Budget Reconciliation and U.S. Agricultural Policy
Jul 21, 2017
Every so often, the U.S. Congress decides that it wants to reduce spending undertaken by the federal government. Under the Congressional Budget Act of 1974, Congress established a specific procedure for itself that applies pressure to its Committee with jurisdiction over large components of the federal budget to cut mandatory spending under their programs over a certain time period by a specified amount. This procedure is known as budget reconciliation, and it has been invoked successfully 20 times in the last four decades or so--such bills were also vetoed four times. The current Congressional leadership is seeking to undertake this process for the 21st time for the upcoming 2018 fiscal year (FY18), which begins on October 1, 2017.
Under Senate rules which govern consideration of reconciliation bills, such bills can be brought to the floor by the Senate Majority Leader without facing a 60-vote threshold to avoid extended debate and filibusters that could otherwise be demanded by the Senate minority. Those bills are also limited by Senate rules in the types of provisions they can include--each one must be shown to have a direct impact on federal spending. If the bill’s authors cannot make that case, the questionable provision can be struck from the bill if a single Senator invokes a ‘point of order’ that it violates Senate rules.
On an annual basis, the House and the Senate are supposed to put together a blueprint for federal spending over the next ten years. If they can agree on a single document, that ‘budget resolution’ guides how they move forward on the annual spending process (known as appropriations) in a binding way, although it is not formal legislation and does not go the President for approval (or rejection). Having a budget resolution in place is the first formal step in what members of Congress view as the normal process for determining funding levels for the various federal agencies and programs, sometimes referred to as ‘regular order’. The inclusion of budget reconciliation instructions in budget resolutions is optional, so it does not happen every year.
Due to the increasing partisan divide in Congress over the last few decades, Congress has failed to agree on a budget resolution eight times in the last 19 years. The budget resolution for fiscal year 2017 (FY17) was finally passed by the Senate in January 2017, months after it is usually adopted, primarily to serve as a means for the U.S. Senate to take up legislation to ‘repeal and replace Obamacare’ without being subject to a filibuster.
The House and Senate Agriculture Committees have often faced a requirement to reduce mandatory spending under their jurisdiction as part of these reconciliation procedures, some of which have coincided with consideration of new farm bills. When those requirements are imposed on various Committees, they typically set a targeted amount of mandatory spending that each Committee must meet, though it does not specify how the designated Committees carry out those reductions. For the Agriculture Committees, the largest pots of mandatory spending are devoted to four types of programs--
- Nutrition programs (largely the Supplemental Nutrition Assistance Program (SNAP)
- Commodity programs
- Federal crop insurance program
- Conservation programs
In the 2014 farm bill, mandatory funding for these four titles accounted for 99.1 percent of farm bill spending for the following ten year period (2014-2023) as projected by the Congressional Budget Office (CBO). The other seven titles (Trade, Credit, Research, Forestry, Horticulture, and Miscellaneous) accounted for less than one percent.
In the past, cuts were made to farm bill programs under budget reconciliation bills in 1982, 1989, 1993, and 2005. The original version of the 1996 farm bill, which converted deficiency payments to direct payments, was done under budget reconciliation, but the full reconciliation package across all Committees was vetoed by President Clinton. The same provisions came back several months later as a stand-alone farm bill, which the President subsequently signed.
The next farm bill, which the Senate and House Agriculture Committees have already started to work on, faces the possibility of being constrained by budget reconciliation instructions as well. On July 19, the House Budget Committee reported out a FY18 budget resolution which included reconciliation instructions totaling $203 billion in cuts to mandatory spending over the next 10 years. This amount includes requiring the Agriculture Committees to cut programs under their jurisdiction by $10 billion over that period. The budget resolution still faces a vote by the full House of Representatives later this month. If adopted by the House, the Senate would either need to adopt the same budget resolution or produce one of their own. Thus far, the Senate Budget Committee has not taken any public action on an FY18 budget resolution. A budget resolution adopted by both bodies would be necessary for Congress to undertake tax reform legislation without facing the risk of a Senate filibuster.