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Texas Agriculture Archive

April 18, 2003

Budget resolution could undermine farm bill

The American Farm Bureau Federation held a "fly-in," April 2, to discuss critical budget cuts included in the FY04 budget resolution.

The House-passed version of the FY04 budget resolution contains cuts in agriculture of $18.6 billion over 10 years. The budget resolution instructed the Agriculture Committee to make cuts of $600 million in FY04, $5.5 billion in FY04-08 and a total of $18.6 billion for FY04-13. The cuts for agriculture must be taken from three programs: the farm bill, crop insurance and nutrition programs.

Farm Bureau believes the money the House wants to take away is critical to maintaining agricultural stability and food security, but it doesn't amount to much in terms of the nation's economy. In fact, the nation's income is roughly $11 trillion a year, as figured by the GDP, and the federal budget is $2.2 trillion a year. Agricultural spending is less than 1 percent of expenditures.

According to Dick Newpher, AFBF's executive director, the House-passed bill contains reconciliation instructions for the House Agriculture Committee to cut entitlement spending programs.

The cut in the mandatory agricultural spending budget is not 1 percent of new spending; it is 1 percent of total agriculture spending. This would cut the budget baseline by $18.6 billion and in effect would cut the additional funding obtained just last year for the farm bill by over 25 percent. This will disrupt the compromises achieved while crafting the 2002 farm bill and will have a negative impact on agriculture and the rural economy. Agricultural spending is less than 1 percent of the $2.2 trillion authorized to be spent in the federal budget.

"The Senate-passed budget resolution for FY04 did not contain cuts in mandatory agriculture spending but included language that could reduce payment limits," Newpher noted.

"Changing the current status of payment limitations would be very disruptive to farming operations. It is imperative that as the Senate and House reconcile the widely different budget proposals, payment limits remain as enacted in the 2002 farm bill. During the farm bill debate an agreement was made to instruct a payment limitation commission to study the effects, both positive and negative, of program payment limits. The Commission is scheduled to give a full report in May 2003. To make changes now would be potentially harmful to the rural economy.

The Senate budget resolution also includes $350 billion in tax relief. The House budget resolution called for the entire $726 billion tax cut/growth package President Bush requested.

A conference committee, comprised of members of the House and Senate Budget Committees, is meeting to reconcile the differences between the two resolutions. The resulting compromise will direct the authorizing committees, such as agriculture, to adjust spending based on their agreements.

AFBF along with conservation, nutrition and commodity organizations, sent a letter to Budget Committee Chairman Don Nickles and Jim Nussle on April 3.

The letter urged the conference committee not to include any cut in the agriculture portion of the budget resolution.

In addition, the groups urged the conferees to adequately fund discretionary spending, and asked that they adopt a discretionary spending total at the level of the Senate resolution, which is similar to the President's budget.

At press time the House and Senate were in conference to find a compromise between the vastly different resolutions with a vote expected April 11.