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Is the Ryan budget the beginning...or the end?

Is the Ryan budget the beginning...or the end?

This past week was all about the Ryan budget. Representative Paul Ryan, Chairman of the House Budget Committee, released his plan for the budget, which was then passed out of the Budget Committee by just one vote and is expected to be on the House floor next week.

The budget kicks off in a formal way many legislative plans. It can be a guiding document for future legislation, and it can include instructions to other Committees on what they need to do to meet certain spending or revenue targets.

With regard to the farm bill and agriculture, the Ryan Budget instructs the Agriculture Committee to come up with $33.2 billion in cuts over the next ten years. In the summary document that was released with the legislation, Chairman Ryan suggests that this be done through reduced fixed, direct payments and through a reduction in crop insurance premium subsidies. The plan also indicates support for converting the Supplemental Nutrition Assistance Program (SNAP, formerly the food stamp program) to a state block grant program. You can find this document here.

IF the Senate were in agreement on these approaches and numbers, then we would be looking at a very real possibility of those $33.2 billion in cuts would happen through a farm bill that would be rolled into a "budget reconciliation bill". The Agriculture Committees would still be given an opportunity to craft those cuts the way they want, but they would be under a great deal of pressure to come up with that number.

BUT the Senate is not in agreement. So what does this budget mean? First, as many observers have mentioned, it decreases the likelihood of a farm bill being enacted before September 30. The House and Senate budget-minders are worlds apart from one another, and this budget still faces a test on the House floor. Even if the House were to pass this budget and the Agriculture Committee create a bill that would accomplish the cuts, you have to wonder, "To what end?" since the Senate is unlikely to take up the package and certainly will go a different path with the funds.

How does it complicate Senate action on the farm bill? Since it has been expected that the Senate will move first on a farm bill this year, what numbers will they use to guide their actions? Some Senators could seize on the Ryan budget as a sign that the other Chamber will be unlikely to come to terms with them this year, thereby casting some doubt on a farm bill coming out of the Senate. Or it could go the other way, and the Senate could produce a farm bill, with expected fewer reductions in spending in the hopes of setting the bar high for any comparisons with the House. Either way, it causes a problem were the House and Senate to try to conference legislation before September. Chairman Lucas in the House would presumably hold tight to his majority's bottom-line number, and it would likely give him little negotiating room. Chairwoman Stabenow in the Senate would be unlikely to accept an ultimatum from the House based on budget numbers that the Senate never accepted.

The big question now would be how such a stalemate affects the possibility of extending the farm bill when efforts to pass a new one fail. Stay tuned...

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Policy Update

Policy Update -- Week of March 12

The Big Picture: The House is in recess, and the Senate is having a hearing on risk management and farm commodities. Meanwhile the new baseline is out. The baseline reflects the best estimates of the Congressional Budget Office for how much the current farm bill programs will cost over the next ten years, assuming they are extended. So when people talk about a “baseline” bill, they are talking about a farm bill that spends only what is currently expected to be spent. However, most people are talking about a “below baseline” bill that saves money, or spends less than is currently expected to be spent if the current programs were simply extended.

That becomes even more complicated when you consider that some programs are not included in the baseline even though they currently exist, so Congressional members want to continue these programs, they will have to find the funds to pay for their future cost.

The Senate has indicated a desire to report out a farm bill this spring, so we will anxiously wait to see if markups are scheduled after the hearing this week.

Happening This Week:

Agriculture Committee on the Senate side holding a hearing on Risk Management and Agricultural Commodities. March 15 at 9:00 a.m.

Helpful links:

How much do direct payments matter to your area? What about crop insurance premium subsidies? Here is a link to USDA’s maps on commodity programs and crop insurance, which allow you to burrow down to the county level. You can also save the maps you create from the data set. http://www.ers.usda.gov/Data/FarmProgramAtlas/Atlas.html

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Congressional Schedules 2012

Each chamber of Congress creates its own schedule for the upcoming session. For specifically, the majority leaders of each chamber create the schedule, though in theory that is done with close consultation with the minority party. Below are links to each chamber's tentative schedules for 2012:

House Schedule

Senate Schedule

These schedules change over the course of the year as voting days shift based on what legislation is "ripe" for consideration and whether it is determined that additional voting days are necessary or not. Generally, they provide a good starting point for Members and the public to determine when the chambers will be in session and make plans accordingly.

