FarmPolicy

April 24, 2014

Farm Bill: Budget Committee Chairman Paul Ryan Releases House GOP Budget Outline

Categories: Budget /Farm Bill

Naftali Bendavid reported yesterday at The Wall Street Journal Online that, “Rep. Paul Ryan’s budget [complete outline here, summary tables here] instantly became the centerpiece of an election-year debate over the size of government on Tuesday, thrusting back into the spotlight a topic—the deficit—that has been largely overlooked by the presidential candidates.

“Democrats said his plan promises drastic savings without specifying what would be cut and without raising taxes on the wealthy, as President Barack Obama has proposed.

“Mr. Ryan (R., Wis.), who heads the House Budget Committee, said his plan would put the U.S. on a sound economic path by spending $5.3 trillion less than Mr. Obama recommends over 10 years, resulting in a budget deficit that would be $3.3 trillion narrower.”

The Journal article noted that, “The Budget Committee will begin finalizing the bill Wednesday, and Republican leaders hope to hold a House vote next week. The Democrat-controlled Senate is all but certain to reject the Ryan plan, if it considers it at all.”

Jonathan Weisman reported in today’s New York Times that, “At the same time, the proposal calls for reducing spending below the cap agreed to in last year’s debt limit deal, raising the prospect of a tense fiscal clash just a month before the election.”

In a statement yesterday, Senate Budget Committee Chairman Kent Conrad (D., N.D.) noted that, “I am disappointed that Representative Ryan is walking away from the discretionary spending levels agreed to by Democrats and Republicans in last summer’s Budget Control Act. Instead, he calls for significant additional cuts in education, energy, infrastructure, and other areas vital to the country’s economic growth. His action is a breach of faith that will increase the likelihood of an unnecessary and harmful government shutdown later this year.”

On this point, during a news briefing on the budget outline yesterday, Chairman Ryan was asked about the increased possibility of a government shut down as a result of the budget outline.  Ryan pointed out that his budget proposal was an attempt to prepare for sequestration that would take place automatically in January, and stated that, “We are actually going to reconcile six Committees, we are going to make six Committees go out and come up with spending cuts to show how we would replace the sequester” (Related audio, (MP3- 1:04)).

One of those six Committees is the Agriculture Committee.

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Critics may argue that House Budget Chairman Paul Ryan’s budget proposal has little chance of passage, but the document puts more pressure on the House Agriculture Committee to cut crop insurance subsidies when writing the farm bill.”

“Included in the Ryan proposal are recommendations to cut $30 billion out of farm programs over 10 years by reducing ‘fixed payments’ and ‘reform the open-ended nature’ of crop insurance.”

Mr. Clayton pointed out that, “The agriculture cuts would be slightly less than the $32 billion proposed by the president last month. The White House plan drew strong criticism from farm groups because of the proposed cuts in crop insurance.

“Crop insurance cuts under the Ryan plan, much like the White House plan, would require farmers to pay higher premiums.”

The DTN article noted that, “The Senate Agriculture Committee, in taking the lead in crafting a farm bill, has been working off a $23 billion budget-cutting proposal over 10 years. That’s the figure the agriculture committees offered to cut in the failed supercommittee talks last fall. Lawmakers criticized the president’s plan to cut more and they have been unwilling to consider cuts in crop insurance due to strong support from farm groups.”

Mr. Clayton’s article pointed to statements on the House Budget proposal from Ag Committee Leaders.

- House Agriculture Committee Chairman Frank Lucas (R., Okla.) – “I would caution people about reading too much into the numbers or policy proposals in either the President’s budget or the Ryan budgetThey are only suggestions.  During our process, both policy and deficit reduction targets will be developed in conjunction with Ranking Member Peterson and Members of the Committee as we write a fiscally responsible Farm Bill that ensures Americans continue to have a safe, affordable, and stable food supply.”

- House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) – “The process outlined by the House Republican budget all but guarantees there will be no farm bill this year.  The Ryan budget proposes significant cuts in the farm safety net and conservation programs, and slashes spending on nutrition programs that provide food for millions of Americans. It is appalling that in an attempt to avoid defense cuts the Republican leadership has elected to leave farmers and hungry families hurting.”

- Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) – “The budget proposed in the House today is irresponsible and undermines one of the few sectors in our economy that is growing and creating jobs…This budget as proposed does nothing to strengthen production agriculture. Instead, it will hurt families and America’s economy at a time when we need to be creating jobs.”

Chairman Ryan was asked specifically about cuts to crop insurance, and the recent $12 billion in cuts that have already been made to the program, at his briefing yesterday.  A reporter also noted that crop insurance was shaping up to be the “core” of the Farm Bill safety net.

Chairman Ryan responded by noting that, “We’re asking the authorizers, the Agriculture Committee, to decide exactly how to do this. They’re going to have to save, I think it’s $33 billion, direct payments, crop insurance, all of the area within the ag title is what the authorizing committee, Chairman Lucas, will have to come up with.

Do I think — this is me talking — do I think you can get more reform out of crop insurance subsidies? Yes, I do. I also think the bulk of the savings need to come from direct — from direct payments, but that is up to the Agriculture Committee to decide exactly how they do that” (Related audio, (MP3- 2:13)).

Meanwhile, Secretary of Agriculture was a guest on yesterday’s AgriTalk radio program with Mike Adams where the preliminary outlines of the Ryan budget were noted.

An audio replay of a portion of Sec. Vilsack’s appearance on AgriTalk can be heard here (MP3- 13:39), while an unofficial transcript of this portion of the AgriTalk program can be found here.

On the issue of crop insurance, Sec. Vilsack stated that: “Well, I think you have to separate the three components of crop insurance: the insurance companies, the insurance agents, and the farmers. And I think the question is whether or not we have a system that provides enough stability for the insurance industry so that the integrity of the program remains, enough incentive for the agents to go out and basically sell and service the product, and sufficient subsidies for farmers basically to see this as a pretty good deal for them.

I think we can strike a balance. There may be some tweaks and adjustments. The president has suggested that perhaps a 12% return on investment would be a little bit better than the 14% that insurance companies are enjoying today. Maybe that’s a point of discussion. Nine hundred dollars a policy as opposed to maybe $1,000 a policy to the agents for servicing. There’s an area of discussion. Folks who are subsidized more than 50% – in some cases producers receive a 60 to 62% subsidy – maybe there can be some adjustments there.

At the end of the day, we’ve got to maintain the core of the program, and I’m very confident, regardless of whose proposal, whether it’s Paul Ryan’s proposal, the Republicans’ proposal, the president’s proposal, or the Senate and House Ag Committees that worked on the $23 billion number, I’m fairly confident we’re going to have a solid crop insurance program.”

On yesterday’s AgriTalk program, Secretary Vilsack also discussed the SNAP program at length (including details on “error” rates and “fraud” rates), as well as issues associated with Department of Labor proposed regulations for young people working on farms - unofficial transcript here.

Reuters writer Charles Abbott reported yesterday that, “The government now pays 60 percent of the premium for crop insurance as well as underwriting insurers’ operating costs and sharing the burden of payments to farmers in high-loss years.”

Mr. Abbott also pointed out that, “Food stamps, which help poor people buy food, would become a block grant to states with a limit on spending in the Ryan plan. Access would be tied to work or job training. Food stamps account for three-quarters of farm-bill spending.

“Ryan made a similar proposal a year ago and faced strong opposition. By one estimate, it would cut funds by $122 billion or 16 percent over 10 years; too much for antihunger advocates.”

A news release yesterday from the American Soybean Association (ASA) stated that, “These cuts, Rep. Ryan proposes, would be reconciled by the House Agriculture Committee. Additionally, the chairman’s budget includes a dramatic transformation of the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamp program, which would cut $123 billion from the program and shift it to a state-run block grant program. [ASA] First Vice President Danny Murphy, a soybean farmer from Canton, Miss., had this to say about Chairman Ryan’s budget proposal:

“‘ASA is pleased to see a proposal that, through the reconciliation process, may lead to a faster consideration of a potential Farm Bill in the coming months. The cuts that Chairman Ryan proposes, however, are significantly higher than those agreed upon by House and Senate Agriculture Committee leadership during the Supercommittee process last fall, and that concerns us. Especially worrisome is the Chairman’s emphasis on the federal crop insurance program as an area for reduction. Crop insurance serves as the main safety net for America’s farmers, and its integrity must be protected.’”

