House Agriculture Committee Releases Companion Farm Bill

Correction: The original post incorrectly stated the change that the House bill made to the Standard Utility Allowance. It does adopt the provision from the Senate bill to set a $10 threshold.

After the Senate farm bill passed two weeks ago by a 64-35 vote, House Agriculture Committee Chairman Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) released the House companion, one which contains many similarities but a few key differences.

Like the Senate bill, the House bill repeals four commodity subsidy programs, the largest being direct payments ($44 billion ten-year savings). And like the Senate bill, the House plows some of these savings back into new insurance programs. It has the Senate bill's provision for a new shallow loss program which provides payments if losses come in below 85 percent of expected revenue (89 percent in the Senate bill). However, responding to criticism from Southern representatives, the House bill gives an alternative to the shallow loss program, one that makes payments to farmers if crop prices dip below certain targets for five consecutive months.

The main area where the House differs from the Senate is on nutrition. One thing that both bills target is a provision that allows states to give a bump-up in food stamp benefits (the Standard Utility Allowance) to recipients who have also received just $1 of energy assistance. Both the House and Senate bills up this threshold to $10. In addition, the House restricts "categorical eligibility"--where beneficiaries of other benefit programs automatically qualify for food stamps--to cash assistance programs only. Thus, the House saves an additional $12 billion in nutrition programs.

Overall, the House bill will save $35 billion over ten years, above the $23 billion of savings in the Senate bill.

^{Source: CBO}

The farm bills are a good first step for reining in farm subsidies--as many fiscal plans have done-- but there is some concern about the new programs the bills create. It is quite possible that if crop prices drop--which CBO does not anticipate in its score--the cost of these programs could rise significantly above their projections. It would be much better to have the savings from ending the current commodity payment programs in hand instead of creating another subsidy mechnaism that could wipe out any potential gains.

Note: Table has been updated from its original posting to include subcategories for farm programs.