The schedules are also great for considering when Members are more likely to be back in their districts, so that they can be included in local meetings and events. The schedules note such time with different terms: constituent work weeks, district work periods, state work periods, or as most people in Washington refer to them -- "recesses". Members can use this time however they choose, but most make a point of at least spending some of the time in their districts.

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Worst Case Scenario?

All eyes are on the Agriculture Committees and whether they release a package of spending cuts and policy proposals to the Super Committee in the next week. After all, the Super Committee has until just November 23 to write a comprehensive bill that would achieve $1.2 trillion in savings, and the Agriculture Committees committed to getting them a $23 billion installment on their goal back in the letter they sent in October (link to blog post about letter). However, current press reports are less than optimistic about the Super Committee's ability to come up with an agreement by that date. What happens if the Super Committee fails to come up with a package by November 23? A few possibilities:
  • Option 1: Congress and the President extend the deadline for the Super Committee's legislation. What is enacted into law can always be changed at a later date, so the House, Senate, and President could simply decide that the Super Committee needs to be given more time to craft a solution.
  • Option 2: The Super Committee initiative is deemed a failure, and the automatic spending cuts that were to be enacted if the Super Committee effort did not produce $1.2 trillion in savings go into effect on January 1, 2013. Included in these cuts are mandatory across-the-board cuts to USDA programs as well. However, such cuts would not affect certain programs such as the Conservation Reserve Program and the nutrition programs. With regard to a 2012 Farm Bill, both Committees would likely try to fashion legislation that could pass both chambers early next year. Such a package would be unlikely to have the "protection" of the Super Committee product, however, in that it would be subject to amendment.
  • Option 3: The Super Committee initiative is deemed a failure, and Congress and the President agree to change the law to prevent the mandatory spending cuts from happening. This option has been floated recently by several Members of Congress that are viewing the Super Committee process as having already failed and are concerned about the effects of the cuts most especially on the military. While those cuts are certainly unpopular, they were designed that way to give an incentive to the Super Committee to complete its work. The obstacle to this option would be securing agreement from all the parties who signed off on the Budget Control Act back in August to unravel what they put in place.
Overlaying all of these possibilities is the reaction from both the public at large and the financial markets specifically to a failure of the Super Committee to achieve its goal in the timeline set forward in the Budget Control Act.

Only eleven days are left till we know for sure whether the Super Committee pulls together Super legislation, and negotiations do not really happen until the bitter end. The question without an answer at this point is whether we are currently at that end or not.

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The Other Funding Battle

While so much focus is on the writing of the next Farm Bill, another significant funding battle is being fought as well. The annual appropriations process is the means by which government agencies receive their annual allocations of money for program operations. The Senate just passed its version of the bill this week, and the House passed its version of the bill in June. Now, both chambers' Appropriations Committees will sit down and resolve the differences between the bills in hopes of putting together a version of the bill that can pass in both chambers and be signed into law by the President.

You can find the status of these governmental funding bills at this link, which is provided by the Library of Congress. You can also track down past spending bills and the legislative and report language that passed into law in previous fiscal years.

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How long does it take to write a farm bill?

Deadlines are nearing for the Agriculture Committees to turn over their complete legislative proposal to the Super Committee for consideration in the Super Committee's debt reduction package. Some groups have accused the Committees of writing a fast farm bill without public input. So how long does it take to write a farm bill?

Answer: Writing a farm bill can be as easy as changing the date of expiration everywhere it appears in current law. Or it can be as difficult as making changes to every single section of expiring law. It can be as fast as using a computer to search for the expiration date (2012) and replace it with the new one (2017). And it can be as slow as holding extensive public hearings in the field and in Washington DC, soliciting volumes of public input, and synthesizing it all into a comprehensive piece of legislation that is then subject to amendments in both Chambers and then is formed into a final version through an extensive and public conference between the House and Senate, with consultation with the Executive Branch.

