President Proposes Ag $32B Funding Cut

DC Dialogue

Congress less than enthusiastic about the President’s budget proposal calling for cuts to conservation and crop insurance.

Published on: February 16, 2012

Monday President Barack Obama officially released his budget, which calls for approximately a $1 tax increase for every $2.50 in spending reductions. For agriculture, the proposal offers many of the same concepts previously proposed, particularly in the president’s proposal to the joint deficit committee last fall and has already received a poor reception by Congress and commodity groups.

His budget includes a smattering of 2012 Farm Bill proposals, including most prominently the same $32 billion in cuts over the next 10 years he issued last September. The proposal from the ag committees settled on only $23 billion in savings.

The proposal follows the emerging consensus to do away with direct payments but offers no alternative safety net proposal. It also proposes an across-the-board 2% cut to farmers’ crop insurance premium subsidies.

Sen. Pat Roberts, R-Kan., ranking member of the Senate Agriculture Committee, criticized the president’s proposal saying it ignores feedback from producers and bipartisan majority of the Senate Ag Committee whom believe that crop insurance is the most effective safety net for agriculture. “Rather than listen to those in farm country, the Obama Administration has chosen to recycle old suggestions and raid Agriculture to pay for excessive spending elsewhere.”

House Agriculture Committee Chairman Frank Lucas, R-Okla., also said the crop insurance cuts threaten the integrity of the program and Obama ignored other areas for saving such as eliminating duplicative programs in conservation and closing loopholes in nutrition spending.

“Nutrition spending comprises 80% of the agriculture baseline and there is bipartisan support in Congress to save billions by eliminating loopholes, but not one penny is cut in the President’s budget,” he said.

With respect to FY 2013 farm bill conservation program spending, the Obama budget proposes to layer further cuts of $432 million on top of the more than $1.25 billion in farm bill conservation cuts enacted as part of the FY 2011 and FY 2012 appropriations bills. All of the proposed cuts would come from working lands conservation programs.

The budget request would cut the Conservation Stewardship Program by 759,632 acres, or approximately $68 million. It would also cut the Environmental Quality Incentives Program by $347 million, the Wildlife Habitat Incentives Program by $12 million, and the Agricultural Management Assistance Program by $5 million.

The proposal also includes previously released plans to save $58 million by proposing to close or consolidate about 260 offices and saving $2 million by consolidating administrative functions.

The president's budget proposes an estate tax at a $3.5 million exemption level with a maximum tax rate of 45%. As a result of a last-minute fix passed through Congress in December 2010, the current estate tax exemption level is $5 million per individual and $10 million per couple with a maximum tax rate of 35%.

One welcomed part of the budget was the president’s request to increase the 2013 funding level for the Agriculture and Food Research Initiative (AFRI) to $325 million, an increase of $60 million over current budget levels.

The proposal also increases funding 2.6% to $5 billion for the U.S. Department of Energy and includes a bigger jump of 4.8% to $7.4 billion for the National Science Foundation.

When questioned whether ideas such as direct payment elimination, crop insurance premium cuts and overall reduced agriculture federal support had a better chance of gaining traction this go-round, Heather Higginbottom, deputy director of the Office of Management and Budget, said she was “hopeful” some will be enacted and because the proposal hasn’t been out there long, there is time for congressional members to understand the proposal better. She said the administration remains “committed to working with Congress” on the funding as well as the deficit side of the budget.

A statement from Roberts noted that Senate Majority Leader Harry Reid, D-Nev., said he will not even consider the budget proposal in the Senate. Roberts said the ag committee will be working to pass a farm bill this year and that process will decide funding priorities, rather than through this budget proposal.