Spending freeze likely to affect USDA programs

Jan 29, 2010
Spending freeze likely to affect USDA programs

Like other federal departments, US- DA’s discretionary spending likely would be affected by the freeze President Barack Obama proposed last Monday and was set to discuss in his State of the Union speech on Wednesday.

A three-year freeze in discretionary programs won’t place any new caps on farm programs, which are mandatory spending programs spelled out in the farm bill. But the spending freeze proposed by the president would cap USDA’s options for discretionary spending, which is $25.6 billion in fiscal-year 2010, or about 19.2 percent of the department’s entire budget. There are discretionary funds for every USDA agency, with the largest line item, $8.24 billion, in the food and nutrition programs.

DTN contacted USDA’s press office seeking comment on the possible impacts of a freeze on discretionary spending but did not receive a response.

The freeze could limit Secretary of Agriculture Tom Vilsack’s ability to respond to certain situations, such as when he used discretionary spending authority to buy more than $150 million in pork products last year for food-aid programs to help boost the hog market.

All told, USDA’s entire department budget in fiscal 2010 is $132.8 billion. USDA’s overall budget has jumped by $42.1 billion in just the last two years, largely because mandatory spending for food and nutrition programs also has risen $30 billion over that same time period as the economy has added more people to the nation’s rolls for supplemental food aid. Congress also increased eligibility for food-aid programs in the 2008 farm bill, and eligibility for food assistance was again broadened in last year’s stimulus bill that boosted USDA’s nutrition spending by $20 billion.

USDA’s discretionary-spending authority for fiscal 2010 is about $6.2 billion less than in 2009, largely because of a $4.5 billion cut in discretionary funds for the Rural Utilities Services and a $900 million cut in discretionary funds for the U.S. Forest Service.

The only effect on farm programs would be on the Natural Resources Conservation Service (NRCS) and Farm Services Agency (FSA), but it’s not clear if those programs would have received increases in 2011. NCRS is allotted $267 million of discretionary funds. FSA is allotted $1.699 billion.

Overall, administration officials have stated the president’s plan would affect $447 billion in the federal budget, about 17 percent of spending. The freeze would generate about $250 billion in budget savings over 10 years.

An official with the White House Office of Management and Budget told reporters last Tuesday that the budget freeze will not affect job-creating programs or administration priorities such as health care reform. The president planned to talk about his proposal last Wednesday night and is expected to lay out his budget proposal Feb. 1.

White House spokesman Robert Gibbs commented in a daily news briefing that departments will look to cut duplicate programs. He also acknowledged the cuts were a minuscule amount when considering the overall projected $1.35 trillion budget deficit.

“I don’t think that this is intended to solve all of our problems,” Gibbs said. “But unless we continue to take those steps ... If we can’t make these steps, how are you going to go after stuff that we know is politically hard? How are you going to create a coalition to do that?” — Chris Clayton, DTN