CBO Updates Estimate of 112th Congress Farm Bills
The last Congress attempted to work out a new farm bill but could never reach an agreement. The American Taxpayer Relief Act, the agreement reached after the fiscal cliff negotiations, only extended the 2008 farm bill for another year. With another expiration of the farm bill at the end of FY 2013, it remains and bipartisan priority to restructure the way government provides farm support. If lawmakers fail to reach an agreement, we could face another "farm cliff" on January 1 next year.
Last Friday, CBO updated its estimates of the Senate and House proposals in the 112th Congress. The Senate bill passed by a 64-35 vote, while the full House did not bring its bill to a vote. Although a bill did not pass Congress, the previous bills provide a perspective where both chambers stand on a new farm bill. The Senate farm proposal was reintroduced as S. 10, while the House proposal has not been introduced in the new Congress. CBO estimates both of these if they were to be enacted as soon as the current farm bill expires on September 30.
|Ten-Year Savings/Costs (-) in the Farm Bills (billions)|
|New Estimate (2014-2023)||Old Estimate (2013-2022)|
|Crop Insurance Programs||-$6||-$11||-$5||-$10|
|Subtotal, Farm Programs||$13||$15||$19||$19|
Source: CBO (Numbers may not add due to rounding)
As we have described before, both bills would repeal direct commodity payments, saving $44.5 billion over ten years. It would replace these payments with a new program that would provide insurance in case commodity prices dipped below a certain level. The Senate and House bills would also increase spending on crop insurance by $11 billion in the House bill and $5.5 billion in the Senate version.
The greatest difference between the two bills is in nutrition. The House bill proposed restricting food stamp (SNAP) eligibility based on being in other programs (categorical eligibility) to cash-assistance programs only, saving $11.6 billion over ten years. Both bills would also raise the amount of low-income energy assistance benefits needed to qualify for increased food stamp benefits (utility allowances) from $1 to $10. However, due to regulatory changes that make this provision ineffective, it is no longer anticipated to produce savings, whereas previously it was estimated to save $4 billion.
Both bills save less in the new CBO estimate than in CBO's 2012 estimate. Higher prices than expected will increase the cost of the Senate's new Agricultural Risk Coverage Program, reducing the savings in commodity programs. CBO also expects less savings in conservation programs due to lower enrollment than expected, as well as in nutrition programs due to the energy assistance savings adjustment mentioned above.
There is certainly room to go further in terms of deficit reduction in these farm bills given our future debt projections. These savings are relatively small, but there are many areas of agreement in these bills. Hopefully, lawmakers will work to a compromise on a farm bill with significant savings in the coming months, perhaps in an agreement that could achieve the $2.4 trillion in deficit reduction we need.