Farm Bill: Background- Budget and Spending Issues
David Rogers reported on Friday at Politico that, “House Republicans sketched out tens of billions in appropriations cuts Thursday, even as White House Budget Director Jacob Lew met with Senate Democrats amid increased pressure to resurrect major elements of last year’s presidential debt commission report.
“The GOP’s ambitious goal in the House is to roll back foreign aid and domestic spending to 2008 levels, but the leadership now admits that its net savings amount to just $32 billion from 2010 levels once new defense spending is added to the equation.”
Mr. Rogers explained that, “Those limits give added impetus now to a bipartisan effort in the Senate to craft a larger, 10-year deficit reduction plan that would include tax and entitlement reform. Senate allies of House Speaker John Boehner (R-Ohio) have participated in the talks, and the goal is to show enough strength to bring both the speaker and President Barack Obama to the table.
“Sen. Lamar Alexander (R-Tenn.), who chairs the Senate GOP conference, has hosted a series of closed-door party meetings he describes as ‘serious, almost solemn.’ ‘This is way beyond politics,’ Alexander told POLITICO of the debt fears, and when nearly 50 Democratic and Republican senators turned out for a meeting on an icy morning this week, both parties seemed to awaken to the potential for real movement.”
Vicki Needham and Bernie Becker reported on Friday at The Hill’s On The Money Blog that, “Nearly a dozen Republican senators sent a letter on Friday urging the House to make at least $100 billion in spending cuts this year.”
And Jennifer Epstein reported on Friday at Politico that, “Tea party-backed Sen. Rand Paul (R-Ky.) isn’t sure that congressional Republicans have the guts to make the big budget cuts they’ve promised and, he said, members of the movement are becoming frustrated.
“‘There’s a disconnect between Republicans who want a balanced budget but aren’t maybe yet brave enough to talk about the cuts to come,’ the freshman senator said in an interview with ABC News, responding to the spending plan released Thursday by the House Budget Committee chairman, Rep. Paul Ryan (R-Wis.), which would cut non-defense discretionary spending by $58 billion for the rest of fiscal 2011.”
In an Op-Ed published in today’s Wall Street Journal, Sen. Paul indicated that, “My proposal would first roll back almost all federal spending to 2008 levels, then initiate reductions at various levels nearly across the board. Cuts to the Departments of Agriculture and Transportation would create over $42 billion in savings each…”
Meanwhile, The Wall Street Journal editorial board stated today that, “It’s amusing to hear the media and some Democrats joining tea partiers in saying that Republicans are failing to meet their budget pledge to voters. In the same breath they also say that Mr. Ryan’s cuts of 20% or more to some programs are too deep and painful. The White House is even saying the cuts could torpedo the economic recovery—though the stimulus couldn’t keep unemployment below 9%…So Republicans can’t win: Their cuts are attacked as both too large and too small at the same time.”
“Mr. Ryan’s budget proposal looks like an excellent beginning to us,” the Journal said.
With respect to the executive branch, Jackie Calmes reported in yesterday’s New York Times that, “The budget that President Obama will release next week reflects scores of ‘tough calls’ that cut deeply into programs that the president supports, in keeping with his proposed five-year freeze on a broad category of domestic spending, according to the administration’s budget director.
“In an Op-Ed article in The New York Times on Sunday, the director, Jacob J. Lew, gives three examples of those calls: proposed cuts for programs that support community organizers, a job the president once held; that clean the Great Lakes; and that finance community development. Together, they would save $775 million.
“That sum would not be a major reduction in an annual deficit that is projected to exceed $1 trillion in the fiscal year 2012, which starts on Oct. 1. Mr. Lew did not disclose the total savings for the cuts Mr. Obama intended to propose in the budget, which he is scheduled to send to Congress on Feb. 14.”
Looking ahead, Molly K. Hooper reported yesterday at The Hill Online that, “House appropriations oversight season starts in earnest this week as subcommittees hold the first of ‘hundreds’ of oversight hearings to trim funding for federal agencies and programs.”