How the process works in any given cycle depends on many factors:
  • whether the bill is moving separately or as another piece of legislation (riding on another "vehicle")
  • whether a particular budget climate is favorable or it is determined that waiting another year would be helpful to the bottom line
  • whether agricultural interests are in favor of the current system
  • whether reform interests are stronger in a given year than agricultural interests
The long and short: There is no set amount of time that it takes to write a bill or pass it. This farm bill may be taking some by surprise, but the wheels that set it into motion began as soon as the last farm bill was enacted.

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Letter to the Super Committee

October 18, 2011 – The Chairs and Ranking Members of the House and Senate Agriculture Committees sent a letter on October 17, 2011 to the Super Committee that outlines their approach to the question of agricultural spending cuts. Link to letter

The letter recommends $23 billion in mandatory spending cuts within the Committees' jurisdiction. Significantly, the letter indicates that the Committees will be forwarding a complete legislative package detailing the recommended cuts to the Super Committee by November 1, so stay tuned.

What is mandatory spending? Congress typically considers spending to fall into two categories: mandatory and discretionary. The funding provided through the annual appropriations bills is considered discretionary. Funding provided through enacted law (such as the farm bill) that is able to bypass the annual appropriations process is considered mandatory. Some exceptions to these general categories exist since the appropriators can use their annual funding bills to take away mandatory money that has been provided by the Agriculture Committees through the farm bill process.

Commodity programs (direct payments, countercyclical payments, and the marketing loan program), conservation programs such as the Conservation Reserve Program, and nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program) are all mandatory programs and are all possible sources for at least a portion of that $23 billion referenced in the letter.

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President's Proposal for Agricultural Cuts

The Obama Administration has released its debt reduction plan, including a list of what cuts should happen in agriculture. Here's the link to the full report. Here's a list of the highlights:
  • Elimination of direct payments;
  • Reduce crop insurance subsidies by reducing the level of administrative and operating expenses reimbursed to companies, increasing the premiums for CAT coverage, and reducing premium subsidies; and
  • Reduce conservation funding.
The agricultural savings add up to $33 billion over ten years. The Administration is also proposing to extend the permanent disaster assistance program in the 2008 Farm Bill that expires in 2011.

The take on this latest entry into the "What Are We Going to Cut" contest? The total falls squarely in the range of estimates that have been discussed over the past year by the various debt reduction commissions (from $10 billion to $34 billion) and all of the items have been mentioned as possibilities. So nothing here is surprising, but it does put the Administration on record as supporting this level of cuts in whatever package the Super Committee puts together.

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Only one month away and more questions than answers

We are only one month away from the Committees submitting recommendations to the Super Committee writing the debt reduction package. Will those recommendations look like a farm bill or just budget-cutting provisions? How much change in commodity policy is coming? While answers to those questions are still developing, a few recent developments from a range of interests are contributing to the debate.

The National Farmers Union released a study that the organization had done by the University of Tennessee that "includes a combination of farmer-owned reserves, increased loan rates, set-asides, the elimination of direct payments and reduced reliance on other government payment instruments."

The National Corn Growers Association released its own proposal for the farm bill that would modify and replace the Average Crop Revenue Election program (ACRE).

With any proposal being released, ask the following:
  1. Does it save money? Any proposal that does not save money is unlikely to be on the table.
  2. Who is the proposal's champion in Congress? Any proposal with a chance at being included must have a strong advocate at the table when key policy decisions are being made. Typically that means one of the Chairs/Ranking Members and/or members of leadership.
  3. What is the proposal's history in past farm bills? A program that has been rejected in the past must have a compelling reason to be reincarnated.
The Committees do not have much time to vet new proposals, so any ideas that are not currently on the table may have a hard time making it to the table in time for what recommendations are made to the Super Committee in October. What form those recommendations take is still an open question.

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Put away the kickballs

That's right, the Congressional August Recess is almost over. In all seriousness, Members of Congress typically use the August time away from Washington to meet with constituents back in the district (hence the official name they use for the recess: the District Work Period), to hold field hearings, and to travel to countries on official trips that are difficult to take during the session.

