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Ali Peterson
Ali_Peterson@leahy.senate.gov

WASHINGTON – Senator Patrick Leahy (D-Vt.) Wednesday joined in introducing legislation to apply the so-called “Buffett Rule” to the U.S. Tax Code. The Paying A Fair Share Act would apply a minimum 30 percent income tax rate for taxpayers with adjusted gross incomes above $1 million.

The bill mirrors a proposal President Obama called on Congress to approve in his State of the Union message last week, to implement what the President termed the Buffett Rule, named for successful Nebraska investor Warren Buffett, who has lamented the fact that his secretary pays a higher effective tax rate than he does.

Leahy said, “While hard-working Vermont families and small businesses are struggling to make ends meet in a difficult economy, tax fairness has continued to erode, benefitting the wealthiest one percent at the expense of the rest of the country. By now a large proportion of millionaires pay a smaller percentage of their income than do a large share of moderate-income taxpayers. As we grapple with large budget deficits worsened by the Bush tax cuts and two wars overseas, it is just common sense that those who have benefitted the most shoulder their fair share of the burden.”

Under current tax law, loopholes and special provisions allow some of the wealthiest individuals to pay lower effective tax rates than do middle-class families. For example in 2008, the wealthiest 400 Americans – making an average of $270 million each – paid an average effective federal tax rate of just 18.2 percent. As a result many millionaires and billionaires are paying lower tax rates than America’s working families pay.

To maintain the incentive for charitable giving, the new bill would permit wealthy taxpayers to continue to receive a credit equal to the value of the charitable contributions deduction under the regular income tax.

Chief sponsor of the new bill is Senator Sheldon Whitehouse (D-R.I.), and both Leahy and Senator Bernie Sanders (I) are cosponsors.

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WASHINGTON (TUESDAY, Sept. 20) – U.S. Senator Patrick Leahy (D-Vt.) has won initial approval of legislation that would permanently move heavy trucks off state secondary roads and onto the state’s Interstate highways. Leahy’s provision will help Vermont businesses and communities struggling due to the large number of state and local roads heavily damaged during the recent flooding disaster.

Leahy included his provision in the annual transportation funding bill that the Senate Transportation Appropriations Subcommittee approved Tuesday – the key step for his legislation. Leahy is a senior member of the transportation funding panel. The bill now moves to the full Senate Appropriations Committee, where Leahy is number two in seniority and where approval is expected tomorrow. Leahy’s Vermont provision is paired with a similar change for Maine, authored by Senator Susan Collins (R-Maine), who is the lead Republican member of the Transportation Subcommittee.

Current federal law restricts trucks weighing more than 80,000 pounds from regularly using the nation’s Interstate highway system. But portions of the Interstate network in neighboring states allow higher-weight trucks to operate on those Interstates due to special circumstances, from tolling to grandfather clauses. Prior to Leahy securing the initial pilot program in 2010, these exceptions, combined with a Vermont law that allows trucks over 80,000 pounds to operate on Vermont’s secondary roadways, resulted in overweight truck traffic traveling through Vermont on some of the state’s smaller roads, creating safety concerns and straining the state’s aging transportation infrastructure.

Leahy said, “No one thinks that overweight trucks should rumble through our historic villages and downtowns on two-lane roads, putting people and our state’s aging infrastructure at risk. Storm damage has further strained our smaller roads and bridges. This extension will keep these trucks out of our downtowns permanently. I have heard from many truckers, Vermont businesses and state and town leaders who reported a significant reduction of heavy truck traffic in our downtowns and villages while the pilot program that I authored was in effect. I am pleased that they join me in support of moving these heavier trucks onto the Interstates.”

Governor Peter Shumlin said, “I am thankful to Senator Leahy for securing this exemption for Vermont. Getting our heaviest trucks off of our town roads will alleviate pressure as we rebuild our local infrastructure affected by

Irene and in the long run will boost economic development and the quality of life in our downtowns.”