“[Appropriations Committee Chair, Rep. Hal Rogers (R-Ky.), a former prosecutor] said on Thursday that the GOP will seek to make the deepest cuts to funding for transportation, housing, agriculture and justice as it seeks to bring down spending for the rest of 2011.”
Farm Bill: Nutrition
Sara Murray reported last week at The Real Time Economics Blog (Wall Street Journal) that, “Nearly a year and a half into the economic recovery, some 43.6 million Americans continued to rely on food stamps in November.
“More than 14% of the population drew food stamps in November to purchase groceries as high unemployment and muted wage growth crimped budgets. The number of recipients was up 0.9% from October, according to the new report by the U.S. Department of Agriculture. Compared to a year ago, the number of people receiving food stamps was up 14.2%.”
Jerry Hagstrom reported on Friday at DTN (link requires subscription) that, “Senate Agriculture ranking member Pat Roberts, R-Kan., said Thursday that food stamps should be on the table along with farm subsidies in federal budget deficit reduction, but a key American Farm Bureau Federation lobbyist said it is unlikely Congress will make a substantial cut in a program that is feeding 43 million people during a recession.
“In a telephone call to the annual meeting of the Crop Insurance Research Bureau here [Indian Wells, Calif], Roberts noted that the presidential debt commission report, which proposed cuts to many programs, including farm subsidies, did not recommend cutting nutrition programs.
“‘They are picking what they call farm subsidies rather than look at the total agriculture budget,’ Roberts said. Asked if his comment meant that food stamps — now officially called the Supplemental Nutrition Assistance Program or SNAP — and other nutrition programs should be included, he said ‘we have to look at the entire budget in terms of whatever percentage Congress agrees should be cut.’”
The DTN article noted that, “American Farm Bureau Federation lobbyist Mary Kay Thatcher said in a separate presentation here that she doubts Congress will cut much from nutrition programs.
“‘You can look at those nutrition programs and say that’s where you need to get the money, but you have a couple of problems,’ she said, noting that these programs make up 75 percent of the USDA budget. Anti-hunger advocates are going to remind the public that unemployment remains at more than 9 percent, Thatcher said, and that 43 million people — one in seven Americans — are on food stamps, and that one of every eight Americans is lining up at food banks.”
Philip Brasher reported on Friday at The Green Fields Blog (Des Moines Register) that, “GOP budget writers have not yet detailed where they plan to cut within departments, but if the Republicans go forward with a goal to roll spending back to 2008 levels, some of the largest cuts would be in food-safety programs at the USDA and the FDA and in a nutrition program for low-income women and children, said Ferd Hoefner, a policy analyst for the National Sustainable Agriculture Coalition. Farm operating loans also would be vulnerable, he said.
“The Women, Infants and Children nutrition program, commonly known as WIC, could be cut back to $6 billion, if it were rolled back to the 2008 level. It would get $7.3 billion this year if the spending level in an expiring spending measure were extended.”
On a separate issue regarding nutrition, Sheryl Gay Stolberg and William Neuman reported in today’s New York Times that, “After wrapping her arms around the retail giant Wal-Mart and trying to cajole food makers into producing nutrition labels that are easier to understand, Michelle Obama, the first lady and a healthy-eating advocate, has her sights set on a new target: the nation’s restaurants.
“A team of advisers to Mrs. Obama has been holding private talks over the past year with the National Restaurant Association, a trade group, in a bid to get restaurants to adopt her goals of smaller portions and children’s meals that include healthy offerings like carrots, apple slices and milk instead of French fries and soda, according to White House and industry officials.”
Farm Bill: Crop Insurance
Jerry Hagstrom reported on Friday at DTN (link requires subscription) that, “USDA Risk Management Agency Administrator Bill Murphy said Friday that the cost of producer premium subsidy for crop insurance could reach $5.5 billion in 2011, but if Congress cuts the premium subsidy then farmers are likely to reduce their own levels of coverage for potential losses.
