Lucas Statement on Obama's Budget Plan: Obama Wants Higher Agriculture

CutsChairman Frank Lucas released the following statement regarding President Obama's fiscal year 2013 budget proposal. The agriculture community remains committed to doing its part in deficit reduction.  However, this proposal shows a lack of perspective and understanding in how agriculture can realistically contribute. The Obama administration effectively rolled out much of the same budget proposals for USDA as last year, looking for $32 billion in overall budget savings over 10 years, largely through eliminating direct payments and cutting subsidies to crop insurers.
The budget recommends reducing agricultural subsidies by $30.2 billion over 10 years. Changes or "targeting" conservation programs would also lead to $1.8 billion in savings over 10 years as well.

"For example, President Obama’s proposal to cut crop insurance threatens the integrity of the program itself. The proposal for cutting crop insurance remains the same as last year, a 2% cut in the premium subsidy across-the-board. It also would change payments for catastrophic coverage and the administrative payments made to crop insurance companies.  And, he ignores other areas for savings such as streamlining or eliminating duplicative programs in conservation, or closing loopholes in nutrition spending.  Nutrition spending comprises 80 percent of the agriculture baseline and there is bipartisan support in Congress to save billions by eliminating loopholes, but not one penny is cut in the President’s budget.

"Not only does it fail to address our serious fiscal problems, but it undermines our investment in providing a stable food supply," said Chairman Frank Lucas.
Senate Agriculture Committee Ranking Member Pat Roberts, R-Kan., said the administration ignored feedback from producers who said that crop insurance is the most effective safety net. "Farmers and ranchers are ready to do their part to rein in federal spending. In negotiations last fall, we identified $23 billion in savings from U.S. Department of Agriculture programs," Roberts said. "Our work to listen to farmers and ranchers continues this week as we hold more hearings on tough issues facing farm country and how they impact producers, consumers and the taxpayers."

Tom Zacharias, president of the National Crop Insurance Services, stated that the industry has already contributed more than $12 billion in spending reductions since 2008.

"Unfortunately, the additional disproportionate reductions being proposed would weaken a crop insurance infrastructure at the very time we need it most," Zacharias said. "We fear such reductions would undermine the successful public-private partnership that was specifically designed by Congress to minimize taxpayer exposure to risk."

The crop insurance spending reductions, however, were cuts in the growth of spending for crop insurance, which continues to project higher costs over the next decade.

Farm Service Agency employees, also fearing cuts in their own offices, are pitching a proposal to shift crop insurance servicing away from companies and back to FSA office. The proposal could save $2.5 billion a year, but also counters the notion of reducing government bureaucracy and is strongly opposed by the crop insurance industry.

The president's budget proposal also would cut discretionary spending at USDA about $700 million in FY 2013, or about 3% from the current budget level. USDA's discretionary spending would be at about $23 billion.

Vilsack said about 30 programs at USDA would be affected by being eliminated or reduced in spending. "Bottom line, this department has stepped up over the last couple of years, has taken deficit reduction seriously and is instituting changes within its operations to reduce additional resources."

Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition, commented that "the Obama farm bill budget cutting proposal is not terribly interesting." Hoefner noted it follows the consensus that direct payments are going away, but offers no alternative safety net. Hoefner criticized the proposals on crop insurance and direct payments because they fail to protect smaller producers.

"Neither proposal addresses the critical issue of whether the public should be given assurances that natural resources are protected in return for their large investment in farm production subsidies," Hoefner said. "Nowhere in the President's request is any indication given that the farm bill has an important role to play in economic recovery, job creation, and improved public health through renewal of funding for innovative programs that expire at the end of 2012. Frankly, the proposals are relatively lame and not at all progressive. Clearly, all the heavy lifting is left to Congress."

Hoefner also noted the proposal would cut another $432 million out of USDA conservation spending over 10 years. The bulk of those cuts, $347 million, would come from the Environmental Quality Incentives Program.

The administration also calls for $6.1 billion in loans to rural electric cooperatives and utilities for "transition to a clean-energy generation and the creation of high-value jobs in rural America." The administration is proposing $200 million to continue developing advanced biofuels.
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