Leahy said he hopes the extension will help ease truck traffic in commercial and residential areas like Derby Line, where heavy trucks from Canada are forced to exit from Interstate 91 to take U.S. Route 5 South through Vermont. Leahy said he has heard similar stories of overweight truck traffic taking state routes along the Interstate from several communities, including in Burlington along U.S. Routes 2 and 7, in Brattleboro along U.S. Route 5, and in St. Johnsbury along U.S. Routes 2 and 5.

Leahy and U.S. Senator Bernie Sanders (I-Vt.) and U.S. Representative Peter Welch (D-Vt.) have been working with state and municipal officials across Vermont to find a solution to the problem of excessive numbers of overweight trucks rumbling through downtowns and villages. Sanders and Welch support the Leahy legislation.

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WASHINGTON (THURSDAY, Aug. 11, 2011) – Senator Patrick Leahy (D-Vt.), Chairman of the Senate Judiciary Committee, sent a letter to the Co-Chairs of the Joint Select Committee on Deficit Reduction congratulating them on their appointments and asking that the panel conduct its proceedings with transparency and accountability to the American people. In his letter, Leahy – a longtime champion of the Freedom of Information Act and the public’s right to know – urges the Select Committee’s members to adopt rules of procedure that will assure transparency as the Committee works to find bipartisan ways to reduce the nation’s debt and deficit.

The letter was sent by Chairman Leahy and addressed to Co-Chairs Senator Patty Murray (D-Wash.) and Congressman Jeb Hensarling (R-Texas).

The full text of the letter follows.

# # # # #

August 11, 2011

The Honorable Patty Murray The Honorable Jeb Hensarling

Co-Chair Co-Chair

Joint Select Committee on Deficit Reduction Joint Select Committee on Deficit Reduction
448 Russell Senate Office Building 129 Cannon House Office Building
Washington, DC 20510 Washington, DC 20515

Dear Senator Murray and Congressman Hensarling:

I congratulate you on your recent appointments as the bipartisan Co-Chairs of the Joint Select Committee on Deficit Reduction (“Committee”). As you commence the important work of this Committee, I urge you to carefully consider and adopt rules of procedure for the Committee that will ensure transparency and accountability to the American people.

The ongoing debate in Congress about the national debt has made clear that we must find ways to work together, across party lines and ideologies, to address the challenges facing our Nation. An open and transparent process for the work of the Committee is vital to ensuring that the recommendations of the Committee will have the confidence and support of the American people. Open government is neither a Democratic issue, nor a Republican issue – it is truly an American value and virtue that we all must uphold. It is in this bipartisan spirit, that I urge you to adopt transparency measures for the Joint Select Committee on Deficit Reduction that reflect this American value.

Again, I congratulate you on your appointments and I look forward to working with you to ensure that the Committee’s work is open and accountable to the American public.

Sincerely,

PATRICK LEAHY

Chairman

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The Vermont grant – one of 25 announced by the U.S. Department of Labor – was among the largest awarded under the $100 million Energy Training Partnership program. The awards ranged from $1.4 million to $5 million.

“One way to move our country toward energy independence, slow global warming and create good-paying jobs is to use energy in a smarter way,” said Sanders, the chairman of the Senate Green Jobs and New Economy Subcommittee. “As a nation we have to cut consumption by making our homes and businesses more energy efficient and move to renewable energies. Trouble is, today you would have a hard time finding workers qualified to do those jobs. This funding helps address the problem by training thousands of Vermonters for good-paying green jobs.”

Sen. Patrick Leahy (D-Vt.) said, “Vermont is right, and early, to make a strong and sustained commitment to cutting-edge green jobs. This project continues the training necessary to help families and businesses transform to a greener economy.”

“Vermont has long been a leader in embracing the economic opportunity inherent in combating climate change,” said Rep. Peter Welch, a member of the House Committee on Energy and Commerce. “This grant is a recognition not only of our state’s past successes but also of our enormous future potential to take the lead in creating green energy jobs. It will help homeowners and business owners save money on energy bills, reduce carbon emissions and create jobs Vermonters need.”