“If the percentage of the subsidy is lowered, farmers would reduce coverage, Murphy said during a speech here to the Crop Insurance Research Bureau (CIRB). Farmers are unlikely to reduce the number of acres covered because lenders would not loan them money if they do not have insurance, Murphy added.”
Friday’s article noted that, “After a speech here, Murphy said in an interview that if the total cost of the premiums rises to $10 billion, the government portion of that would rise to between $5 billion and $5.5 billion.
“As the government has increased the subsidy, farmers have bought higher levels of insurance, Murphy said in his speech. But there also seems to be a limit to the amount of money that farmers will spend on insurance. In reaction to a question about what farmers would do if the subsidy were reduced from 52 percent to 45 percent, Murphy said he believed farmers would lower the percentage of the value of the crop covered.
“American Farm Bureau Federation lobbyist Mary Kay Thatcher told the crop insurance group Thursday that if Congress gets serious about controlling the deficit or needs money for other farm bill programs, the producer premium subsidy is a likely target for cuts because it is a large pot of money and makes up 69 percent of government spending on crop insurance. The rest goes for underwriting gains for the companies and the administrative and operating expenses for delivering the policies.
“Murphy said he agreed with Thatcher about the potential cuts. ‘Everything will be on the table,’ Murphy said.”
Farm Bill: Lawmaker Perspectives
An update posted on Friday at KXLH.com (Helena, MT) reported that, “U.S. Senator Jon Tester [D-MT] stopped in Great Falls on Friday to field questions about the future of Montana’s agriculture industry…Tester said, ‘What we are going to need to concentrate on in Washington DC is not cutting the program overall by 10%, that would not be smart. But we will look for the programs that work well, make those programs better. And the programs that are not working so great, get rid of them.’”
Peter Johnson reported on Saturday at the Great Falls Tribune (MT) Online that, “U.S. Sen. Jon Tester got a smorgasbord of ideas Friday when he asked a panel of 10 folks from different aspects of farming for ideas about what’s right with the current Farm Bill and what could be cut back when it’s rewritten in 2012.”
The article added that, “Loma farmer Dan Works said direct payments and crop insurance were the two top priorities of Montana Grain Growers.”
The AP reported on Saturday that Montana GOP Rep. Dennis Rehberg would challenge Sen. Tester in 2012.
Sally Pollak reported on Friday at the Burlington Free Press Online that, “[R]ep. Peter Welch, D.-Vt., met with about 20 Vermonters to discuss local agriculture, regional food systems, and access to healthy and nutritious foods…After taking particular interest in the frozen blueberries from Adam’s Berry Farm, Welch went into the Intervale Center’s offices to talk to farmers, nutritionists, food advocates and other experts. He said he’s interested in ideas about what works, and what doesn’t, in Vermont’s agriculture community. As a new member of the House Agriculture Committee, Welch is on a month-long listening tour.”
The article added that, “He wanted to learn Thursday about specific issues, policies and programs that are effective in producing local, nutritious foods, and ensuring their accessibility. Welch wanted to learn, as well, about the roadblocks to success.”
And Peter Wong reported on Saturday at The Statesman Journal Online (Salem, OR) that, “U.S. Rep. Earl Blumenauer, who comes from Oregon’s most urban congressional district, said Friday that a redirection of a small part of federal farm subsidies would be good both for Oregon’s farmers and for state and national efforts against child hunger and obesity.”
“But in a meeting with the Statesman Journal editorial board, the Portland Democrat said the right kind of federal aid can advance national goals to reduce hunger and fight obesity among young people who otherwise will drive up the nation’s future health care costs.
“‘We have done a terrible job of informing people about what stake they have in the farm bill,’ said Blumenauer, who’s been in Congress 15 years.”
The article added that, “Blumenauer said about half the federal farm subsidies are distributed among farmers in about two dozen congressional districts — mainly for bulk commodities, and mostly to large operations. He said some of that money could be redirected to help promote production directly from smaller farms to public markets, enabling people to obtain fresh fruit and vegetables as alternatives to less nutritious foods.
“‘Good food is better in the long run, but it’s not cheap,’ he said.”
