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Tuesday, August 02, 2011

Agriculture Spending And The Debt Ceiling Negotiations


There is very little, if anything, that the individual farm operator, landowner, or agriculturist can do about the debt ceiling agreement concluded over the weekend in Washington.  After all some of the most powerful individuals in the US government were wondering if they had any influence.  However, the 74 page agreement says very little about individual government programs.

The Congress and the President are raising the debt ceiling, which was the most contentious issue in government since Monica Lewinsky was in the headlines.  The agreement to prevent a governmental default is a 74-page page document which restricts the speed at which expenditures can increase.  Following House passage Monday evening the Senate is scheduled to vote mid-day on Tuesday, and the President will sign the agreement before the midnight deadline.

So how was agriculture treated in the agreement, which primarily was negotiated behind closed doors and over phone lines?  There were certainly no committee hearings, and lobbyists were watching the news reports as much as the typical voter and taxpayer.  If the objective of a farm lobbyist was to keep agriculture out of the agreement, they earned their fee.  The agreement does not include the words, agriculture, farm, farm policy, biofuel, ethanol, direct payment, or any of the language that you would expect.  The word “food” appears once, only to correctly change the reference to the Food Stamp Program to the Supplemental Nutrition Assistance Program in 1985 language that formed the basis of the legislative document.  Otherwise the agreement is devoid of references to agriculture.

The other shoe will fall in mid-August, when the House and Senate will appoint 12 of their members to a special committee to determine how to remove another Trillion dollars from the budget over the next 10 years.  So the farm lobbyists had their chance to get some rest this past weekend because they will be working overtime through the rest of the year to push and pull and minimize the impact on agriculture.

The current attitude in Washington is that agriculture is doing very well, and USDA is a wealthy unit of government where savings could occur, short of selling the USDA South Building for Capital office space.  With USDA’s $100+ billion budget, the initial target will be direct payments, and similar farm safety net programs, which even some farm groups are willing to sacrifice.  However, 75% of the USDA budget is in the food assistance programs, and those have recently appeared to be vulnerable to sizeable cuts.  When the Supplemental Nutrition Assistance Program (food stamp) is cut, that will be long after commodity support programs have been discarded, along with conservation funding, biofuel support programs, ag research and rural development funding.

Protection of some farm programs has long been the job of certain southern senators, whose tenure put them in charge of committees where they could ensure that substantial funding was available for cotton, rice, peanuts and tobacco.  Those days are over.  The senators are retired, and when Arkansas Senator Blanche Lincoln was defeated in the last primary election, her chairmanship of the Senate Agriculture Committee went to a Michigan Senator who might like fried rice, but has no particular allegiance to US rice farmers.

On a parallel path with the blue ribbon budget cutters will be the renewal of farm policy in the 2012 Farm Bill.  In farm country that process garners headlines, but within the Washington budget atmosphere, it may be hard to find notices of when House and Senate Agriculture Committees will even be holding Farm Bill hearings.  At this point the committees will be determining where funds are allocated, if they can find any funds to allocate.

The debt ceiling negotiations have successfully avoided a governmental default, but in doing so everyone agreed to curtail spending increases, so there has been no specific impact on agriculture.  However, a special committee will soon begin work to cut the budget, and that will bring an expected impact on the USDA budget, from commodity support programs, conservation, ag research, and even food assistance programs.

Posted by Stu Ellis on 08/02 at 12:00 AM | Permalink

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