The administration this week threatened to veto the House Ag Committee's passed farm bill, saying it doesn't provide enough reform of the commodities title and needs to lower payment limitations. It also called the revenue measure to fund the additional $4 billion for nutrition a "tax increase."

The House Ways and Means Committee passed legislation to pay for this additional funding by ending the practice called "earnings stripping," which allows foreign-owned companies to shift income to a country with lower tax rates. The House Republican leadership in a statement said, "The Democrats' surprise tax hike would raise taxes on "insourcing" companies operating inside the U.S., potentially driving millions of American jobs out of the country. Specifically, the Democratic scheme would raise taxes on insourcing employers that operate throughout the U.S. and employ more than 5.1 million Americans."

Democrats counter that the administration is "flip-flopping" on this issue, and contend the measure "closes a tax loophole that allows foreign-based companies located in tax havens to avoid tax on income earned in the U.S. by their U.S.-based subsidiaries." Democrats also point to a 2002 Department of Treasury policy paper that identified "earnings stripping" as a tax abuse.

Rep. Collin Peterson (D-MN), chairman of the House Ag Committee, released a statement saying, "This isn't the first time the Bush Administration has turned its back on American ag and rural America. They repeatedly threatened to veto disaster assistance for ag, which the Democratic leadership passed this year. The Administration also vigorously opposed the 2002 Farm Bill, which USDA Secretary Mike Johanns and others now praise as the right bill at the right time."
-- P. Scott Shearer, Washington, D.C. correspondent