Recall that an Economic Research Service (USDA) report from last week (“How Much Do Fruits and Vegetables Cost?”) noted that, “We also found that, in 2008, an adult on a 2,000- calorie diet could satisfy recommendations for vegetable and fruit consumption in the 2010 Dietary Guidelines for Americans (amounts and variety) at an average price of $2 to $2.50 per day, or approximately 50 cents per edible cup equivalent.”
Andrew Pollack reported in Saturday’s New York Times that, “The Department of Agriculture said on Friday that American farmers could resume growing genetically engineered sugar beets that had been barred by a federal judge.
“The decision could allow farmers to plant the biotech seeds this spring, avoiding a possible shortage of sugar later on.”
The Wall Street Journal noted on Saturday that, “U.S. District Judge Jeffrey S. White, who sits in San Francisco, last year blocked farmers from planting the weedkiller-resistant beets again this spring. He concluded the USDA should have conducted a lengthy study of the crop’s potential consequences for groups such as organic farmers before originally clearing it in 2005.
“An environmental-impact statement of the type ordered by the judge is usually thousands of pages long and takes years to conduct. That would have kept the genetically modified sugar beets out of the hands of farmers at least through 2012.
“Monsanto said Friday that the USDA’s move would allow U.S. farmers to begin planting genetically modified sugar beets this spring. But environmental and organic-seed groups that originally sued the USDA said Friday they would ask Judge White to block this latest move by the USDA.”
Bloomberg writer Jeff Wilson reported on Friday that, “Corn surged to the highest since July 2008 on speculation that demand from China will surge to a record, further eroding global stockpiles…Corn futures for March delivery gained 16 cents, or 2.4 percent, to close at $6.785 a bushel at 1:15 p.m. on the Chicago Board of Trade, pushing this week’s gain to 5.4 percent, the most in three weeks.
“Earlier, the price touched $6.795, the highest since July 17, 2008. The grain has surged 92 percent in the past year.”
Leslie Josephs reported in today’s Wall Street Journal that, “The amount of land in the U.S. dedicated to planting cotton this spring is expected to surge 14%, according to a closely watched forecaster…The National Cotton Council of America, an industry group, said on Saturday it estimates farmers will plant 12.5 million acres of cotton.”
And Des Moines Register writer Philip Brasher pointed out in an article from last week that, “Cotton isn’t a food crop, but farmers in places such as Mali or Senegal in west Africa could do quite well if cotton prices hold up, [Eric Hazard, who manages development efforts for the aid group Oxfam in west Africa] said in a phone interview from Dakar, Senegal. A jump in world cotton prices last year came too late to really benefit farmers as much as it could have, because they have their crop under contract by the time they plant, he said. The world price of cotton shot from 90 cents in August to $1.68 in December, according to the National Cotton Council.
“Some west African farmers may switch some of their land from food production to cotton to take advantage of the prices, Hazard said.”
Reuters writer Jonathan Lynn reported on Friday that, “As trading powers embark on a renewed push for a Doha round trade deal, Mexico has come up with a wide-ranging proposal to break the deadlock in the long-stalled talks…Mexico’s proposal attempts to tackle the fundamental divide in the talks — the call by rich countries for a more far-reaching deal than is now on the table versus the demand by poorer countries that a deal primarily promotes development.”
However, a separate Reuters item from late last week stated that, “A Mexican proposal to break the deadlock in long-running world trade talks fails to achieve the amount of market opening the United States wants to see from a deal, a U.S. trade official said on Friday.”
Meanwhile, The New York Times editorial board noted on Saturday that, “Max Baucus [D-Mont.], the chairman of the Finance Committee, which handles issues related to trade, said he remains opposed to the South Korean pact because it doesn’t go far enough to open its beef market — an issue near and dear to his constituents in Montana. He is demanding that South Korea drop its ban on beef from cattle older than 30 months, imposed after a scare over mad cow disease in the United States.”
The Times added that, “[W]hile Mr. Baucus may want to get more for the beef industry, if he pushes too hard, the industry, and the whole country, will lose out.”