The Central Vermont Community Action Council will use the grant to help find good-paying green jobs for the unemployed, underemployed, veterans, women, the disabled, and high school dropouts. The council will partner with Vermont Technical College, the Vermont Office of Economic Opportunity, Vermont Works for Women, Vermont Coalition for Runaway and Homeless Youth Programs, organized labor and industry.

The project will provide intensive case management and training to 398 individuals, and ensure that nearly 2,000 others receive training. Participants will receive certificates – including the Homebuilders and Remodelers Association’s Certified Green Professional certificate – or apprenticeship and licensing credits recognized by the International Brotherhood of Electrical Workers.

“Our outstanding award recipients were selected because their proposed projects will connect workers to career pathways in green industries and occupations through diverse partnerships,” said Secretary of Labor Hilda L. Solis.

Sanders authored the Green Jobs Act with then-Sen. Hillary Rodham Clinton. Then-Rep. Solis was the lead House sponsor of the Green Jobs Act. Their legislation, which became law as part of the 2007 energy bill, was funded for the first time as part of last year’s $787 billion economic stimulus legislation.

Contacts:
Michael Briggs (Sanders): 202 224-5141
David Carle (Leahy): 202 224-3693
Paul Heintz (Welch): 202 226-8346

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Vermont coops weigh programs to rein in milk supply

Marie Audet, right, talks with her husband Eugene and Margaret Laggis at a hearing in St. Albans recently. Audet is one of the founders of Dairy Farmers Working Together, a grassroots group that is pushing a growth management program for the dairy industry. Photo by Terry J. Allen.

Raw milk is a highly perishable product. Once it leaves the cow’s udder, it has to be processed into bottled milk, cheese, butter or yogurt within a few days.

That fact makes dairy farmers more vulnerable to the vagaries of the market than other food producers. Dairymen (and women) can’t wait for a better price. Unlike the farmer who raises soybeans or carrots, a dairy producer’s raw milk has to be processed almost as soon as it’s been vacuum pumped from the Holstein and piped into the steel bulk tank.

On the farm, cows have to be milked no matter what, and day to day that imperative trumps everything else – even the glut of dairy products on the global market.
And when the milk supply outstrips demand, as it does in predictable, 36 month cycles, according to a Cornell University study, milk prices plummet as they did in 2006 and at the beginning of this year.

The current downturn is the worst in living memory. Milk checks are half what they were in 2008 and, in effect, because of the high cost of production, farmers are paying dairy processors to take their milk. (The cost of production is $16-$18 per hundredweight, or 11.6 gallons of milk; farmers receive about $11 per hundredweight.)

Farmers won’t see break-even prices for raw milk until July 2010, according to USDA projections, and economists are already predicting the next downturn — in 2012.

It’s counterintuitive, but some farmers are already bulking up on heifers (teenage cows) in order to profit from a potential price uptick next year, and it’s that surplus of heifers that will likely set off the next dairy market crash, according to Dr. Mark Stephenson, an extension economist with Cornell University.

Currently, there are two short-term fixes for the oversupply problem: killing thousands of cows and/or letting hundreds of farm businesses fail nationwide.

Since last winter, the dairy industry group Cooperatives Working Together has taken more than 225,000 cows out of production in the United States to counter a 2.6 percent, or 5 billion pound annual milk surplus, according Jim Tillison, chief operating officer for CWT.

In Vermont, 26 farms have taken the herd buyout since December of last year, and the process of natural selection has begun. In all 32 have gone under, and UVM Extension agricultural economist Bob Parsons predicts 150 Vermont dairy farms will sell out by next summer. There are 1,046 farms left in the state currently.

Beyond survival of the fittest?

Several dairy groups have proposed a less painful, more long-term solution to the problem: growth management. Proponents believe that if farmers limit the amount of milk they produce, they can control the supply, lessen the volatility of the milk market and ultimately get a better price for their product.

