow income for farmers because sales do not
make a determination of whether or not you're making a profit or not.
So it's got to be related to capability of paying. So that would
be one change I would make. Now, here's another consideration that
goes beyond just a cap. And that is direct payment or include all
payments. I would be one to include all payments. That's why my way
of $250,000 is a better way of doing it because it -- a direct payment
dollar, an LTP dollar, a countercyclical dollar, they all look the
So you should have all of them included. And then you want to
remember that some of this eventually has to be taken into
consideration with our WTO and our negotiations. We want market
opening. We get market opening. We're willing to change our
subsidies that are trade distorting.
Direct payments and conservation and maybe some others are not
trade distorting. LDPs and countercyclicals are a trade distorting.
Maybe countercyclicals a little less trade distorting than LDPs.
So we've got to change those. So it's going to bring us for a
safety net for farmers back to something like direct payments and
conservation and some other things that aren't trade distorting.
So all of those things have to be taken into consideration, and I
don't think they have been taken into consideration by the $500,000
restriction on direct payments.
QUESTION: OK. Thank you.
GRASSLEY: Tom Rider?
QUESTION: Good morning, Senator.
Senator, I understand the president's expected to outline his
trade policy very soon. Are you concerned at all that it may be a
little bit too protectionist in scope?
GRASSLEY: Yes. I'm always afraid of that. And I think it is.
But I am happy to see that they're concerned about negotiation and
having authority. I'm glad to see that they're willing to move ahead
on Panama with some indication that they're going to move ahead on
Colombia and maybe, to a lesser extent, on South Korea.
All of these are movements that, considering the fact that the
president wanted to renegotiate NAFTA, which I hope he doesn't want to
do, but that sent a terrible protectionist signal around the world,
and we don't want to have such a signal sent.
In fact, at a time of recession that we are in -- and we think of
appropriating money from Washington as helping us get out of that
recession -- probably, the worst thing we could do is turn
protectionist. And if we want a real economic stimulus, promote
And I think I got a bottom line view of what you asked me about
the president that this move does please me from the standpoint that
we're not seeing -- that they are seeing trade as a very important way
of improving the U.S. economy.
Let's see. That was Tom.
Gene, Iowa Farmer?
QUESTION: Yes, Senator. You mentioned, obviously, the
importance of ethanol. One of the things that industry is talking
about a lot right now is the issue of indirect land use and how that
might affect credits for ethanol. Is that something you see Congress
coming back and addressing sometime in the near future?
GRASSLEY: Oh, man. If they are going to proceed down that road
through EPA, I hope so. But I hope we don't have to do it.
You know, I want to put this in perspective, if I could, for you.
You know, hearing somebody talk about taking into consideration
whether land is cultivated down in Brazil or not, it kind of fits into
one of these things like some bureaucrat thinking we ought to tax
dairy cows $178 or that we can do something about the dust coming out
of our combine or the limestone dust that comes off of the road that
you've got to keep it inside of your fence line just like I make a
determination whether or not the wind blows.
Well, God makes that determination, and I'm not God. And so I
don't have any control over it. But you see all of these stupid ideas
coming out of the bureaucracy and you wonder what the planet these
bureaucrats come from. In fact, I'm going to go down there someplace and try to find these people and see if they got antennas sticking out of their head or
something. But anyway this falls into that category. So what's the policy
here? The policy is that somehow American farmers that produce corn
that, in turn, is made into ethanol, that somehow somebody's arguing
it's taking us away from food out of somebody's mouth and that ethanol
is -- and that our producing ethanol is going to cause farmers in
Brazil to plow up savannah -- well, what do I have to do with farmers
in Brazil? Absolutely nothing.
And why should we be penalized? Why should we be less energy
independent based upon what somebody's doing in Brazil?
I hope these bureaucrats in EPA know that farmers in Brazil have
a mind of their own and they're going to make determinations what to
do. And they were plowing up savannah a long time before we were ever
producing nine and a half billion gallons of ethanol every year.
So I hope you can tell that we're going to be fighting this all
QUESTION: Good morning, Senator.
I see, going back to trade momentarily there is a House spending
bill that contains a provision that might roll back Bush era
restrictions on ag trade with Cuba. How would you feel about that if
it made it to the Senate?
GRASSLEY: Except for what we're doing right now on food and
medicine which is kind of a humanitarian issue, not really a trade
issue, although it involves money in the pockets of some Americans,
I'm not for changing our policy which is this: That I will vote for
free trade with Cuba just as soon as they allow their people to have
And until that happens, I think we ought to keep things just the
way they are. So, obviously, I will not support the president's
effort to do that. In fact, you know, coming out of this
administration, so much concern about the human rights of terrorists
that are being held in Guantanamo and not being concerned about beyond
the border of Guantanamo is the rest of the island of Cuba where
people don't have any human rights and the president isn't talking
about those human rights and political freedoms.
It's quite an inconsistency as far as I'm concerned.
QUESTION: Good morning, Senator.
I want to go back to this dust issue with EPA now coming forward
again very similar to what they did under Steven Johnson in the Bush
administration. Do you think that there's any prospect that there
will be regulation of dust in these rural areas based upon what you're
seeing right now?
GRASSLEY: I believe that, with that court decision, it's going
to give a great deal of encouragement to the EPA to move ahead on what
you call fugitive dust. And let me remind you, Ken, that this isn't
something new. But because it's such a stupid idea, it's never gotten
any place until three judges start determining that we -- that EPA
ought to do something about it or has a legal responsibility to do
something about it.
