Shallow and Behind-Closed-Door Thinking in Farm Bill 'Debate'

October 20, 2011 02:12 AM
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Watch out what you ask for

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Shallow losses” could lead to “deep payouts” from U.S. taxpayers to farmers. I have learned in my over 33 years watching budget estimates, especially from the Congressional Budget Office (CBO), that forecasts of farm program payouts can frequently go awry. That was the case in the 2008 Farm Bill debate when CBO fell wide of the mark in predicting way too many farmers would go into the Average Crop Revenue Election (ACRE) program. But farm-state leaders at the time used the around $1 billion in “savings” as a result of that CBO projection to spend money elsewhere.

The 'Gang of Four Plus Staff'. Those are the “players” actually writing key features of key farm policy behind closed doors. The same complaints that some of those same lawmakers used against the “writing” of health care reform in closed offices among Democratic Party leaders have been doing the same thing with the coming farm bill strategy. That increases the odds, much like the health care reform package, that there will be major glitches ahead.

Is this a wheat and cotton farm bill? In the years ahead we could see more yield volatile crops like wheat and cotton garner the lion's share of farm program payouts because of the less yield variability of corn, soybeans and rice. This is just a guess because actual farm bill language is being hidden for now, so it's hard to do actual analysis before things are agreed to. And they call this a farm bill debate?

The American Farm Bureau Federation has taken a clear leadership role in the new farm bill debate. I detailed at length on Monday its recent letter to farm-state lawmakers. Go back and read the farm group's comments, because unlike most other national and commodity groups, the Farm Bureau letter looks at the big picture and actually discusses some potential negative impacts should farm policy move in a certain direction. Kudos for at least thinking about impacts.

Direct payment shuffle. Some other farm groups are focused on shifting taxpayer money – a lot of it via in moving some current direct payments– around to programs mostly designed to provide a pseudo direct payment on an annual basis. These groups are good at that task. And they have a lot of farm-state lawmakers very willing to go along with that “transformational” agenda. I'm not arguing against this approach. But to do so via a request to the Super Committee charged with coming up with at least $1.2 trillion in spending cuts and/or revenue over ten years, with far more cuts likely in the years ahead, leads one to wonder if the twelve lawmakers sitting on the Super Committee will accept the farm-state leaders' offer of $23 billion, or label it a very good down payment and ask for around $10 billion more. There is at least one “aggie” on the Super Committee -- Senate Finance Chairman Max Baucus (D-Mont.) -- who has a history of liking to spend a lot of money and being a “protector” of farm programs.

Now comes high anxiety from some conservation-program proponents, who have never seen a dollar they couldn't spend wisely according to their definition. They currently fret that the Conservation Reserve Program, which now has a maximum level of 32 million acres, could be sliced to under 20 million acres. I certainly have not heard that level in any serious discussion. I have heard a potential cut to 26 to 28 million acres over time. But crying wolf has played in the past in farm policy. But this could well be a public relations ploy to declare victory when the CRP maximum level is only cut by a few million acres. Regarding the CRP, the key question is how many of the current CRP acres could legitimately be brought back into production? You would have thought all the money Congress and USDA has spent on the program and “research” in the past would have answered that key query. But that takes leadership and this has been lacking far too long in depth farm policy analysis.

And woe is the person who suggests savings from food and nutrition programs via a look at administrative and program operations. But a review of how much CBO estimated the 2008 Farm Bill would cost over five years, and what the actual payouts have been, shows over a $100 billion increase in food and nutrition spending from expectations – most of which have been for SNAP/formerly food stamps. And CBO significantly overstated actual farm program spending. In a letter to the Super Committee, farm-state leaders noted that actual Commodity Title spending has been almost $25 billion below Congressional Budget Office projections at the time the 2002 and 2008 Farm Bills were passed.

Bottom line: The U.S. is in a very, very serious debt situation. The Super Committee is apparently having a hard time coming up with just a strategy in dealing with at least $1.2 trillion in cuts/revenue over ten years. And if they think it's hard now, without major changes, the U.S. debt will grow by $11 trillion over the next decade. And that doesn't even count the $54 trillion in unfunded mandates coming at taxpayers over the next decade (with a big chunk of that being Medicare). So even if farm policy cuts reach the $33 billion level the Biden Commission, President Obama and House GOP leaders signaled earlier, a level that would be $10 billion above the level suggested by House and Senate Ag panel leaders, the coming cuts are just the first of several ahead. The U.S. debt situation is that onerous.... The years of spend-happy farm program payouts is over. Do the math. It may take longer to have this fact fully in sight, but it's coming. With that in mind, farm policy should focus on the real need for a safety net – when commodity prices tumble, not to provide aid for “shallow” losses. That is just shallow thinking. And I am well aware budget types can never balance the U.S. budget via farm program cuts. But if the low-hanging fruit isn't picked, there is no chance the real juicy fruit – Medicare, Social Security and other more lofty entitlement program spending – will be cut enough. That is, until the bond traders shift their focus from the EU to the United States.

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






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