Representatives Jeb Hensarling, R-Texas, and Patty Murray, D-Wash., the committee co-chairs of the deficit reduction Super Committee waited until markets closed Monday to announce they've decided it will not be possible to make any bipartisan agreement before the committee's Wednesday deadline.
Senator Mike Johanns, R-Neb., and former Secretary of Agriculture, called the Super Committee's failure disappointing news. Johanns said ignoring the ballooning debt crisis will not make it go away. If a deficit reduction plan doesn't come to floor of the Senate soon he says the consequences will affect not only job creation but shake the very foundations of our economy. He believes it's time to get our fiscal house in order. Senator Chuck Grassley, R-Iowa, agrees saying the President should have been engaged and at least offered a credible deficit reduction plan.
Farm Futures Senior Editor Bryce Knorr says that the failure of the Super Committee will have lasting impact on policy and the markets.
"With no resolution on potential cuts to the deficit that triggers $1.2 trillion in reductions split between domestic and military spending," Knorr said. "Those reductions don't take place for another year, which sets the stage for perhaps an entire year of gridlock and wrangling over this issue. The market does not like and we are seeing a lot of risk aversion as a result."
So, it appears the 2012 Farm Bill process will head back to the House and Senate Agriculture Committees. The success of a fast-track farm bill always hinged on the success of the Super Committee but now the fate of the work done by the ag committee leaders is clouded in uncertainty.
Senior Director of Public Policy for the National Corn Growers Association Sam Willett says if the committee had even been able to reach an agreement on part of the reductions it is likely the farm bill would have been part of that package.
However with no agreement the bill is subject to sequestration. Such an across-the-board cut would pare farm bill spending by $15 billion, not the $23 billion the House and Senate Agriculture Committee leaders had offered. Though American Farm Bureau Deputy Executive Director of Public Policy Dale Moore says the $15 billion could quickly grow if the writing of the farm bill returns to the ag panel. Moore says a return to the regular farm bill process has serious pitfalls, including further cuts to the farm safety net.
Willett says that with the current farm bill expiring on Oct. 1, 2012 the next step by the Agriculture Committees is anyone's guess.
A Senate document that was leaked calls for elimination of direct and countercyclical payments as well as the SURE and ACRE programs, and replacing ACRE with new shallow loss revenue coverage, expanding crop insurance and capping the Conservation Reserve Program at 25 million acres.
The Environmental Working Group, as well as other groups opposed to farm policy, has been up in arms, screaming bloody murder over the proposed farm bill.
However Environmental Defense Fund Agricultural Policy Director Sara Hopper says that the agreement included significant savings from USDA's voluntary conservation programs, and while any cuts to these programs are painful, leaders of the House and Senate agriculture committees worked in a bipartisan way to minimize the negative impact of the cuts by also including in their agreement certain policy changes that would have improved the effectiveness of conservation programs.
While the failure of the Super Committee means that the agreement reached by House and Senate agriculture committee leaders will not advance now, from EDF's perspective the work that leaders of the House and Senate agriculture committees did over the past few months demonstrates a continuing strong commitment to conservation in the face of significant budget pressures. That commitment is something we expect will carry forward into next year and beyond.