CBO: Draft Senate Farm Bill Saves $18 Billion Over 10 Years; $24.4 Billion With Sequestration Impacts

May 13, 2013 02:40 PM
 

via a special arrangement with Informa Economics, Inc.

Scoring of legislation to be subject of markup session May 14; CBO also releases score of House farm bill 


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Estimated Budgetary Effects Relative to the Current-Law Baseline

Direct spending under the draft Senate farm bill released last week would total $955 billion over 2014-2023, a reduction of $18.0 billion compared to the May baseline, according to the Congressional Budget Office (CBO). Link to CBO letter and scoring details.

Savings if the bill were enacted following other legislation to repeal the provisions in the Budget Control Act of 2011 regarding sequestration would total $6.4 billion over the period. If current-law requirements on sequestration were repealed and the legislation were enacted and the draft bill were implemented, CBO said it would reduce direct spending by $24.4 billion over the 2014-2023 period.

Commodity spending would be reduced by $17.193 billion while nutrition program spending would decline by $4.004 billion and spending on conservation would decrease by $3.677 billion. Spending under the crop insurance title, however, would rise by $4.978 billion.

The bulk of the $6.4 billion sequester-related cuts would come from commodity program spending -- $4.080 billion – and conservation -- $2.088 billion.

The CBO score shows the following farm bill funding for key proposed Title 1 programs:

Adverse Market Payments (AMP):
$3.476 billion

Ag Risk Coverage (ARC): $23.716 billion

Total: $27.192 billion

Bottom line: ARC constitutes 87.2 percent of the funding in the Senate’s Title 1 farm safety net, considerably above the estimated expenditures via adverse market (target price) payments.

CBO also released its scoring for the House farm bill - link. CBO estimates that direct spending authorized by the draft legislation over the 2014-2023 period would total $940 billion. Relative to spending projected under CBO’s May 2013 baseline, CBO estimates that enacting the draft legislation would reduce direct spending by $33.3 billion over the 2014-2023 period. Sequestration resulted in a reduction of roughly $6.4 billion in CBO’s baseline projections for mandatory agricultural programs over the 2014-2013 period. If other legislation were enacted to repeal provisions of the Budget Control Act of 2011 regarding sequestration and the Congress subsequently enacted the committee’s draft legislation, CBO estimates that it would reduce direct spending by $39.7 billion over the 2014-2023 period.


Comments: Compared to the February scoring of the Senate-passed farm bill in 2012, the draft bill will save some $11 billion more -- $24.4 billion for the draft bill to be marked up Tuesday compared to CBO’s February estimate that the 2012-passed bill would save just $13 billion. The spending level in the draft bill is put at $955 billion over the 2014-2023 period compared to $963 billion for the 2012-passed version.

Other differences between Senate and House bills.

* The Senate bill includes new payment limits and tighter subsidy eligibility rules
strongly opposed by House Agriculture leaders. The Senate bill will also require conservation compliance for crop insurance policy holders.

* Food stamp funding cuts is the biggest difference between the two farm bills. The Senate proposes cuts of around $4 billion, with the House measure proposing $20 billion in cuts over ten years. Some Senate Democrats think $4 billion in cuts is too high; some conservative House Republicans think $20 billion in cuts is too low.

 

* The Senate bill would phase in a lower maximum acres for the Conservation Reserve Program to 25 million acres by 2018; the House would lower its acreage cap to 24 million and accomplish that by 2017.

 

* Both bills contain a new dairy program that incorporates a supply management plan opposed by dairy processor and House Speaker John Boehner (R-Ohio). Sources signal the dairy program will not likely be changed via the Senate Ag panel process, but it "could be a close call" in the House Ag panel, according to one veteran farm policy analyst who nonethless thinks the supply management language will still prevail in the House Ag Committee but admits "all bets are off" during House floor debate.

* Energy program funding. Another key difference is that the Senate bill would provide $800 million in mandatory funding for programs in its energy title, including subsidies for renewable energy projects and biomass crop assistance. The House bill has no such funding.

* The US sugar program would remain intact under both the Senate and House bills.

 


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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