The Long and Winding (Budget Deal) Road
May 20, 2011
Washington continued down the long and winding road toward a budget agreement this week. Depending on one’s point of view, nothing happened or lots happened. What did not happen was introduction of a Senate budget resolution, much less mark-up of a resolution in the Senate Budget Committee. But here are some of the things that did happen.
- The gang of six bicameral, bipartisan congressional leaders meeting with Vice President Biden has so far agreed on approximately $200 billion in spending cuts as part of a potential deal that would secure majority congressional support for an increase in the debt ceiling. Still under discussion are the major entitlement programs as well as revenue increases, among other topics.
- According to some reports, the amount agreed to so far by the Biden group includes a $34 billion farm bill cut (over the next decade), assumed to be achieved by completely eliminating commodity program direct payments. The total savings estimate is not higher than that because it is assumed many farmers, in the absence of direct payments, would enroll in the Average Crop Revenue Election (ACRE) program.
- This budget savings compares to the ten-year $30 billion cut to commodity and crop insurance programs contained in the House-passed budget resolution. The House resolution assumes $178 billion in total ten-year farm bill cuts, including a $127 billion cut to SNAP (food stamps) and $21 billion cut to conservation and other farm bill mandatory programs.
- The rumored $34 billion cut being discussed in the Biden group is considerably more than the cut proposed by the Obama Deficit Commission last year – they proposed a $15 billion cut to farm and conservation programs, but $5 billion in new spending for disaster assistance, for a net ten-year $10 billion cut. Since that report was issued, the ten-year cost estimate for reauthorizing the permanent farm disaster program has risen to nearly $18 billion.
- Senate Agriculture Committee Chair Debbie Stabenow (D-MI), joined by all the other Democrats on the Committee (except for Max Baucus (D-MT) since he is a member of the Biden group), sent a letter late Thursday to the White House expressing opposition to the House-passed budget assumptions for the farm bill and concern over unreasonable cuts to the farm bill budget, noting the importance of risk management, conservation, food assistance, renewable energy, local and regional agriculture, rural job creation, and agricultural research. The letter also emphasized that specific choices of what and how to cut should be left to the Agriculture Committee and not be dictated in a budget deal.
- Senator Conrad (D-ND), a signer of the Stabenow letter and Chair of the Senate Budget Committee, announced that he was again deferring a budget markup to allow the bipartisan Biden talks to continue, with the hope of any deal then informing the Senate resolution and markup. Conrad noted the same type of delay happened in 1990 and 1997 as comprehensive budget deals were negotiated outside of the normal congressional process.
- Majority Leader Harry Reid (D-NV) also noted this week that a deal out of the Biden group could be passed as a Senate budget resolution, sent back to the House for adoption, and then enforced using “budget reconciliation” procedures which would allow the Senate to adopt the bill to implement the cuts outlined in the resolution with a simple majority rather than the 60 vote super majority.
- Conrad continued to meet with all the Budget Committee Democrats in an attempt to forge a consensus should he be forced ultimately to move ahead without a bipartisan agreement. After earlier tentatively agreeing on a ten-year $4 trillion deficit reduction package equally weighted between revenue increases and spending reductions, the consensus was ruptured this week when several Senators broke ranks over the tax issue.
- Senator Tom Coburn (R-OK) pulled out of the Gang of Six Senators (a different gang then the Biden group). The Gang of Six has been meeting for months to try to forge their own consensus for a ten-year $4 trillion deficit reduction package in hopes of informing a final budget agreement. Coburn has recently been pushing for an additional $130 billion in cuts to Medicare beyond what had been previously agreed to, a move that turned out to be a show stopper and led to Coburn’s resignation from the Gang. Not missing a beat, Coburn then announced he would soon release his own budget plan that would feature a ten-year $9 trillion cut, or more than twice the level he had spent months and months negotiating.
- The remaining Gang of Five (Conrad plus Senators Chambliss, Crapo, Warner, and Durbin) continued to meet, without Coburn. The option of expanding the group to include other Senators from both parties was discussed, but with no decision made as yet.
- Despite the delay in a congressional budget deal, appropriators are moving ahead with their discretionary spending bills. The House Appropriations Agriculture Subcommittee is marking up their Fiscal Year 2012 bill next Tuesday, May 24, with the goal, dictated by the House-passed budget resolution and subsequent allocations to each subcommittee, of finding another 14 percent cut to USDA and FDA programs on top of the 14 percent cut included in the final FY 2011 bill. With reductions via earmark elimination and rescissions of earlier year appropriations already used in the FY 2011 bill, the bill the Subcommittee will approve on Tuesday will cut even deeper into the muscle of USDA.
- Letters from individual Senators to the Senate Appropriations Agriculture Subcommittee, in which they name their spending priorities, are due at the end of next week. Without a budget and thus without an allocation to work with, though, it will be difficult for Senate appropriators to actually start on bills. With the likelihood of budget negotiations dragging on for some time, the likelihood of an omnibus appropriations bill, rather than individual bills for different parts of the government, appears increasingly likely.
- Senate Minority Leader Mitch McConnell (R-KY) announced his intention to insist on a short term agreement as part of any budget deal to lift the debt limit that would set discretionary caps for the appropriations bills for two years, both FY 2012 and FY 2013. McConnell also discussed a medium term agreement on discretionary and mandatory cuts beyond those first two years, and also a long term deal on entitlements including Medicare. Some Hill watchers think it was McConnell who pressured Coburn to exit the Gang of Six, a rumor that McConnell refused to deny when asked by the press.
- Majority Leader Reid announced on Wednesday that the Senate will have an up or down vote next week on the House-passed budget resolution. The move is aimed to put Republicans on record in favor of the radical House GOP Medicare plan. McConnell responded by saying he would force a vote on the Obama budget proposal. Neither measures are expected to come close to passing, but both will be used to make political points.
- This past Monday, the Treasury Department auctioned off its last legally permissible debt offering to the public, reaching the current $14.3 trillion cap on borrowing. The Department previously notified Congress that using extraordinary means, starting with the immediate suspension of required investments in government retirement and disability accounts, it will be able to prevent default until August.
- On Tuesday, the Senate fell eight votes short of the supermajority needed to end several tax breaks for the largest oil companies and trim the budget deficit by $21 billion. The 52-48 vote included three Democratic no votes and two Republican yes votes.
- It is too soon to know the federal costs for crop insurance and disaster assistance related to Mississippi River flooding and levee opening, but USDA has notified producers that help is available.
Well, there you have it in quick summary fashion. We will leave it to the reader to decide if nothing happened or lots happened. We will simply assure you there will be more to report from the long and winding road to follow in future weeks.
Budget and Appropriations, Farm Bill