Comparing the House and Senate Agriculture Changes

Recently, both the House and Senate proposed cuts to the Department of Agriculture. Though the proposals are fairly similar in magnitude, they achieve their savings in very different ways. With the 2008 Farm Bill expiring in September, it will be interesting to see how these bills will shape the final outcome for that legislation.

The House Agriculture Committee's savings are in the reconciliation bill to comply with the savings target from the budget resolution. It would cut $34 billion through 2022, entirely from food stamps and related nutrition programs (all under the Supplemental Nutrition Assistance Program, SNAP, which we looked at in a previous blog). This total represents 4.4 percent of projected SNAP spending, or 3.4 percent of USDA spending. 

The House bill ends the temporary benefit increase from the 2009 stimulus in June 2012, more than a year earlier than scheduled. It also limits categorical eligiblity--where people participating in other low-income programs qualify for SNAP automatically--to just cash assistance programs, limits an allowance that is automatically given if a recipient gets energy assistance from LIHEAP (allowing states to bump up benefits by giving only a few dollars of LIHEAP money), and eliminates federal funding for a state employment and training program.

In its proposed Farm Bill, the Senate majority would cut $26 billion, or 2.7 percent of USDA spending, mostly from farm subsidies, but with small reductins in SNAP as well. The bill eliminates direct payments, reduce other commodity payments, cuts conservation programs, and also limits the SNAP energy allowance (although in a way that saves less). It replaces direct payments with a risk assurance program that costs less, although this is largely dependent food prices remaining elevated as they are in CBO's baseline projections.

These two bills can be compared to the President's budget, which cuts agriculture spending by $26 billion. The budget is more similar to the Senate bill. It eliminates direct payments and replaces them with a disaster assistance mechanism, while it reduces crop insurance subsidies and conservation programs. The budget also creates various user fees for agriculture-related services. All of those savings are netted against an extension of the temporary SNAP benefit increase for a year and funding for the Secure Rural Schools program.

It is important to note that under the sequester from the 2011 Budget Control Act, low-income programs under SNAP would be spared, but various farm subsidies would absorb an estimated $15 billion of cuts through 2021.

Each Congressional bill takes a step in the right direction toward additional savings, but each one also has disappointing aspects. The House bill abandons the current bipartisan consensus for some spending cuts to agriculture subsidies, instead leaving them untouched. The Senate bill does reduce agriculture subsidies, but it changes the subsidy mechanism from direct payments to risk assurance, with the potential for cost increases well above what is projected if food prices are lower than CBO expects.

However, both Houses deserve credit for offering new ideas to reduce the budget deficit.