USDA programs face billions in looming cuts

Feb 8, 2013

President Barack Obama asked Congress last Tuesday to rethink the automatic, across-the-board spending cuts set to take effect March 1.

Farmers could see cuts in farm programs and less opportunity to enroll in some conservation programs if the budget cuts typically referred to as “sequestration” go into effect.

The president argued that “deep, indiscriminate cuts” would slow down the economic recovery and cost jobs.

Obama said budget cuts could be packaged with tax reform, which implies a push for more federal revenue.

“There is no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn’t come together to eliminate a few special-interest tax loopholes or government programs that we agree need some reform,” the president said.

Members of Congress countered Tuesday that they have repeatedly attempted to fashion another alternative to the sequester cuts, but have failed. Republicans also rejected a push for more revenue.

The sequester cuts over 10 years would add up to just under $1.2 trillion. That effectively comes from $55 billion annually out of the Department of Defense, $11 billion annually out of Medicare, and another $44 billion annually out of all other federal programs.

USDA would have to cut nearly $2.47 billion over the last six months of the federal fiscal year if the acrossthe-board cuts go into effect.

Republican members of Congress rejected Obama’s call for delays, saying the president was merely searching for another avenue to increase taxes.

House Speaker John Boehner, R-OH, issued a statement noting that the president first pitched the sequester idea. “Republicans have twice voted to replace these arbitrary cuts with common-sense cuts and reforms that protect our national defense,” Boehner said. “We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes. The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.”

Sen. Charles Grassley, R- IA, also commented that sequestration is “less than ideal,” but neither the White House nor the Senate have been able to work out an alternative.

“The pile of cans that have been kicked down the road under the watch of the president and the Senate majority leader would be worth a lot of money in Iowa, where you get 5 cents for every can you turn in,” Grassley said. “There’s nothing funny, though, about the fact that both short- and long-term spending problems are being virtually ignored by the president, even when it’s so obvious the harm it does to future generations and to getting the economy turned around so we can create jobs today. Even so, the president is asking for more tax increases in place of spending reductions. The grassroots knows that spending is the problem. The reality is you can’t raise taxes high enough to fix the budget impact of the entitlement programs. And, Washington failing to address fiscal problems works against the certainty and confidence needed to build a stronger economy.”

USDA isn’t providing details on exactly how sequester cuts would be made.

When asked about specific cuts on Tuesday, a USDA spokesman referred DTN to the White House Office of Management and Budget (OMB). The OMB media office did not respond to an inquiry.

But an OMB report issued last fall stated spending on mandatory farm programs would be cut 7.6 percent, or about $469 million, for the current fiscal year, or about $4.7 billion over 10 years. Given the lion’s share of commodity funds are flowing through the $5 billion-ayear direct-payment program, it’s likely that’s where the cuts would occur.

Most agencies and programs across the federal government would take an 8.2 percent cut in the discretionary budget. But programs in the federal budget helping low-income people would be exempt. That would include the line items for school lunches and the Supplemental Nutrition Assistance Program, formerly known as food stamps.

However, some programs for low-income people would face cuts. Women, Infants and Children (WIC), another supplemental food program, is classified as discretionary spending. WIC could face a $543 million cut, which nutrition advocates say would cut as many as 900,000 women and children from the program. The WIC cut is the single biggest line item in the USDA cuts.

Crop insurance appears to be largely exempt from cuts under the sequester, though the Risk Management Agency would take a $10 million cut this year.

The report also stated agricultural disaster programs would face a $104 million cut. Yet, Congress has already gone further by failing to fund any of the major disaster programs for 2013.

OMB also cites that $289 million would be cut from conservation programs, though USDA would honor contracts already obligated for programs such as the Conservation Reserve Program.

Bloomberg reported on Monday that the number of inspectors at meatpacking plants would be reduced under sequestration cuts as well. Bloomberg quoted Agriculture Secretary Tom Vilsack saying there would be fewer inspections. The Food Safety and Inspection Service would face $87 million in cuts for the current year.

In an interview last month, Vilsack said the cuts would be worse coming in March because USDA would already be halfway through its budget year. Thus, the cuts would be more severe because there would be less time to implement them.

Some reports state as many as 800,000 employees across the federal government would be furloughed.

According to a White House OMB report last fall, these would be the agency cuts at USDA:

• Agricultural Marketing Service, $94 million

• Agricultural Research Service, $90 million

• Animal and Plant Health Inspection Service, $92 million

• Economic Research Service, $6 million

• Farm Service Agency, $790 million

• National Agricultural Statistics Service, $13 million

• National Institute of Food and Agriculture, $39 million

• Food Safety and Inspection Service, $87 million

• Food and Nutrition Services, $573 million

• Foreign Agricultural Service, $149 million

• Forest Service, $430 million

• Grain Inspection Packers and Stockyards Administration, $6 million

• Natural Resources Conservation Service, $289 million

• Risk Management Agency, $10 million

• Rural Development, $15 million

• Rural Housing Service, $124 million

• Rural Utilities Service, $48 million

An OMB report on sequestration cuts can be found at Chris Clayton, DTN