“The quickest way ever for us to make more money, to bring in more revenue is to increase production, whether prices are high or low,” says Marie Audet, a Bridport farmer and member of Dairy Farmers Working Together, the grassroots group that began looking at growth management options in 2006. “So we’re creating our own surpluses. Basically, the only tool we have is what we sell. We’re trying to fix that.”

A coalition of three organizations — DFWT, Holstein Association USA and the California Milk Producers Council – is proposing that Congress adopt a new, “budget-neutral” program that would incentivize farmers to limit increases to their milk supply.

Under the plan, production levels for each farm would be averaged over a three-year period. These averages would be used to calculate a base annual production level for each farm that includes a small percentage increase. Farmers who go beyond the preset level in a given year would be required to pay a market access fee. Everyone else would receive a share of the pooled fees.

Unlike CWT’s herd buyout program, participation would be mandatory. An advisory board and the USDA would administer the program, according to the Holstein Association.

“Supply management is kind of going to cut out some of the opportunity for speculation in the middle,” says Lucas Sjostrom, of the Holstein Association. “Right now we have swings between $10 hundredweight and $20 hundredweight which really equates up a $1.50 swing in the grocery store, however even though our prices have dropped, the prices in the store have not. So if we could manage supply with the perishable product, which in 7 days needs to be either turning into cheese or be in fluid milk in the store, we can give farmers an opportunity to make a profit instead of getting rid of one-third of the dairy farmers every three years.”

Dr. Mark Stephenson, an economist with Cornell University’s extension service, says the 36-month milk cow breeding cycle has the biggest impact on market volatility. Stephenson’s research shows that a growth management program that limited the number of cows in production would stabilize the milk supply — and prices.

Implementing such a program, however, would require an act of Congress. Sen. Bernie Sanders, D-Vt., and Rep. Peter Welch, D-Vt., have voiced support for a growth management plan. Proponents say a draft bill is under congressional review.

Last week Sen. Patrick Leahy, D-Vt., provided a meeting room for a Senate and House staff briefing on the coalition proposal. More than 30 staffers attended. A similar briefing will be scheduled in the House in the next few weeks, according to Amanda St. Pierre, of DFWT.

Sen. Patrick Leahy, D-Vt., at the Senate Judiciary Committee hearing in St. Albans. Photo by Terry J. Allen.

At the recent Senate Judiciary Committee Hearing in St. Albans, where Leahy recorded testimony about the dairy crisis, Sanders took a straw poll of support for a supply management system. Twenty or so farmers in the audience raised their hands.

The dairy cooperatives that handle raw milk in Vermont have been less enthusiastic. But all three are considering some kind of growth management option, and the issue is starting to gain traction.

Coops weigh in

The biggest news? Dairy Farmers of America, a national cooperative with 18,000 member farmers in 48 states, including Vermont, adopted its own growth management initiative last week.

DFA, which markets 35 percent of U.S. milk, is proposing that this initiative replace the national herd buyout program, according to Ralph McNall, chairman of St. Albans Cooperative Creamery, which works in tandem with DFA. Farmers would pay 25 cents per hundredweight under the proposed growth management initiative, and participation would be mandatory, he says.

The DFA initiative includes elements of the Dairy Farmers Working Together, Holstein and Milk Producers Council proposals, though there would be no market access fee, McNall says.

On a scale of 1 to 10, the decision by DFA to support growth management is a 10 for McNall. “It’s a big, big deal,” he says. “It’s the biggest deal I’ve been involved with in terms of the dairy business.”

Amanda St. Pierre of Dairy Farmers Working Together says she’s hoping DFA will be willing to talk with the coalition soon. “We’re willing to work through whatever issues need to be worked out for the good of the dairy farmers,” she says.

The directors of St. Albans also recently passed a resolution that “supports the concept of a CWT or growth management program.”

Massachusetts-based Agri-Mark, Inc., which serves 1,300 members in New York and New England, including 400 from Vermont, will consider growth management proposals among other options at its next meeting in mid-October.

