How will the New Budget Deal Affect Agriculture?

Basically we know very little at this point. But if you want to know more about how government works or how budgets affect agricultural programs, this post from the National Sustainable Agriculture Coalition is a fantastic reference. I learned a lot from reading it - especially about what we don't know and why!

We have delayed publishing an update on the fiscal year 2011 appropriations and fiscal year 2012 budget bills several times in the past week due to a lack of detailed information emanating from Capitol Hill.  Now, with the government shutdown averted just after midnight last night, we understand (from the many emails received!) that readers would like to know what happened on sustainable agriculture priorities.  Unfortunately there is not yet much to report with any degree of assurance. Fiscal Year 2011 Bill We will likely not be able to provide details on the 2011 appropriations bill until late Monday after the bill is (hopefully) made public.  Appropriations staff on Capitol Hill are busy this weekend working on the details of the package announced last night. From press accounts, the basics of the deal are a $42 billion cut below FY 2010 levels for non-defense spending coupled with a $4 billion increase in defense spending, for a net decrease of approximately $38 billion.  Of that $38 billion, $10 billion was already enacted via the two preceding short term Continuing Resolutions over the past five weeks and $2 billion more was enacted last night in the form of a new one-week Continuing Resolution. No USDA programs were included in the new $2 billion in cuts; those cuts were focused on Transportation and Housing and Urban Development. Agriculture and rural development were already subject to disproportionately high cutbacks in the earlier two short-term Continuing Resolutions. The new Continuing Resolution passed last night expires next Friday, April 15, at the same time that many people will be racing to the Post Office with their last minute tax return filings.  The rest-of-FY 2011 appropriations bill is being drafted now.  It will be made public soon, presumably on Monday.  The House will vote on the bill first.  By House rules, the bill will need to sit for three days before it can be voted on, presumably on Thursday.  The Senate will vote later on Thursday or on Friday. Two issues have been particularly contentious over the last several weeks.  First, there has been significant disagreement over the issue of whether the final measure will include cuts to mandatory spending programs in addition to discretionary spending, which is the normal focus of appropriations bills.  (Cuts to mandatory programs, such as Social Security, food stamps, or farm subsidies, are known in Hill-speak as “CHIMPS” (changes in mandatory program spending)).  Second,  it has been uncertain whether the bill would legislate as well as appropriate via provisions known as legislative “riders.” According to press accounts, the final bill does include substantial CHIMPS, as favored by Senate Democrats and the White House.  Nearly $18 billion of the $42 billion in non-defense cuts are reported to be from mandatory spending.  Or to put it another way, of the $30 billion remaining to be cut beyond the reductions already made in the short-term Continuing Resolutions, 60 percent will come from mandatory programs.

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Among the CHIMPS in the bill are $3.5 billion from unspent Children’s Health Insurance Program,  $2.2 billion from the $6 billion in the health care law for co-op health plans, $2.5 billion in unexpended highway funding, and immediate as well as long term savings to Pell grants.  We do not yet know if the CHIMPS include cuts to the conservation, energy, or other Farm Bill titles.

On the legislative rider front, all of the measures past earlier by the House to curtail the authority of the EPA were excluded from the final deal.

A key issue in the final negotiations was whether to include restrictions on family planning and abortion programs in the bill.  The anti-Planned Parenthood and related riders were kept out of the final deal on the basis of a promise of a stand-alone vote on the issue later this year.

The District of Columbia was the big loser in the “rider” war.  The DC government is now prevented from spending its own tax receipts on abortion services for low-income women.  In addition, as championed by House Speaker John Boehner, the District must now provide vouchers to low-income children to attend religious or private schools instead of public schools.

House FY 2012 Budget Resolution

While all the activity on the FY 2011 appropriations bill was going on this week, the House Republicans also introduced and passed their budget resolution for FY 2012.  In the coming weeks, we will be covering that resolution in more detail, as well as the one expected to be released soon by Senator Kent Conrad (D-ND), chair of the Senate Budget Committee.

We can say two things about the House resolution with assurance.

First, the House resolution suggests a $30 billion reduction in farm commodity and crop insurance subsidies over the course of the next ten years, but it postpones the reduction until after Congress has time to work on the 2012 Farm Bill.

If the $3 billion a year reduction were to be made with $2 billion from commodity production support and $1 billion from crop insurance, it would likely reduce direct payments to corn, soy, wheat, cotton and rice producers and landowners by 40 percent.

Second, the House resolution calls for a $18 billion reduction, over ten years, in environmental and natural resource spending.  These reductions will affect farm bill conservation spending as well as funding for EPA, Fish and Wildlife Service, National Park Service, Forest Service, Army Corps of Engineers, and other government natural resource agencies.

How much if any of that $18 billion is assumed to come from farm bill conservation spending or discretionary spending for conservation technical assistance at USDA is unknown at this time.

The budget resolution, once it is finalized, controls the spending limits that appropriations bills must abide by.  The House resolution assumes increasingly tighter limits on discretionary spending.

With respect to mandatory spending, budget resolutions can mandate a “budget reconciliation” process in which authorizing committees, such as the Agriculture Committee, must come up with legislation to scale back spending to the numbers in the resolution.  Strangely, however, the House budget resolution does not call for budget reconciliation, even while calling attention to items such as the suggested $30 billion cut in farm program spending and other large reductions in mandatory spending.

With respect to the nutrition program part of the farm bill, the House resolution assumes a radical change in the SNAP or food stamp program, transforming it from a federal entitlement program to a state block grant program that would reduce overall food stamp spending.  Similar proposals were attempted during the 1980s and 1990s, but both times were turned back by an alliance of farm, agribusiness, and anti-hunger groups.

Whatever the outcome of the congressional budget resolution process this year, it is important to remember that the budget resolution can assign a mandatory spending budget reduction number to an authorizing committee such as the Agriculture Committee, but then it is entirely up to the authorizing committee as to where and how to make the required cuts.  Assumptions undergirding the budget resolution are just that, assumptions, that do not need to be followed.

We will continue to report on the FY 2012 budget and appropriations process over the course of the coming months.