Fast Facts on the Debt Deal & What It Means for the Farm Bill

On August 2 President Obama signed the Budget Control Act that allows the U.S. to raise the debt limit by $2.1 trillion and starts the process of cutting about $2.1 trillion in spending over the next ten years.

Almost $1 trillion in cuts will come from capping spending on discretionary programs through the annual appropriations process over the next ten years.  Another $1.2 trillion in savings will be recommended by a Joint Select Committee on Deficit Reduction composed of 12 members of Congress; six Democrats and six Republicans, three each from the House and the Senate. This Select Committee can recommend tax reforms to increase government revenue as well as program cuts to achieve the savings necessary over the next ten years.

The Committee will present their plan to the Congress around Thanksgiving. If the Committee does not agree on a plan, if the plan does not pass Congress, or if the President vetoes it and the veto is sustained, there would be automatic across-the-board cuts beginning in January 2013. This process is called sequestration. Cuts to achieve these savings would be divided between defense and domestic programs. 

A number of key entitlement programs are exempt from sequestration including:

• Social Security
• Medicaid
• SNAP
• Child nutrition
• Supplemental Security Income (SSI)
• Refundable tax credits including the Earned Income Tax Credit (EITC)
• Veterans’ benefits
• Medicare except for limited payment cuts to providers and insurance plans

Farm commodity programs, however, would be subject to cuts through sequestration, which raises interesting question for members of the Committee on Agriculture.

Each authorizing committee has been tasked with providing the Select Committee with a plan to reduce spending under their jurisdiction by October 14. The Committee is to distill these suggestions, write and present its plan by November 23rd, and it will be voted up or down by December 23.

This mandated cost-cutting process essentially begins the Farm Bill process and Agriculture Committee staffs in both the House and the Senate have begun serious work. The competition among different sectors of agriculture for reduced dollars will be fierce, and the high costs of the SNAP program (now serving more than 45 million Americans a month) makes it a tempting target, too.

It is possible that there could be a sort of mini-Farm Bill process this fall to authorize the cuts to be made for debt reduction. Conceivably, the legislation could cover just the titles affected by budget cuts and be followed next spring by a more thorough process that would consider all the titles and make programmatic tweaks to the accommodate reduced resources.

The bottom line for advocates is that now is the time to finalize legislative priorities and begin clearly and consistently articulating them to members of Congress while they are home on the August recess.  The environment in Washington, D.C. is of strict austerity, so cost-free program improvements or new ideas that serve multiple constituencies and create jobs and economic stimulus will be what representatives will be seeking. Big ideas with costly price tags will have to wait until the next time around.

(For more information on the sequestration process, see the Center on Budget and Policy Priorities’ excellent summary.)