Policy Journal: Budget Cuts Impact the Farm Bill Process

April 29, 2011 10:31 PM

While Washington is focusing on how to fund the government for the rest of the current fiscal year (through September), House Budget Committee Chairman Paul Ryan (R-Wis.) is looking ahead. His fiscal year 2012 budget plan cuts $6.2 trillion in spending from President Barack Obama’s proposal during the next 10 years, reduces debt as a percentage of the economy, brings federal spending to below 20% of gross domestic product (consistent with the postwar average),
trims the budget deficit by $4.4 trillion and limits spending on domestic government agencies to below 2008 levels. He is also proposing cuts to several hot-button programs, such as Medicare, Medicaid and Social Security.

Cuts to ag spending are inevitable, but not in the near term. The GOP plan cuts the size of direct payments and crop insurance subsidies in the next farm bill, and it moves food stamps into a block-grant program run by individual states. The proposed reforms would commence at the
beginning of the next farm bill and have the potential to save $30 billion during a 10-year period.

Ryan adds that he would give the House Agriculture Committee "flexibility" in writing the omnibus farm bill.

"I commend Chairman Ryan for taking the first serious step in reining in our deficit," says House Agriculture Committee Chairman Frank Lucas (R-Okla.). "The House Budget Committee has outlined a plan that may shock some, but this only illustrates the deep hole we are in. While I might not agree with every proposed cut, we are well past the point where trillion-dollar deficits can be ignored. I am glad that we are finally having a serious dialogue about our nation’s fiscal crisis."

Lucas is quick to remind the agriculture industry that Ryan’s suggestions for cuts are just that—suggestions. "Members of the House Agriculture Committee and I will write the next farm
bill," Lucas pledges.

The proposal by Ryan is only one piece of the budget pie. The Senate hasn’t yet presented its version of a fiscal year 2012 spending blueprint, which is expected to have its differences since the Democrat-controlled chamber will surely not rubber-stamp the House’s plan. Needless to say, the farm bill process will be interesting as it unfolds in the final months of 2011 and into 2012.

Completing the farm bill in 2011 seems more and more unlikely. Lucas says his main reason for wanting to wrap up the bill in 2012 is the budget—the very reason others are pushing for a quicker finish.

His reasoning: "I expect that for the global situation, commodity prices will be more realistic for a long-term number next year. I expect revenue numbers [the economy] to be better—you have terrible revenue numbers at the Treasury [now]. I think in spite of what may or may not happen in the world, those long-term projections in the spring of 2012 will be better than the numbers that we would be working off of right now."

House Ag Committee Ranking Member Collin Peterson (D-Minn.) now supports holding off until 2012 to wrap up the bill. On the Senate side, Ranking Member Pat Roberts (R-Kan.) thinks a 2012 finish is ideal because the panel still needs to hold oversight hearings on the 2008 farm bill before launching into writing a new bill.

While efforts to wrap up the bill in 2012 are gathering steam, budget cutters are ready to whack major slices out of government spending.

Policy Briefs

1099 fix.

The Senate finally approved the House version of legislation that removes a provision from the Health Care Reform Act that would have dramatically increased the number of 1099 forms required to be filed by businesses. Since the House plan already passed, there was no need for a conference committee to iron out differences.

Colombia done, Panama next?

The Obama administration has worked out several outstanding labor issues with Colombia, so the fair trade agreement negotiated in 2007 by the George W. Bush administration can now be sent to Congress. The move was welcomed by growers of wheat and other crops who have experienced declining market share in recent years.

EPA regulation limits.

The House approved a measure by a vote of 255-172 to bar the Environmental Protection Agency (EPA) from regulating industrial air emissions linked to climate change. Rep. Collin Peterson, one of the co-sponsors, described the bill as hitting the "pause button on EPA’s current efforts to regulate greenhouse gases." However, the Senate rejected a similar measure, keeping the issue in limbo.

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