The Hagstrom Report

Agriculture News As It Happens

Ryan: Cut direct payments, crop subsidies; convert food stamps to block grants

The budget proposal put forward today by House Budget Committee Chairman Paul Ryan, R-Wis., would cut the size of direct payments and crop insurance subsidies in the next farm bill and convert the food stamp program into a block grant to the states that seems similar to the one proposed by then-House Speaker Newt Gingrich, R-Ga., when the Republicans took over the House in 1995.

“With crop prices – and deficits – hitting new highs, it is time to adjust support for this industry to reflect economic realities,” Ryan said in a booklet released at a news conference about his proposal for fiscal year 2012. He proposes reducing the fixed payments that crop farmers get irrespective of price levels, and reforming “the open-ended nature of the government’s support for crop insurance so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do.”

While price-triggered subsidies have fallen with rising crop prices, the cost of insuring the increasingly valuable crops has soared.

Ryan did not provide details, but said that the proposed reforms would save taxpayers $30 billion over 10 years. He said his budget proposal would assume that these changes would not take place until the beginning of the next farm bill, and that he wants to give the House Agriculture Committee “flexibility” in writing the next bill.

Ryan also said there should be an overall cap on discretionary spending for fiscal year 2012, which would also affect agriculture programs.

On food stamp or SNAP benefits, Ryan proposed a block grant “tailored to each state’s low-income population, indexed for inflation and eligiblity beginning in 2015 after employment has recovered.” He said the aid would be contingent on work or job training.

Ryan said part of the increase in SNAP program participation from 17.3 million people in 2001 to 44.3 million today has been due to the recession, but not all. He said states have an incentive to enroll people in the program, and that he wanted to apply reforms that were used for welfare reform in the 1990s.

Capping the food block grant and giving the states more freedom to decide how to spend the money would encourage the states to reduce enrollments and help people find jobs, he said. Ryan said that the cost of SNAP is projected to be $700 billion over 10 years. A projection of SNAP-related budget savings was not immediately apparent.

In 1995, then-House Agriculture Committee Chairman Pat Roberts, R-Kansas, opposed the food stamp block grant idea, and the food stamp program was cut, but saved. The reauthorization of the food stamp program — now known as the Supplemental Nutrition Assistance Program or SNAP — in the farm bill is considered vital to garnering urban and suburban House votes to pass the farm bill. The food stamp program makes up about 70 percent of the USDA budget.