March 22, 2012
Members and readers have been calling and writing asking for insight into what the House budget resolution — introduced on March 20, passed out of the House Budget Committee on March 21, and headed to a vote on the House floor next week — means for the new farm bill. We will do our best to try to make sense of the complex and still unfolding situation in simple terms.
Budget-Driven Hurry Up Farm Bill…Ultimately Signifying What?
Most importantly, the House budget resolution calls on six authorizing committees, including the Agriculture Committee, to report a “budget reconciliation” bill by April 27. In the case of the Agriculture Committee, their specific instructions are to cut spending from the farm bill baseline (projected spending) by $33.2 billion over the next 10 years, including a whopping and disproportional $8.2 billion in 2012 and 2013.
This figure compares to the draft farm bill agreed to by House and Senate Agriculture Committee leaders last year that proposed to cut $25 billion (gross) from the farm bill 10-year baseline for a net savings of $23 billion. Besides the obvious difference of the additional $10 billion in proposed cuts in the new House budget resolution, the draft deal from last fall also had the cuts somewhat back loaded into the second five years of the 10-year budget window, compared to the heavy front-loading in the new House proposal.
Under the special budget reconciliation process, the only germane provisions are those that either save money or cost money in portions of the farm bill with mandatory or direct spending. Policy changes, however important they may be, that do not change mandatory funding under the Agriculture Committee’s jurisdiction are not generally allowed. This would include nearly all of the myriad farm bill provisions that establish policy and programs that are authorized by the farm bill, subject to appropriations in the annual (discretionary) agricultural appropriations bill. It will also include directives to USDA about new priorities, regulatory issues, and program consolidation and streamlining initiatives, among other categories.
Hence, it would not be entirely accurate to call the bill that the House Agriculture Committee must deliver to the Budget Committee before the end of April the farm bill per se. Strictly speaking it is not the farm bill, though with all the major farm bill funding decisions made, including presumably all of the specifics of new commodity subsidy programs widely assumed to be included in the new farm bill, it is also not at all clear when or how the Committee would return to take up all the other provisions that would normally go into a comprehensive farm bill.
More importantly, it is quite clear that the Senate will not be undertaking any similar budget reconciliation exercise. So once the House committee reports its $33.2 billion in net cuts to the Budget Committee, and the Budget Committee wraps it together with the cuts from the other five Committees with reconciliation instructions and sends it to the floor for a vote on the whole package, that is likely the end of the story for this bill. There will be no similar reconciliation bill from the Senate with which to go to conference, and it would logically then die at that point. Should Congress decide late in the year to take some action to forestall some or all of the automatic spending cuts (see below), it is possible some of the ideas in the House budget reconciliation package could come back into play at that point in time.
However, having made some very big, tough, and fast decisions to come up with the $33 billion, those on the Committee voting in favor of the stripped down farm bill may hang onto some or all of the components of the budget reconciliation bill if, later in the process, there is actually a more normal farm bill debate and conference. Hence there could be an ongoing impact even if the specific legislative vehicle dies.
The purpose of the budget reconciliation maneuver by the House majority leadership is to come up with a package of cuts that would delay for one year the automatic cuts (called sequestration) that are scheduled to take effect January 1, 2013 as a result of the failure of the Super Committee process last fall. A substantial portion of the automatic cuts fall on the defense budget and the House majority leadership wants to prevent any of those defense budget cuts from happening. The reconciliation bill, together with a proposed $19 billion cut to annual appropriations for FY 2013 below the levels agreed to between the House, Senate, and White House just last summer, would negate one year’s worth of the $1.2 trillion 10-year automatic cuts.
The ten-year impact of sequestration on the farm bill baseline would be less than half of the $33 billion mandated by the House budget resolution, yet the House reconciliation package is geared to just delaying sequestration by one year. That would suggest that if the House Republican budget leaders had their way, there would be a need for regular, repeat budget reconciliation packages each year, potentially with bigger proposed farm bill cuts yet to come, to continue to delay sequestration. In other words, rather than being disproportional by a factor of two, the accumulated effect could be even greater disproportional cuts to food and agricultural spending relative to other government functions.