This was an issue my last two years in the state legislature, and
we laughed at it then and we're still laughing at it. And the trouble
is we got people coming up with these ideas that don't know -- that
don't know that God controls the weather.
So the only thing I can say to you is that I hope the industry
groups will appeal the ruling and we'll get a little common sense from
a higher court.
QUESTION: Thank you.
GRASSLEY: Chris Clayton?
QUESTION: Senator, what just -- real quickly, what is on the
agenda in terms of energy legislation? Anything -- is something going
to move here fairly quickly? And what do you expect to see in that?
GRASSLEY: Well, yes. I believe that the Energy Committee is
moving very quickly. And when they do, traditionally, the Finance
Committee has done that with a lot of tax incentives. But we kind of
have these tax incentives set ahead, in the case of wind, for another
three years; in the case of solar, probably for five or six years; in
the case of biodiesel and ethanol, just to the end of 2010.
So I don't know that we, in the Finance Committee, will be acting
at the same time as the Energy Committee, but I expect the Energy
Committee to move ahead. And then you want to remember that there's
some things in the stimulus package that already deal with energy, and
the money is out there.
QUESTION: But, I mean, you expect a bill that will be -- arrive
to the floor here before the end of March? Or...
GRASSLEY: No. Probably in April or May.
QUESTION: All right. Thank you.
Stacia, National Farm Broadcasters?
I've gone through everybody that I think is on there. Does
QUESTION: Senator, this is Philip Brasher.
QUESTION: Can I ask you to follow up on the direct payments
issue? A couple of questions. This is, obviously, how you do put the
issue of direct payments in play in order to pay for child nutrition
or increasing child nutrition spending in the reauthorization.
Are you comfortable with that? Do you have a problem with
cutting direct payments, number one? Number two, what's your
assessment so far of Secretary Vilsack and the direction he is taking
the department? Do you have any concern he's taking it away from a
focus on production agriculture, or are you comfortable with it?
GRASSLEY: Oh, I'm comfortable with what he's doing because I
don't see anything he says is a threat to anything with production
agriculture except maybe this issue of the 500,000. And I wouldn't
attribute that to him; I would attribute that to people in OMB.
And, of course, he's part of this administration and he's going
to have to back this. So, obviously, he would follow along and speak
in favor of it.
But I know that he knows the difference as a country lawyer there
in Mount Pleasant that there's a big difference between what farmers
get for gross income and what they get for adjusted gross income. And
I'm sure he appreciates that.
Your first question to me I would answer this way. That money is
fungible and the direct payment -- the only thing I would say that --
a direct payment dollar isn't any different than an LDP dollar, isn't
any different than a counter cyclical dollar, and that when you're --
when you want to put restrictions on income coming from the federal
Treasury to farmers, you ought to throw all of them in.
Now, he does that on the $250,000 cap, but -- and I applaud that
effort. But for two reasons, we have to be careful about direct
payments. Anything we do on direct payments has to be based upon net.
And anything we do on direct payments has to take into consideration
that it's one of only two, maybe three payments in the safety net that
would be WTO compliant according to the way we have been negotiating
WTO on agriculture for the last three or four years.
QUESTION: Just if I could ask a follow up. You don't get
anywhere near the savings from the $250,000 cap, obviously, than you
do this kind of direct payments which way it's there.
GRASSLEY: Well, whatever -- let's put it this way. I would -- I
might raise some question about the amount of money they want to raise
from it, but I -- whether that's $1 or whether that's billions of
dollars, the principle still holds that it ought to be based upon
adjusted gross income and not gross income because gross income isn't
a measure of whether or not a farmer needs to participate in the
QUESTION: So just one last -- so you wouldn't object to the --
you don't necessarily object to cutting direct payments? It's making
the means test of gross sales, not...
GRASSLEY: No. I think I -- I want to make sure that a direct
payment dollar isn't treated differently from an LDP dollar and a
countercyclical dollar when it comes to helping farmers and,
particularly, I want to keep direct payments strong for possible use
after WTO negotiations forces us to change countercyclical and to
change LDP because they're trade distorting. And direct payments are
not trade distorting.
Neither are conservation payments trade distorting. So I
suppose, if you wanted to argue with me, Philip, that while -- if you
-- if we have a WTO agreement, we can reduce direct payments, but are
you going to have a safety net for farmers, then you're going to have
to put more eggs in the basket of conservation.
QUESTION: Sir, this is Dan Looker. Just to follow up, you would
prefer to keep direct payments? To have them as something of a
bargaining chip in WTO negotiations?
GRASSLEY: No. Bargaining chips are LDPs and countercyclicals.
QUESTION: Oh, OK. OK.
GRASSLEY: But they are trade distorting.
GRASSLEY: So I would -- I would keep direct payments as just the
one thing left over that is on the trade distorting. Well, one of two
things left over that's not trade distorting along with conservation.
QUESTION: OK. And just to clarify, in your comments earlier,
the -- would you support a $500,000 cap based on adjusted gross farm
income? In other words, lowering the current Farm Bill limit from
$750,000 to $500,000 on direct payments?
GRASSLEY: I'm reluctant to do too much to direct payments until
we get done with our trade negotiations.
QUESTION: OK. Thank you very much.
GRASSLEY: You bet.
I've gone through the entire list. Anybody have a follow-up?
OK. Thank you all very much.