Debt Deal Debate Continues, Takes Aim at Direct Payments

July 29, 2011 Bookmark and Share

With just days until the U.S. runs out of borrowing capacity to pay its bills, Congressional leaders appear unable to reach a compromise that could prevent default, and at least one serious proposal is taking aim at direct payments to agricultural producers.

At press time, the impasse continued on Capitol Hill, with little hope for either a plan proposed by House Speaker John Boehner (R-Ohio), the Republicans’ most senior Congressional leader, or that proposed by Senate Majority Leader Harry Reid (D-Nev.), the Democrats’ most senior Congressional leader.

Late Thursday evening, it became clear Boehner would not have the votes in his own caucus to pass his proposal, which is considered not dramatic enough by hard-line conservative Republicans and all-too-dramatic by Democrats, including those in control of the Senate.

Reid’s plan faces the opposite reviews – too liberal for Republicans, meaning it would almost certainly not pass the House of Representatives.

Another disturbing development for agriculturalists surfaced this week with regard to the Reid proposal – it’s inclusion of severe cuts to direct payments as a cost-saving measure.

The proposal as outlined would reduce the percentage of base acres on which direct payments are made. Under the 2008 Farm Bill, direct payments will go to landowners with historic base acreage at a rate of 85 percent of that acreage for most of the bill’s life. The Reid proposal would cut that rate to 59 percent in years 2012-2021, which produces a savings of $11 billion according to the Congressional Budget Office (CBO).

While that price tag is on the low end of rumored cuts to ag programs, there is no guarantee they would be the only money taken from the safety net. The $11 billion in cuts now, while not felt until the conclusion of the 2008 Farm Bill, would erode 2012 Farm Bill budget baseline, which is already facing extreme reductions. And, NAWG and other agricultural groups strongly oppose cuts being made by Congressional leadership rather than the agriculture committees with program jurisdiction.

Since the Reid proposal emerged, NAWG policy staff and president Wayne Hurst, a wheat producer from Idaho in town for other meetings, have been on Capitol Hill daily to press opposition to any proposal to cut the 2008 Farm Bill – which is a contract between the government and agricultural producers who have planned around it – before it expires next year, particularly without program prioritization by the House and Senate Agriculture Committees.

At a hearing this week held by the House Agriculture Committee to examine Title I programs in advance of the 2012 Farm Bill, Members also expressed near unanimous opposition to cuts directly to farm programs in the safety net.

While NAWG’s Board of Directors has not yet endorsed 2012 Farm Bill priorities, the Association has historically supported direct payments because they are predictable, reliable and the most trade-friendly of current farm programs. They are also helpful to producers seeking operating credit in a time of multiple weather problems and an uncertain national economy.

To read more about NAWG’s budget priorities, including a recent commodity coalition letter on the issue, please visit www.wheatworld.org/budget.