Neal Rea, the chairman of Agri-Mark’s board of directors, says the cooperative is “in favor of looking at options and ideas to reduce national milk supply.” Rea says Agri-Mark was one of the first coops to support supply management in the United States through the CWT herd buyout program.

Though Agri-Mark has continued to support the Milk Income Loss Contract (a federal subsidy system) Rea says cooperative directors “have some concerns over programs that are run and controlled by the federal government.”

“If we had to make that (a DFA-style growth management initiative) a mandated program the government would probably have to be involved,” Rea says. “They’d collect the money and it would have to go through USDA and the concern is that USDA would probably have to run the program. They’d request dairy farmer input, but it very well could be a government run program determining how we spend our money.”

The National Milk Producers Federation, which represents coops and runs the CWT herd buyout program, came out with its own set of recommendations last week, none of which, with the exception of a requirement for full participation in CWT (currently 67 percent of farmers pay in 10 cents per hundredweight), appear to address the long-term effects of oversupply. An attempt to reach Jerry Kozac, CEO of National Milk, yesterday was unsuccessful.

A few weeks ago, Christopher Galen, spokesman for the trade group, said, “We at National Milk have not taken a position yet on the so-called price stabilization plan, which as you know is being promoted by the Holstein Association, by Dairy Farmers Working Together and there’s also a group in California called the Milk Producers Council and they’ve become the three musketeers, if you will, having formed a coalition to support in concept this growth management plan.”

St. Pierre says that if the industry doesn’t work with farmers to create a system that provides long-term stability consumers will suffer.

“Ultimately, who’s going to be hurt is the American consumer,” she says. “When we’re seeing consolidation of the farming industry we’re down to 55,000 dairy farmers. Couple more of these cycles and we’ll be down to 15,000 to 20,000 in the whole country.”

She is particularly disturbed by the pain her neighbors are enduring. “An eerie silence has fallen on the Vermont dairy industry,” St. Pierre says. “It’s almost grieving to be honest with you.”

McNall says if prices don’t go up soon and the long-term volatility problems aren’t resolved, the state could lose its dairy industry.

“We’re at a crossroads like I’ve never seen before,” McNall says. “It’s extremely serious. Here in the Northeast, Vermont especially, it’s on the verge of perhaps losing our dairy industry. And I’m not sure a lot of people understand that. It’s that serious. Our infrastructure is in trouble. It isn’t just us. Our bankers, our suppliers, they’re in trouble. And people can’t afford to exist like this. I don’t mean to sound that negative, but in reality dairying could change fast here in the state of Vermont. There’s no other state that depends so much on dairying as Vermont does. On a per capita basis, well, you and I have more at stake than anyone else in the country.”

Bob Wellington, an economist for Agri-Mark, Inc., the dairy processor that manufactures Cabot Cheese summed up the situation this way: “This is not a case of having no supply control. We have supply control right now and it’s harsh and it’s cruel and it’s low milk prices. We have to ask: Which system do you prefer?”

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Senators say dairy industry consolidation hurting farmers

Sen. Patrick Leahy and Sen. Bernie Sanders listen to testimony at the Senate Judiciary Committee hearing on antitrust issues in the dairy industry on Saturday in St. Albans. Photo by Terry J. Allen.

A lack of competition may allow dominant dairy processors to “exert power” and depress the price farmers receive for raw milk, according to Christine Varney, the assistant attorney general for the Antitrust Division of the U.S. Department of Justice, who spoke at a congressional hearing held in St. Albans on Saturday.

The largest dairy processor in the country, Dean Foods, buys 70 percent of the milk produced in the Northeast. Sen. Bernie Sanders, I-Vt., has asked the Department of Justice to investigate the Dallas-based corporation’s alleged anti-competitive market practices.

Sen. Patrick Leahy, D-Vt., who called the hearing as part of a congressional investigation into “anti-competitive” dairy industry practices, asked Varney if that level of industry buying power “bothers” her.