While the programmatic changes to reach $33 billion is totally up to the Agriculture Committee to decide, and while they could essentially start from scratch and decide how much to take from nutrition, crop insurance subsidies, commodity subsidies, and conservation programs — the four big pots of mandatory farm bill spending – it is generally assumed the starting point would likely be something very close to the $23 billion net savings deal reached by the Agriculture Committee leaders last fall, but with the additional $10 billion cut tacked on, including the big $8 billion immediate cut.
Unconfirmed rumors on Capitol Hill suggest that the working assumption about the extra cuts is that they would target nutrition programs for low-income Americans, primarily through cuts to SNAP (food stamp) benefits. Needless to say, that would be a highly controversial proposal. If it is latched onto as a crusade, it could by itself quite easily doom chances for a farm bill this year.
One final thing to note about the stripped down farm bill on tap for April 27 — timing. After the House floor vote on the budget resolution next week, there will be only seven working days on the House calendar for the Agriculture Committee to report the bill, in large part due to the schedule two week Easter recess which will shut down the House from March 30 to April 15. So, absent a successful floor amendment next week to change the due date beyond the end of April, the House Agriculture Committee will have the herculean task of producing a bill in a week’s worth of legislative days.
Meanwhile, back over in the Senate, plans are still proceeding for a Senate Agriculture Committee mark-up of a more comprehensive farm bill under normal procedures sometime in April or May. With two very different processes in the two chambers, it is anyone’s guess as to how this whole thing plays out. It is like two trains heading down two different parallel, non-intersecting tracks. Whether a train can jump the tracks and actually get us to a 2012 Farm Bill will take a great deal of legislative ingenuity.
The two primary options remain passing a comprehensive farm bill this year, on time and on schedule, or, in the alternative, passing a one-year extension of the current farm bill, either exactly as is, or with modifications. Time will tell, but it would not be a bad bet at this point to think that sometime before summer a decision will need to be made about whether or not to start negotiating an extension of current law if it appears by then it will come to that.
What About All the Other Cuts We Have Been Hearing About?
The source of much of the confusion we have been hearing about from members and readers the last couple of days has to do with all the other farm bill numbers included in the political and explanatory document accompanying the House budget resolution and calculated into the big picture numbers in the resolution itself. In the document, Budget Committee Chair Paul Ryan (R-WI) proposes that farm bill spending be cut over the next ten years by over $180 billion, very similar to the budget he presented and the House approved on a party line vote last year.
Those bigger numbers include over $30 billion in cuts to commodity and crop insurance subsidies, $16 billion in cuts to conservation programs, and a whopping $134 billion cuts to nutrition assistance. The bulk of the nutrition cut would come from turning the federal program into a state block grant at reduced funding and with tighter eligibility standards.
We will report a bit more on those proposals in a separate later posting. For current purposes, we would just note two things.
First, these huge and highly disproportional farm bill cuts in the House Republican budget are very important to the various claims the Chair and the majority leadership are making about how much of a bigger impact their proposal would have on deficit reduction compared to the President’s proposal. In other words, they are part of the additive mix to come up with the macro numbers used to sell the budget proposal.
Second, however, they are unrelated to the immediate mandate to cut $33 billion from the farm bill through legislation that must be passed before the end of April. The latter is where the real action is, and the former are more like long-term suggestions (not to mention fodder for many upcoming campaign debates as we approach election day in November). The House Agriculture Committee will use its own judgement on how to reach the $33 billion cut and does not have to pay any particular attention to assumptions made for purposes of putting together the budget resolution.
We hope this explanation is helpful to those trying to follow along on the path to the farm bill. In a related post, we describe the impact of the new House budget resolution on the agricultural appropriations process.