CBO: Updated Assumptions Mean 2012 Senate, House Farm Bills Save 'Considerably Less'

March 1, 2013 08:37 AM
 

Via a special arrangement with Informa Economics, Inc.


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Bills would still produce budget savings, but $10 billion less via the Senate plan and $8.5 billion less via the House plan.

Farm bill plans that were produced in 2012 and approved by the Senate and the House Ag Committee would still save money relative to continuing current policies, but the Congressional Budget Office (CBO) told the panels today "the reduction would be significantly smaller than we estimated in 2012."

The updated savings figures result from CBO's "most recent baseline projections for commodity prices, land conservation, and nutrition spending," the agency said, noting that also included taking into account a later enactment of the legislation. Specifically they detailed the following:

Senate farm bill (S 3240): Enacting S. 3240 (as modified to account for a later enactment) would bring total direct spending for the affected USDA programs to $963 billion over the 2014-2023 period, or $13.1 billion less than what we project will be spent over that period if those programs continue to operate as under current law. Last year, CBO estimated that enacting S. 3240 would have reduced spending relative to continuing current policies by $23.1 billion over the 2013-2022 period.

House farm bill: HR 6083 (as modified to account for a later enactment) would bring total direct spending for the affected USDA programs to $950 billion over the 2014-2023 period, or $26.6 billion less than what we project will be spent over that period if those programs continue to operate as under current law. Last year, CBO estimated that enacting H.R. 6083 would have reduced spending relative to continuing current policies by $35.1 billion over the 2013-2022 period.

Under the Senate bill, CBO noted the following as the major shifts in the updated assumptions:

  • CBO now estimates that spending on commodity programs under title I of the legislation would cost $3.8 billion more over the next 10 years than we estimated in 2012 because: recent higher commodity prices increase the expected cost of the income guarantees in the Agriculture Risk Coverage Program offered under the legislation; lower milk prices increase the cost of the Margin Protection Program for dairy producers; and, it is now clear that the recent drought conditions will increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.
  • CBO now estimates that spending on conservation programs under title II of the legislation would cost $1.4 billion more over the next 10 years than we estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings we previously expected from the proposal to cap enrollment in the program.
  • CBO now estimates that spending on nutrition programs under title IV of the legislation would be $4.4 billion more over the next 10 years than we estimated in 2012 primarily because of a change in our estimate of a provision regarding utility allowances in the Supplemental Nutrition Assistance Program. CBO has obtained new information on state practices and USDA's interpretation of current law with respect to how households qualify for utility allowances. Accordingly, CBO now believes that states would have more flexibility under the proposal than was assumed for the previous estimate. Thus, CBO now expects that this provision, as drafted, would result in little to no reduction in the cost of nutrition programs.

 

As for the House farm bill, CBO noted the following as the major shifts in the updated assumptions:

  • CBO now estimates that spending on commodity programs under title I of the legislation would cost $1.1 billion more over the next 10 years than we estimated in 2012 because: lower milk prices decrease feed cost margins for dairy producers; and, it is now clear that the recent drought conditions would increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013.
  • CBO now estimates that spending on conservation programs under title II of the legislation would cost $1.7 billion more over the next 10 years that we estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings we previously expected from the proposal to cap enrollment in the program.
  • CBO now estimates that spending on nutrition programs under title IV of the legislation would be $4.3 billion more over the next 10 years than we estimated in 2012 primarily because of a change in our estimate of a provision regarding utility allowances in the Supplemental Nutrition Assistance Program. CBO has obtained new information on state practices and USDA's interpretation of current law with respect to how households qualify for utility allowances. Accordingly, CBO now believes that states would have more flexibility under the proposal than was assumed for the previous estimate. Thus, CBO now expects that this provision, as drafted in the legislation, would result in little to no reduction in the cost of nutrition programs.
  • CBO now estimates that spending on crop insurance under title XI would cost $1.4 billion more over the next 10 years than we estimated in 2012 because increased participation in the Price Loss Coverage Option offered in title I will make more producers eligible for benefits under the Supplemental Coverage Option offered under title XI.

 

The following graphic shows the spending changes by farm bill title for the S 3240:

03 01 13 Img1 

The following graphic shows farm bill spending changes for HR 6083:

 03 01 13 Img2

 

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