Next week, Congress comes back and will hold a joint session with the President to discuss job creation (now to be held on September 8). Additionally, the Agriculture Committees will resume holding hearings to educate Members and to learn what changes in policy might be necessary. The Senate Agriculture Committee has not yet announced. You can see the schedule and links to the hearings as they happen on the House Agriculture Committee Schedule site. Here are the two that have been announced so far for House Ag:

September 8: Hearing on dairy programs in the House Agriculture Committee
You will probably hear discussion relating to the proposal to change dairy policy this year. Since the proposal may save money, it has been suggested that it should be included in the debt discussions. However, certain regions of the country are not supportive of the changes. More info on the proposal and its critics.
September 11: Hearing on rural development programs in the House Agriculture Committee
A question that always arises with regard to rural development is whether the programs should receive mandatory funds from the farm bill versus receiving discretionary funds through the appropriations process. Rural development programs have typically been paid for through annual appropriations, and when mandatory funding was allocated, it was pulled from those rural development programs for other purposes during the annual appropriations process. Expect to hear about these different funding mechanisms and implications of any changes during a tight budget climate.

A sign of the challenges facing direct payments: The cotton industry released a statement walking away from direct payments. Acknowledging the reality of the growing debt and the pressures on farm programs, the National Cotton Council is stepping away from its strong defense of direct payments and encouraging the funds to be used on a revenue-based insurance program. Read more

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Who Writes the Farm Bill?

Usually the Farm Bill is written for the most part by the Agriculture Committees in both the House and Senate, with considerable guidance and direction from the relevant Congressional leadership. Those Committees carefully consider what legislation will get the necessary votes to pass out of the chamber, so that they can negotiate the final language within a conference committee composed of members of both chambers. That final language, called a conference report, is the legislation that is submitted to both chambers for an up or down vote with no changes. But what happens this farm bill cycle when you have a Super Committee possibly deciding key funding issues?

A few possibilities:
  • The Agriculture Committees write a bill and submit it to the Super Committee for possible inclusion within whatever budget-cutting package the Super Committee produces.
  • The Super Committee writes its own bill (or more likely portions of the farm bill related to funding cuts) for inclusion in its package and then the Agriculture Committees write a bill under normal order in the next year before the Farm Bill expires on September 30, 2012, using whatever funding restrictions have been imposed by the Super Committee's package.
  • The Super Committee is unable to achieve agreement on a package, forcing an automatic round of funding cuts. The Agriculture Committees write a bill under normal order, but they likely will still face a great deal of pressure to achieve savings through cost-cutting.

Regardless, cuts are coming. The vehicle for moving the legislation may change and the authors of the cuts may change, but cuts are coming. The next few weeks should give additional signs with regard to how the Super Committee will operate and what signals it will send to the Agriculture Committees for their recommendations that are due on October 14. According to press reports in Politico, the Super Committee is supposed to be putting up a website by the end of the week and pulling together public hearings.

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Let's Dive In...

It's less than two months from the deadline that Congressional Committees have to report their recommendations to the Super Committee charged with coming up with a package that will reduce the debt by at least $1.2 trillion.

The Super Committee created by the debt limit deal may have a lot to say about the structure of the next farm bill. The key question now is whether that Super Committee will be able to come up with a legislative proposal that it can report to both chambers of Congress for an up or down vote. If the answer is yes, it is almost certain that the bill will include some changes to mandatory spending on agricultural programs given that every debt reform proposal that has been discussed since December 2010 has included some cuts to mandatory agricultural programs. The cuts to agriculture that have been discussed range from $10 billion to $34 billion (over a ten-year budget window).
Text of Debt Limit Deal (S 365)
National Fiscal Commission
Bipartisan Debt Reduction Commission Report

Timeline for the Super Committee's work:

  • October 14 -- Deadline for Congressional Committees to submit their recommendations to the Super Committee.
  • November 23 -- Deadline for the Super Committee to pass a legislative proposal. If the SC does not meet this deadline, automatic cuts will result.
  • December 23 -- Deadline for both Chambers of Congress to consider the Super Committee's proposal.


The goal of this site is to help people follow what is happening in Washington on agricultural and food policy issues. Have a question? Email me at aleta.botts@uky.edu.

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