National Farmers Union President Roger Johnson indicated in a statement from yesterday that, “The House Budget Committee report includes language that net farm income has been high in recent years, but as farmers, we know that with our current policies, good times do not last. Policymakers should look to what happened around the 1996 Farm Bill, when lawmakers saw relatively high farm prices as a reason to remove most of the farm safety net. When prices fell in the late 1990s, billions of dollars were spent to keep farmers on the farm when a modest investment in the 1996 Farm Bill would have prevented the calamity. We must learn from the past.”

The Washington Post editorial board noted in an opinion item on the GOP budget outline in today’s paper that, “We support some cuts, such as for agriculture subsidies.”

With respect to implications the House Budget outline could have on the Farm Bill process, David Rogers reported yesterday at Politico that, “For the Agriculture Committee, which hopes to write a new farm bill before September, the expedited budget schedule poses both a severe challenge and potential opportunity.”

Mr. Rogers noted that, “The draft numbers demand $8.2 billion over the first year, $19.7 billion over five years and $33.2 billion over a decade. Indeed, the relatively high first-year number suggests that the budget will assume an early rollback of more generous food stamp benefits first allowed under the 2009 economic stimulus bill.

“In terms of core commodity and crop insurance programs, the longer-term savings are considerably more than the draft farm bill negotiated by the House and Senate Agriculture leadership last fall. That measure saved just $23 billion over 10 years, compared with $33.2 billion.

But if a compromise can be found, the Agriculture Committee could find it in its interest to hitch a ride with the budget package so as to get a farm bill across the House floor with a minimum number of amendments.”

Mary Kay Thatcher, Senior Director, Congressional Relations, for the American Farm Bureau Federation made some initial assessments on the Ryan budget outline on yesterday’s AgriTalk program with Mike Adams, related audio- (MP3- 2:23), where she pointed out that it puts the Farm Bill on faster track.

Ms. Thatcher noted that, “I suspect that we will have some real action in the last two weeks of April.”  The cuts from the Agriculture Committee are to be submitted back to the Budget Committee by May.

In other Farm Bill news, Jerry Hagstrom reported on Monday at AgWeek Online that, “The issue of whether proposed farm bill commodity programs would work in the Northern Plains remain to be resolved in Senate Agriculture Committee negotiations, Jim Miller, a former Agriculture Secretary for farm and foreign agricultural services and key aide to Senate Budget Committee Chairman Kent Conrad, D-N.D., said March 13 in an interview with Agweek.

“Miller also said Conrad’s concerns over issues such as duplication of payments, which farm leaders fear would lead to more criticism of the program, or how various farm proposals would affect the Northern Plains have not been resolved at the staff level.

Miller said he and Conrad are particularly concerned about proposals to aggregate payment areas rather than to make payments based on individual farms because there are ‘localized production risks’ on the Plains. But he added that there has not been an attempt to resolve those issues. Conrad has written his own farm bill proposal that would involve the now-expired permanent disaster program that was included in the 2008 farm bill.”

And Ken Leiser reported yesterday at the St. Louis Post-Dispatch Online that, “Under a new deal between Metro transit and a mobile farmers market, riders can now shop for locally grown fruit, veggies, eggs and cheese at bus and train stops…‘It is really going to resemble what people are used to seeing at farmers markets,’ said Tim Woods, community sales and market manager of the fledgling Farm to Family Naturally Mobile Market.”

The article added that, “The four stations where Metro’s farmers markets will be set up are located where some transit riders don’t have easy access to fresh fruit or vegetables, [Metro spokeswoman Dianne Williams] said.”

Keith Good

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