Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Thursday 02/07/13

Sequestration Cuts Just One More Federal Merry-go-Round

I set out this week to better understand the relationship between the across-the-board federal budget cuts known as sequestration cuts. I was trying to figure out a little bit about how the cuts affect the USDA budget baseline and the farm bill.

I probably failed in that regard. Here's what I learned. The sequestration cuts that are supposed to take place March 1 could cut 8.2% from most farm programs. According to a White House Office of Management and Budget report last fall, the program cuts at USDA programs would add up to about $2.47 billion this year alone.

No, that's not right. The Congressional Budget Office cited a percentage cut for fiscal 2013 budget figures of 5.3% in a report released Monday. It's a single percentage number on page 14 of the report. How in the world I missed that valuable piece of information I will never know.

The CBO also put out a report for USDA programs showing an increased baseline on farm programs of $6 billion over 10 years from $970 billion to $976 billion.

No, that's not right either. Because the CBO report on USDA programs didn't actually factor in the impact of the 5.3% sequestration cuts because those cuts haven't actually happened yet.

The one group that put out some detailed information on these issues, the National Sustainable Agriculture Coalition, said the sequestration cuts at USDA would amount to about $7 billion over a nine-year period.

OK, so the baseline that added $6 billion over 10 years failed to account for the $7 billion reduction over nine years. In reality, the budget for the farm bill somehow would have $1 billion less to work with than there would have otherwise been.

Then a $2.47 billion cut this year actually translates over 10 years to not actually being that big a deal, right?

How do these cuts play out and exactly which programs are affected? That's kind of important because somewhere there is someone who might not be eligible or funded for a program in which that person had already assumed was funded. Let's say, for instance, a local conservation staffer assured a farmer that guy was next in line for an Environmental Quality Incentives Program cost-share so all the guy has to do is go ahead and start. Are those projects all set or funded for 2013? Is EQIP a possible program that could face a cut?

Are the direct payments going to be funded for 2013 as guaranteed or are they going to take a nick as well?

This is where my federal merry-go-round began last week. A helpful House staffer told me that, yes, direct payments would take an 8.2% cut. No, wait, that can't be right because the CBO report suggests 5.3% cuts. Crop insurance would be cut, I was told, but not until 2014. Well, the OMB report from last fall doesn't show crop insurance cuts. The CBO baseline is no help there, either.

For other information, I should direct my inquiries to the U.S. Department of Agriculture, which has 107,000 employees. Surely someone at USDA could competently explain the broad array of cuts to programs and how USDA plans to implement them. There has to be a memo somewhere, right? After all, there can't be an impetus to prepare for cuts in a particular program if the department faced with implementing the cuts doesn't have a handle on exactly where the axe will fall. According to reports, there also could furloughs among federal agencies. Could that affect local Farm Service Agency offices?

Agriculture Secretary Tom Vilsack has been telling us that rural America needs to make its voice heard when it comes to these federal budget issues because rural Americans aren't as relevant in the political world as they once were. That's a valid point. So please, USDA, can you provide me with some details on these sequestration cuts?

No. USDA isn't discussing it. All press inquiries about sequestration cuts have to go through the White House OMB.

Dear OMB, can you tell me how this is going to work? Silence. Prolonged silence. After all, I'm a peon journalist from rural America. I'm irrelevant to some guy responsible for handling press inquiries at OMB in Washington, D.C. Moreover, apparently from what I gather the administration that has preached transparency isn't being so transparent on how these cuts will fall. Yet, the president wants to stop the across-the-board cuts. You would think if you wanted to stop the cuts someone would suggest providing the public with a detailed accounting of where the cuts would fall. After all, you can't exactly get riled up about something affecting you if you don't know it's going to affect you in the first place.

As for congressional committees and trade associations who generally pay attention blow-by-blow to cuts to their favorite programs or agencies, in general they either don't know or they are simply laying low.

Well, screw 'em.

If the federal agencies faced with implementing across-the-board cuts can't adequately explain how these cuts will be applied, which programs are affected and exactly how much will be cut, then at least it's understandable why federal bureaucracy continues to sail along on like a rudderless ship.

If congressional committees aren't able to explain how these budget changes impact current federal programs or the ability to draft a new farm bill, then leaders of these committees shouldn't be surprised when there is no outcry from rural America over why we don't have a farm bill.

If the groups who covet certain programs in commodities, conservation, rural development or research can't adequately express their concern over possible cuts to their pet programs, then they ought not be surprised when they get whacked.

As for me, when I get details about exactly, how, when, where and why a particular program is no longer available, I'll pass that information along.

I can be found on Twitter @ChrisClaytonDTN

Posted at 9:35AM CST 02/07/13 by Chris Clayton
Comments (3)
The rising tensions between China and Japan don't hold much promise for solving the "Farm Bill Issue", as if we're likely sucked into the mess, the "Sacred Cow" of the Defense Budget is more likely to get "after dinner mints" rather than some of the trimming it needs. This is sad as the Farm Bill is an investment in America's Supply Chain and Business growth foundation, one that, given a little time, could actually stimulate some real economic growth-badly NEEDED economic growth. If it even LOOKS like we might be on the road to WWIII, color that gone.
Posted by Ric Ohge at 10:12AM CST 02/07/13
Finally Chris, you make sense! You are not in trouble when you argue with yourself, only when you lose! Keep trying and thanks for the blog. Snarky
Posted by Bonnie Dukowitz at 4:54PM CST 02/07/13
There are several other obvious and relevant facts that need to be part of this discussion. At the beginning of the past decade the government was guaranteeing a minimal amount of gross revenue per corn acre grown. Now many farmers receive a revenue guarantee of close to $1000 per acre of corn grown. Also the government was paying a minimal amount of insurance premium per acre. Now it is many billions per year. Some farmers now receive over a million dollars every year as a benefit towards the cost of their government crop insurance premium. Also the national debt has nearly tripled since the beginning of the last decade.
Posted by Lon Truly at 5:20AM CST 02/08/13
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