October 18, 2013
Late on Wednesday, October 16, Congress passed a bill to fund the government through January 15 and raise the debt limit until February 7. The bill ends a partial government shutdown that lasted 16 days, and averts a default that could have occurred had the U.S. debt limit been reached. However, because the deal is short-term, Congress will have to revisit the same issues once again this fall and winter.
Along side the short-term funding bill (known as a continuing resolution, or CR) and debt ceiling increase, Congress directed itself to negotiate a FY 2014 budget resolution and to report a deal by December 13. Both the House and the Senate passed their respective budget resolutions earlier this spring, but a conference committee was not established until this week. Key House and Senate Republicans had blocked a budget conference repeatedly over the past six months over a set of preconditions they wanted agreed to at the outset. This week they dropped those preconditions. This is the first time since the 2010 elections that Congress has established a conference committee to negotiate a bicameral budget resolution.
On the Senate side, the conferees will be the full Senate Budget Committee:
And on the House side, the conferees will be:
A budget resolution is a non-binding document that outlines a framework for budgeting decisions in the next fiscal year and potentially over a much longer period. In 2011, Congress passed the Budget Control Act, which set top-line funding caps for ten years. Since then, the Senate has used those annual caps in the place of yearly budget resolutions, while the House has each year passed separate budget resolutions in an effort to ratchet funding down below the levels agreed upon in the Budget Control Act. This gap between House and Senate top-line spending caps has made it extremely difficult for the two bodies to negotiate real appropriations bills. Instead, “continuing resolutions” (known as CR’s), which simply continue the previous year’s funding levels, have become the new normal.
The upcoming budget negotiation is set to begin during the week of October 28. The farm bill conference committee will begin meeting the same week. As part of the negotiation, the budget conferees will address major fiscal issues, including especially funding and funding caps for the remainder of FY 2014 and whether sequestration (automatic budget cuts established by the Budget Control Act) will kick in again in January as scheduled and, if not, what will replace those automatic cuts. If sequestration is allowed to proceed in FY 2014, each mandatory farm bill program (other than a few programs including SNAP, crop insurance subsidies, and the Conservation Reserve Program) will be cut by over 7 percent in 2014, while total non-defense discretionary spending will be cut by roughly $55 billion, on top of whatever funding cuts appropriators make.
Recall that both the House and Senate FY 2014 budget resolutions include significant cuts to farm bill spending. The House budget cuts farm bill spending by $184 billion over ten years. Of this total, $135 billion would come from the Supplemental Nutrition Assistance Program (SNAP), $31 billion in cuts would be split between commodity program and crop insurance subsidies, and roughly $18 billion would come from cuts to farm bill conservation title spending. The difference between the SNAP cut in the House budget resolution and the SNAP cut in the House-passed nutrition bill is a whopping $96 billion. On the Senate side, the cut to farm bill spending – roughly $23 billion – is much closer to the cut contained in the Senate-passed farm bill. The Senate budget resolution takes all $23 billion from commodity and crop insurance spending, while the Senate farm bill takes roughly two-thirds of its savings from those programs.
Triple-Headed Budget Monster
Some may recall the triple-headed budget monster from earlier this winter and spring. A deal to temporarily raise the debt limit set the stage for a renewed debate over sequestration, the debt ceiling, and funding for the rest of the fiscal year. In fact, much of our post from last February could be re-posted here. Whether or not Congress is able reach an agreement on sequestration, the debt ceiling, taxes, long-term deficit reduction, and FY 2014 appropriations, among other issues, by December 13, remains to be seen. However, we expect that as part of the process, the conference committee, which includes Senate Agriculture Committee Chair Debbie Stabenow, will likely address farm bill spending.
Farm Bill Interplay
It is widely expected that a farm bill conference report, if it is to have any chance of passing, will cut food stamp funding by no more than $8 billion to $12 billion. Given the very significant gap between the SNAP cut in the House farm bill ($39 billion) and the SNAP cut in the Senate farm bill ($3.9 billion), and given the recent defeat of House Speaker John Boehner (R-OH) and the Tea Party over repealing or delaying Obamacare in exchange for short-term government funding and a debt limit increase, it will be very difficult for moderates in the House to usher a stand-alone farm bill conference report that contains a SNAP cut closer to the Senate figure than the House figure. Thus, according to many observers, the most promising path forward for a new five-year farm bill is for it to be linked to the broader budget deal.
Agriculture Appropriations Interplay
The farm bill is not the only budget-related matter caught up in the budget conference. Agricultural appropriations for 2014 and beyond also hang in the balance. If the House and Senate split the difference on their overall government spending levels for 2014 in the upcoming conference, that may help a bit in easing enormous budgetary pressures at USDA and FDA, but only to the extent that the agriculture bill out of all the annual government funding bills actually sees a fair amount of the overall amount. If most of the increase above current caps goes to defense, education, transportation and the like, then despite the increase agriculture could be left out in the cold. That would be particularly ironic if, as could well happen, savings from the farm bill provide some of the funds that get divvied up. NSAC will be arguing for the food, agriculture, and rural budget to get its fair share.
Agreement or More Can Kicking?
The 16-day government shutdown that ended this week made quite clear that we cannot continue to lurch from fiscal crisis to fiscal crisis without serious damage to economic growth, political good will, and public morale. Given the current state of politics in the country and in Washington, D.C., there is no crystal clear path to a deal to end sequestration, reduce the deficit, and pass a five-year farm bill. Come December 13, either a budget deal that has so far proved elusive will be forged, or Congress will once again have to figure out some elaborate new version of its “kick the can down the road” game. As the process evolves, we will continue to track the implications for food and agriculture policy and spending, and keep readers appraised.