Congress likely to avoid fundamental farm program changes

By Sara Wyant

For most of us who don't have billion dollar checkbooks, $3 billion is a lot of money to cut out of the bank account over a five-year time span. But if you are a member of the House or Senate Agriculture Committee and you oversee $300 billion in spending during that same time period, you have a slightly different perspective.

Looking at the total scope of spending for farm, food and nutrition programs, the $3 billion required as part of the deficit reduction package is "pretty modest," explains the House Agriculture Committee Majority Staff Director Bill O'Conner. "Everything will be on the table, but Chairman Goodlatte does not intend to make any fundamental changes in current farm policies to meet this goal."

Senate Agriculture Committee Chairman Saxby Chambliss echoes the same sentiment.

"Those proposals that first called for cuts at $7 to $9 billion would have dictated difficult farm bill cuts that would jeopardize farm programs," explained Chambliss. However, the final number is much closer to the $2.8 billion in cuts that the Senate Agriculture Committee originally recommended. "Now our committee can move forward to consider legislative options in making deficit reduction cuts of $3 billion over a five year period, while being mindful of farmers, soil and water conservation plans, and families needing food aid."

No cuts at all?

Most farm organizations sighed in relief as news leaked that their portion of the cuts would be much smaller than originally expected. Odds of making major farm bill changes before the 2007 farm bill are now between slim and none. But other folks, like Rep. Collin Peterson, D-MN, believe agricultural programs should not be subject to any cuts. Peterson described the cuts as "unfair, especially when you consider how fiscally sound the 2002 farm bill has been."

National Farmers Union President Dave Frederickson also expressed disappointment that Congress voted to cut mandatory agriculture spending, "while at the same time approving the framework for another $70 billion in tax cuts to the nation's wealthy. Jeopardizing federal programs that benefit farmers, ranchers and rural communities is the wrong move for the wrong reasons at the wrong time."

But Budget Committees went looking at all program areas, in order to chop away at the federal deficit and make their first attempt to force spending cuts on both mandatory and discretionary programs since 1997. The conference agreement, approved on a party line vote by both the House and Senate, calls for $34.7 billion in mandatory spending cuts for fiscal 2006 through Fiscal 2010.

The budget plan projected that the annual federal deficit will fall to $387 billion in FY 2006 and then decline further to $210.9 billion by FY 2010. But U.S. economic growth may fuel even faster deficit reduction.

When the Congressional Budget Office (CBO) released its Monthly Budget Review for April, it showed a sharp reduction in the deficit for fiscal year 2005. The report estimates the deficit will be approximately $350 billion, a $50 billion decrease from CBO's prediction in February of a $400 billion deficit for fiscal year 2005.

"This report shows that our policies and budget have helped the economy grow, and thus helped reduce the deficit. The budget we just passed will allow these policies to continue, and further our progress in reducing the deficit," said House Budget Chairman Jim Nussle, R-IA.

Savings by September

Members of the House and Senate Agriculture Committees have until September 16 to figure out how to come up with $3 billion in savings. Of that amount, $173 million will need to be trimmed for the next fiscal year, beginning Oct. 1, 2005, but there are no minimum guidelines for the following four years. The budget does not dictate where or how the savings will be found.

At this point, no programs are exempt, but staffers will be looking for the "least painful" cuts first. That's likely to include tighter enforcement of food stamp programs to cut waste, fraud and abuse. Conservation programs remain another "easy target," despite their relative popularity among farmers. The challenge will be to find enough savings in several different areas so that no single program needs to be substantially altered.

"We're pleased that this budget protects the integrity of the current farm bill, but there's still a lot of work to be done," notes Sam Willett, Senior Director of Public Policy for the National Corn Growers Association. "Whenever it comes to trimming the size of programs, we'll need to be especially vigilant so that the impact on farmers is minimized."

Mary Kay Thatcher, Director of Public Policy for the American Farm Bureau Federation, says "we don't anticipate any heavy lifting on the issue until mid-summer but have already been involved in discussions with other farm and commodity groups about potential places to find savings. Farm Bureau's top priority is preserving the current farm bill."

Editor's note: Columnist Sara Wyant is president of Agri-Pulse Communications, Inc. and publishes a bi-weekly newsletter, Agri-Pulse, on food and farm policy. For more information, you can e-mail her at Agripulse@aol.com.

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