Obama Budget Often Familiar, Mixed Bag in Time of Deep Deficits

February 5, 2010 Bookmark and Share

Obama Administration budget proposals released on Monday contained familiar ideas on cutting the farm safety net and a few positive surprises in the areas of research and trade, particularly in light of the federal government’s deteriorating fiscal situation.

Echoing its efforts in the FY2010 budget process to phase out direct payments and impose further payment limits on producers, the Administration proposed cutting the cap on the direct payment by 25 percent, from $40,000 to $30,000, and proposed reducing adjusted gross income (AGI) payment eligibility limits by $250,000 over three years, bringing non-farm AGI limits from $500,000 to $250,000 and farm AGI limits from $750,000 to $500,000.

These proposals were not surprising based on last year’s concepts, but enactment of either would require both Congressional support that doesn’t seem to exist and reopening the 2008 Farm Bill for debate, something most Members of Congress are loath to do.

Elsewhere in safety net programs, the Obama Administration budget assumed savings from the ongoing renegotiation of the Standard Reinsurance Agreement, the contract between USDA and crop insurance companies that deliver services to producers.

NAWG has urged both parties to negotiate in good faith to ensure the quality of crop insurance delivery is maintained under the new agreement. NAWG and other groups have also vocally supported reinvesting any savings achieved back into the program to improve coverage and maintain budget baseline that will be essential in the writing of the 2012 Farm Bill.

The proposals for export promotion programs were a mixed bag, with a proposed 20 percent cut, totaling $40 million, to the Market Access Program, accompanied by a proposed increase of $54 million under a new National Export Initiative announced in the State of the Union. As part of that initiative, the Foreign Market Development (FMD) program budget of $34.5 million would be doubled in FY2011 with discretionary money. MAP was a target of the Administration’s proposals last year as well, but was ultimately funded at the authorized level of $200 million, which NAWG and other commodity groups are also urging for this year.

The budget proposal included $429 million for competitive grants through the Agriculture and Food Research Initiative, the highest ever proposed for the program, which is authorized at $700 million, and a sign that the Administration understands the vital need for stronger investment in agricultural research. However, the budget provided no additional funding for Agricultural Research Service buildings or facilities, though the budget does include $1.75 million to create a capital improvement plan.

Two discretionary conservation programs are zeroed out in the budget, including the line item for Watershed and Flood Prevention Operations and the Resource Conservation and Development Program. A number of mandatory conservation programs would see cuts under the proposal, including the Wetlands Reserve Program, the Wildlife Habitat Incentives Program and the Grassland Reserve Program.

The Environmental Quality Incentives Program would see an increase over last year, but still be off $200 million from its 2008 Farm Bill authorization. Other mandatory programs, including the Conservation Stewardship Program and the Chesapeake Bay Watershed program, would see more funding. On the whole, mandatory Natural Resources Conservation Service programs would see an $11 million decrease, while discretionary spending would see a $45 million decrease.

Other budget highlights include $1 billion for the Food Safety and Inspection Service and $1 billion for renewable energy programs. The budget also included $19 million – an increase of 46 percent – to strengthen regulatory oversight of biotech products. Importantly, the budget included an $83 million increase in funds for USDA’s information technology systems, which are woefully out of date and, in some cases, unable to support software to implement producer programs.

As has become common, more than 70 percent of the USDA budget would go to nutrition programs. At a budget briefing Monday, USDA officials estimated that more than 40 million people would access SNAP, the food stamp program, which would see a $10 billion increase in the 2011 budget over 2010 spending.

All of these proposals will be considered by Members of Congress, who have the Constitutional authority to allocate money regardless of what is proposed by the executive branch.

More detailed information about the proposals from USDA is at http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=budget2011.xml.