“Competition is not very well served when you have one player in the market who controls 70 percent of the market,” Varney said. “We look very carefully at the activity in a market when you have that kind of dominance.”


Varney explained to the audience of 100 people in the St. Albans City Hall that some dairy processors have become “vertically integrated.” These manufacturers not only process raw milk, but also may own parts of the supply chain “such as distribution of its products or supply of its inputs.”

“Vertical relationships in dairy markets would include, for example, a processor entering into exclusive agreements with a specific cooperative to buy raw milk,” Varney testified.

Varney said her division would pursue an investigation of anti-trust violations allegedly perpetrated by dairy processors and would examine complaints about a lack of transparency in the industry as a whole.

“Transparency is something we all need in order to understand how we can improve the production, the health and life of the dairy industry in the United States,” Varney said.
Leahy and Sanders reiterated that Dean Foods has reaped enormous profits this year at a time when dairy farmers are facing a rip tide of red ink and going deep into debt to stay afloat.

Milk prices, which have reached 30-year lows, hovering in the $11 per hundredweight range are not expected to reach $15 per hundredweight until next summer according to USDA economists.
Meanwhile the cost to produce raw milk in Vermont has remained high – at around $18 per hundredweight – partly because farmers must buy more grain here due to the state’s short growing season.

As a result of this whipsaw of low prices and high costs, agricultural economist Bob Parsons at UVM Extension has said Vermont could lose 150 farms in the coming year.

Willard Rowell, owner of Green Mountain Dairy in Highgate, testified on Saturday that his farm will likely lose $1.6 million this year. He and his family milk 900 cows. Last year their income was $2.5 million.

Paul Doton, who milks about 60 cows with his wife and son on their 200-acre farm in Barnard, says he is scraping by because he sells maple syrup, vegetables and does some custom mowing and snowplowing.

“Without this income, I would already be out of business,” Doton said. “Doton farm, much like many other Vermont farms, cannot hang on much longer. How long can we go on losing $4,500 per month? My answer is – not long at all.”

Dean Foods reported first quarter profits of $76.2 million this year, up 147 percent above its reported earnings in the same quarter in 2008, Sanders reported at the hearing.

Sanders said the corporation paid its CEO, Gregg Engles, $116.38 million over the last five years.

“What we are seeing in recent years is a growing concentration of ownership, specifically in dairy processing,” Sanders said. “According to the dairy industry press, one company, the largest milk producer in America, Dean Foods, controls approximately 90 percent of the milk market in Michigan, about 80 percent of the milk market in Massachusetts, 80 to 90 percent in Tennessee, over 80 percent in northern Alabama, over 70 percent in northern New Jersey and in New England about 70 percent.”

In 2001, Suiza Corp. bought Dean Foods, adopted the company’s name, and formed the largest dairy manufacturing corporation in the United States. The company sells milk and other dairy products under 50 “well-known local and regional brands and a wide array of private labels,” according to its web site.

Sanders asked Varney if she would pick up an investigation into the “far-ranging anti-competitive practices” of Dean Foods and Dairy Farmers of America. The 26-month probe, conducted by career investigators at the Department of Justice, was dropped in 2006.

“It is my understanding that in August of 2006 that team recommended action against some of the dairy industry’s biggest firms, including Dean Foods, Dairy Farmers of America and National Dairy Holdings,” Sanders said. “Unfortunately, under the Bush administration it was kicked over to the political people and they decided not to pursue that investigation or take any action. Can you give us assurance that you in fact will continue that investigation and if it leads you to the conclusion that action should be taken that in fact you’re prepared to take action?”

Varney replied, “I can give you every assurance that any investigation I undertake that leads us to believe there is evidence sufficient to prosecute will be prosecuted. There is no doubt that we will prosecute that kind of activity should we find it.”

The Senate Judiciary Committee will accept written testimony from dairy farmers through Sept. 30 at Dairy_Hearing@Judiciary-dem.senate.gov.

Bob Wellington testifies

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