March 14, 2013
This week, both the House Budget Committee and the Senate Budget Committee released their respective budget resolutions for fiscal year (FY) 2014. A budget resolution is a non-binding document that outlines a framework for budgeting decisions in the next fiscal year. Normally, the House and the Senate consider budget resolutions after the President has submitted his budget proposal for that fiscal year. This year, the President has delayed the release of his budget proposal due to issues of budget sequestration.
While non-binding, these resolutions do signal the opening moves leading up to a bigger budget deal to raise the debt ceiling later this spring and possibly into the summer. (For a recap on why these budget issues are important in determining the fate of this year’s farm bill, read our posts from earlier this year here and here.)
House Budget Resolution
As expected, the House Budget Resolution for FY 2014 makes astronomically deep cuts – $184 billion – to farm bill spending. Of that total, $135 billion would come from the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. Some $31 billion in cuts would be split between commodity program and crop insurance subsidies. According to multiple Hill sources, though not specified in the text of the bill, another $18 billion would come from cuts to farm bill conservation title spending.
If the House Agriculture Committee were to take the House Budget Resolution seriously, the $184 billion cut to farm and food spending would effectively end any chance of getting a new farm bill written and passed, this year or perhaps ever. The cut is simply too big for Congress to swallow as part of a farm bill. Yet, as in previous years, Agriculture Committee members from the majority will dutifully vote for the budget, yet quickly add that they do not consider themselves bound by it in any way.
Senate Budget Resolution
The House Budget Resolution is starkly different from the Senate’s FY 2014 Budget Resolution, which cuts total farm bill spending by roughly $23 billion. In contrast to the House resolution, the entirety of this cut comes from commodity and crop insurance spending. Unlike the House’s proposal, this proposal does create a viable path for getting a farm bill done this year because the cuts are smaller and more consistent with the cuts that Senate and the House Agriculture Committee accepted as part of the last year’s farm bill debate. We believe that additional savings are possible via long overdue subsidy reform.
Subsidy reform was part of the Senate Budget Committee’s discussion of the proposed budget. During that discussion, Senator Grassley (R-IA) asked Budget Committee Chair Murray (D-WA) and Agriculture Committee Chairwoman (and Budget Committee member) Senator Stabenow (D-MI) whether the Budget Resolution contained commodity payment limitations. (Recall that Senators Grassley, Johnson (D-SD), Enzi (R-WY), and Brown (D-OH) introduced a bipartisan bill last month to restore fiscal responsibility to federal farm policy by capping farm program payments and closing current loopholes.) Chairwoman Stabenow noted that the Budget Resolution does not include that level of detail, but that she would work with Senator Grassley to ensure that the farm bill includes payment limits — which were included in Senate-passed farm bill last year.
Senator Grassley also asked a clarifying question regarding the total cut to farm bill spending included in the proposed budget. Senator Stabenow confirmed that the entire $23 billion comes from commodity and crop insurance spending. Senator Stabenow did note that the instructions for the farm bill included in the Senate budget resolution, and accompanying report language*, give the Agriculture Committee flexibility to make changes to this distribution of cuts in the future.
Both the House and Senate budgets call to some degree for budget reconciliation, which would force certain committees to write legislation that generates a specified level of savings by a certain date.
The House budget instructs eight committees, including agriculture, to each cut spending by $1 billion over ten years. The House reconciliation instructions are meant to be placeholders, included presumably as a signal to the Senate and the White House that the House majority is open to discussing a comprehensive budget reconciliation procedure.
Conversely, the Senate budget instructs the Finance Committee to generate $975 billion in ten-year savings by reforming the tax code. The Committee must do so by October 1. This process could impact agriculture insofar as the Finance Committee has jurisdiction over tax law related to agriculture; however, the resolution does not include reconciliation instructions specifically for the Agriculture Committee.
The House and the Senate will likely vote in the next week to adopt their respective budget resolutions. Given how far apart the two budget resolutions are — not just on agriculture but on nearly every subject — we do not expect the House and Senate to attempt to reach an agreement between the two through a conference committee. However, the starkly different budgets will be standing in the background as the House, Senate, and White House explore the possibility of a grand bargain on revenues and spending ahead of the need to raise the debt ceiling later this spring and into the summer.
* The Senate Budget Resolution report language says this about the farm bill:
Many of America’s rural priorities depend on enacting a strong five‐year Farm Bill reauthorization. From preserving a safety net for producers, to expanding economic opportunities in a clean energy economy, to accessing new markets for our domestically produced products, a Farm Bill authorizes and provides funding for the programs necessary to keep rural America thriving.
The 2008 Farm Bill made certain farm program reforms, while ushering in a new focus on healthy foods and clean energy. The 2012 Senate Farm Bill would have made significant reforms to farm programs while refocusing support on helping farmers manage risk. It would have also continued important investments in specialty crops and home‐grown energy.
This balanced approach passed the Senate with broad, bipartisan support, but unfortunately was not considered in the House of Representatives. Due to the House’s failure to act, Congress was forced to extend the existing Farm Bill for one year, but because of fiscal constraints had to leave many programs, including those for clean energy and agricultural research that are critical to rural America, on the cutting room floor.
The Senate Budget supports responsible spending reductions in farm programs and gives the Senate Agriculture Committee the flexibility to write a new five‐year Farm Bill reauthorization. Having a five‐year law in place is critical to giving our farmers and ranchers an appropriate safety net and our rural communities the certainty they need to continue to prosper.