NSAC's Blog

Two-Year Budget Deal Includes Major Offsets, Impacts Farm + Food Programs

July 30, 2019

White House.
White House. Photo credit: Reana Kovalcik

After months of uncertainty and start-and-stop negotiations between Congress and the White House, last week congressional leaders finally announced a two-year budget agreement. In addition to setting top-line funding levels so that the government can keep running, the budget deal sets annual discretionary spending caps for defense and non-defense programs for fiscal years (FY) 2020 and 2021, and raises the debt limit. The House approved the deal last week, and the Senate is expected to do so later this week. The final deal will then be sent to the President’s desk.

Under the agreement, defense spending will increase to the tune of $5 billion (as compared to the budget projections included in the House’s FY 2020 appropriations bill), while non-defense discretionary funding will be $15 billion less than House projections. Combined with $77 billion in offsets that will be taken out of farm and food programs and other mandatory programs, this budget deal will force Congress to make hard choices when it comes to allocating scarce funding to federal agricultural programs.

The budget deal sets the discretionary spending cap for defense programs at $738 billion for FY 2020, and in FY 2021, the defense-spending cap will increase to $740.5 billion. The non-defense discretionary spending cap is set at $632 billion for FY 2020 and will increase to $634 billion in FY 2021. In addition to funding for myriad federal programs (including farm and food programs) the non-defense discretionary allowance also includes a temporary $2.5 billion increase in funding for the 2020 U.S. Census.

Funding allocations by specific program have yet to be made, but given the difference in billions of dollars between the House Agriculture Appropriations bill and the two-year budget deal, it is certain that funding for at least some of the National Sustainable Agriculture Coalition’s (NSAC) priorities will be on the cutting table.

Spending Caps and the Budget Control Act

Spending caps were introduced into the budget process by the Budget Control Act (BCA) of 2011 in an effort to reduce the federal deficit and control spending. BCA set overall discretionary caps for both defense and non-defense spending for ten years, and created a mechanism to implement broad automatic reductions to both discretionary and mandatory spending if these caps were ever exceeded. The Act has widely been viewed as a crude austerity measure, and has resulted in severe reductions to both discretionary and mandatory funding (often referred to as “sequestration”).

In passing the BCA in 2011, few legislators intended for sequestration to ever actually go into effect. Rather, the intention was that a deficit reduction special committee referred to as “the super committee” (created by the BCA) would develop a long-term $1.2 trillion deficit reduction package, and in so doing, prevent sequestration. Because the super committee failed to develop such a deficit reduction package, however, the unthinkable happened and sequestration went into effect.

The severity of sequestration has led Congress to raise the caps above the levels mandated in BCA a number of times. The last time the caps were raised was two years ago, which increased overall spending levels for FY 2018 and FY 2019.  

If a new budget deal were not to be put into place for FY 2020 and FY 2021 (the final two years under the BCA), sequestration would kick back in and Congress would have tens of billions of dollars below previous year’s funding levels with which to work. Non-defense discretionary (NDD) spending, which includes agriculture, would be cut by nearly $55 billion (before adjusting for inflation) below FY 2019 levels. This would amount to a $70 billion, or 11 percent (after adjusting for inflation), cut to NDD spending. For more information about the broader contours of the budget debate and how it impacts sustainable agriculture funding, visit our earlier post.

What the Budget Deal Means for Agriculture Appropriations

The House Appropriations Committee has already passed their agriculture appropriations bill for FY 2020, which includes hard-won boosts to sustainable agriculture research, outreach and technical assistance for beginning and socially disadvantaged farmers, local food systems, food safety, and value-added agriculture spending. The Senate, however, chose to wait for the budget deal to be finalized before marking up any of their funding bills. With the budget deal all but set, the Senate is expected to begin their appropriations work in earnest after the August recess.

At this time, it is unclear whether or not the House Appropriations Committee will make any adjustments to their bill to reflect the lower 302a allocation, or whether they will work with the Senate through the conference process to make those adjustments. Most likely, the House will choose to work with their colleagues in the Senate to make the necessary adjustments.

Once the budget deal is signed into law, Senate Appropriations Committee Chairman Richard Shelby (R-AL) and Ranking Member Patrick Leahy (D-VT) are expected to meet and then set 302b allocations for the 12 appropriations bills, including agriculture. The Senate Appropriations Committee, including the Agriculture Subcommittee, is expected to spend the August congressional recess putting together their 12 funding bills with plans to mark-up and pass these bills at the beginning of September before funding for the government runs out on September 30. With that timeline,  conferencing with the House and having a final bill signed by the President before the end of FY 2019 will be difficult at best.

The current fiscal year ends on September 30; typically the full appropriations process takes several months. Congress, therefore, will almost certainly have to pass a short-term Continuing Resolution (CR) before September 30 in order to give themselves more time to fully negotiate all 12 bills. In order to speed the process along, it is very possible that after marking up spending bills at the subcommittee level, the Senate will skip full committee markup and floor proceedings and move straight to conferencing with the House.

It is critically important to the health of our food and farm system that the agriculture appropriations bill receives its fair share of funding. Historically, agriculture has received around 3.5 percent of the overall funding for appropriations. If we use this as a guide, then the final agriculture bill should receive at least $2 billion in additional funding for FY 2020.

Like all appropriations bills, the agriculture bill has suffered under the weight of the unsustainable domestic discretionary budget caps. Higher budget caps will allow Congress to re-invest in groundbreaking research, farm credit programs, rural development, and training and outreach for farmers and ranchers. Additional funding is also desperately needed to fill long-standing gaps in capacity and service, but for this to happen, sequestration on mandatory spending needs to be brought to an end.

The End of Sequestration?

While some have hailed the latest budget agreement as “the end of sequestration,” the reality is more complex. The most severe impacts to agriculture programs through sequestration have been avoided; however, the budget deal does include approximately $77 billion in offsets. Those offsets are a result of the extension of customs fees that were set to expire and extending the date by which sequestration on mandatory spending would end. The BCA’s sequestration of discretionary spending ends after fiscal year 2021. So while the budget deal ends sequestration for discretionary funds, it also extends the sequestration for mandatory spending from 2027 to 2029. Previous budget deals also included similar offsets, extending the end of sequestration for mandatory spending.

The result of extended sequestration on mandatory spending will be billions of dollars in cuts to critical farm bill programs. These include cuts to voluntary conservation programs, beginning farmers, local food systems, and organic research – as well as cuts to critical support for commodity payments and dairy support. And while we recognize the budgetary challenges that Congress is up against, as farmers struggle against the continued downturn and financial stress across the entire farm economy, farm programs should be the last place to turn to find budgetary savings.

For more information about specific sustainable agriculture programs impacted by this budget deal, check out the chart in our earlier post.

NSAC voiced strong opposition to the extension of these cuts, and will continue to represent the interest of sustainable agriculture and family farmers on the Hill as difficult appropriations decisions are made in the months ahead.

Categories: Budget and Appropriations, Farm Bill, Grants and Programs

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