The Hagstrom Report

Agriculture News As It Happens


Farm bill filed; CBO score reports $23.6 billion in savings

The Congressional Budget Office has released a score saying that the 2012 farm bill would cost a total of $969 billion between fiscal years 2013 and 2022, $23.6 billion less than if the 2008 farm bill were extended.
Sen. Debbie Stabenow, D-Mich.

Sen. Debbie Stabenow, D-Mich.
Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich. filed the bill late Thursday, noting that she and Senate Agriculture ranking member Pat Roberts, R-Kan., had co-authored it and that the Agriculture committee approved it by a vote of 16 to 5 on April 26.

“This bill has strong bipartisan support from senators across the country and I am looking forward to beginning floor consideration soon," Stabenow said in a news release.

In a signal that she and Roberts are still negotiating with southerners who are dissatisfied with the bill, Stabenow added, "We look forward to continuing to build on the Senate farm bill’s broad bipartisan support to enact a farm bill this year before the current one expires.”

The bill is expected to come up on the Senate floor in early June.

The CBO savings estimate exceeds the $23 billion that congressional farm leaders have said is their goal for savings, and raises the possibility that spending could be raised slightly through amendments on the Senate floor.

The CBO has estimated that the commodity program would cost $43.2 billion over 10 years, $19.8 billion less than under current law, while the crop insurance program would cost $94.6 billion, $5.1 billion more than under current law.

The bill makes popcorn a program crop for the first time.

The bill also contains a crop insurance supplemental coverage option known as SCO that would allow farmers to combine farm-level crop insurance coverage with crop insurance based on county-level coverage. This option would be subject to a deductible of 21 percent of expected revenue for farmers participating in the Agricultural Risk Coverage program or 10 percent of expected revenue for farmers not participating in the ARC program, CBO said today.

USDA would pay 70 percent of the premium for the SCO policy.

A Stabenow spokesman said today that the committee agreed to clarify that the SCO program contains a 10 percent deductible so as to ensure that the overall bill continues to save $23 billion.

The supplemental nutrition assistance program, better known as SNAP or food stamps, which is by far the largest program in the bill, would cost $768.2 billion over 10 years, $3.9 billion less than under current law.

In explaining this savings, CBO said:

“Under current law, households qualify for a Heating and Cooling Standard Utility Allowance (HCSUA) if they provide proof that they pay heating or cooling expenses or receive any assistance through the Low-Income Home Energy Assistance Program (LIHEAP). The bill would eliminate the automatic qualification for those allowances for households who receive less than $10 each year in energy assistance, beginning in fiscal year 2014. (States would have the option to delay implementation for six months for current recipients.) The value of the HCSUA is used, along with other factors, to determine the amount of housing expenses that households can deduct from their income.”

Stabenow and others have called the use of the LIHEAP program to reduce people's qualifying income for food stamps a loophole, and CBO noted that “some states send nominal LIHEAP benefits (typically between $1 and $5, and typically only once per year) to SNAP participants to automatically qualify them for the utility allowance.”

“Based on discussions with states, CBO assumes that some states would continue to send LIHEAP benefits that meet the $10 minimum qualification to some SNAP participants, but others would discontinue that practice,” the report says. “CBO estimates that under this provision, nearly 500,000 households each year would have their SNAP benefits reduced by an average of $90 per month.”

CBO estimated that enacting the LIHEAP provision would reduce direct spending by about $4.5 billion over the 2013-2022 period, but the bill contains provisions to increase nutrition spending in other ways, so the savings is $3.9 billion.

The CBO has also estimated that the bill authorizes appropriated programs such as research, conservation and rural development that will cost a total of $28 billion over 5 years.