Senate Ag Committee: myth vs. reality

Myth #1: Past farm bills have meant big subsidies for big agriculture; this one is no different Facts: The Agriculture Reform, Food and Jobs Act is the most significant reform of American agriculture in decades. The bill ends direct payments and three other subsidy programs, saving $23.6 billion. The Washington Post said the bill is “a considerably slimmed down version of previous incarnations,” Bloomberg said the reform “represents one of the biggest policy changes in generations,” and the Wall Street Journal said “If signed into law, the subsidy cuts would mark one of the biggest changes to farm policy in years.” Myth #2: $23.6 billion in spending cuts is not enough Facts: $23.6 billion in spending cuts is more than double the amount the Simpson-Bowles commission and Gang of Six recommended in agriculture cuts. It is also more than agriculture would be cut under the super committee’s sequestration process. The portion of the budget under the Agriculture Committee’s jurisdiction is approximately 2 percent of federal outlays, and $23.6 billion is roughly two percent of the super committee’s goal of $1.2 trillion in deficit reduction— meaning agriculture is contributing its share. If every other committee came forward with this level of de"cit reduction, the super committee’s goal would be achieved. Myth #3: Crop insurance is a subsidy like direct payments Facts: Crop insurance is completely different from direct payments and other subsidy programs. Direct payments provide farmers tax dollars for crops they don’t grow, and even when farmers don’t take a loss. On the other hand, farmers pay into crop insurance, and crop insurance only pays claims when farmers suffer a loss for crops they actually grow. Ending direct payments and three other subsidy programs and transitioning to a risk management approach based on crop insurance saves taxpayers $15 billion, the bulk of the Farm Bill’s savings. Myth #4: The Senate Farm Bill cuts food assistance benefits for families in need Facts: The Agriculture Reform, Food and Jobs Act does not change the standard benefit structure for needy families. Instead, the bill reduces fraud and abuse and improves the integrity of the Supplemental Nutrition Assistance Program (SNAP) to help ensure every dollar goes to families based on need. The bill eliminates overpayments, stops lottery winners from receiving assistance, ends misuse by college students supported by wealthy parents, cracks down on benefit trafficking and helps prevent liquor and tobacco stores from accepting food assistance benefits. These changes save $4 billion in SNAP while leaving standard benefits and eligibility rules unchanged. More Information: Myth #1: Past farm bills have meant big subsidies for big agriculture; this one is no different Facts: The Agriculture Reform, Food and Jobs Act is the most significant reform of American agriculture in decades. The Washington Post said the Farm Bill “was always a bloated, contentious piece of legislation that grew larger and more expensive as it lumbered through Congress. But the farm bill that the Senate will begin debating…is a considerably slimmed-down version of previous incarnations….” And the Wall Street Journal said, “The farm bill…would cut spending by $23.6 billion over a decade, mostly by pruning payments that farmland owners get regardless of whether they plant crops… If signed into law, the subsidy cuts would mark one of the biggest changes to farm policy in years.” The bill: • Eliminates direct payments and three other farm subsidy programs and instead supports farmers only when they take a real loss. • Implements a new risk management approach that allows the market to guide planting decisions rather than having Congress set !xed prices that guarantee subsidies when market prices fall below the price Congress sets. • Caps remaining risk management support at less than half of what an individual can receive under the current system (saving tax dollars and ensuring that small family farms will receive a greater share of federal farm support). • Stops millionaires from receiving support under any circumstances. • Closes the manager’s loophole to ensure only farmers receive farm support—under the current system, individuals can be designated as farm “managers” and receive farm payments even if they never set foot on a farm. These reforms cut spending by $23.6 billion, over double the amount the Simpson-Bowles commission and Gang of Six recommended agriculture programs be cut. Myth #2: $23.6 billion in spending cuts is not enough Facts: By ending unnecessary subsidies, streamlining and consolidating programs and cracking down on abuse, the Agriculture Reform, Food and Jobs Act cuts spending by $23.6 billion. This level of de"cit reduction is over double the amount the Simpson-Bowles commission and Gang of Six recommended in agriculture cuts. It is also more than agriculture would be cut under the Joint Committee on Deficit Reduction’s (“super committee’s”) sequestration process. The portion of the budget under the Agriculture Committee’s jurisdiction is approximately two percent of federal outlays, and $23.6 billion is roughly two percent of the super committee’s goal of $1.2 trillion in deficit reduction—meaning agriculture is contributing exactly its share. If every other committee had accomplished what the Agriculture Committee accomplished, the super committee would have been successful and Congress would have achieved major spending cuts and deficit reduction. However, he Agriculture Committee was the only committee to reach bipartisan agreement on legislative recommendations to the super committee. The Agriculture Committee is coming forward with these spending cuts even after agriculture was targeted with one of the highest cuts among all areas of the budget last year. The fact is that if the Senate Farm bill does not pass and the status quo is left in place, our country’s deficit will be higher. Direct payment subsidies and three other subsidy programs we cut will continue. One hundred eliminated programs or authorizations will be left in place. The fraud and abuse the bill restricts will go on. As the Washington Post said in an editorial: “Who says that the Senate can’t get anything done? On Thursday, it voted 90-8 to open debate on a bill that could actually cut projected spending on Agriculture Department programs… Most of the $23.6 billion in savings come from eliminating such notorious subsidies as the “direct payment” program…. The cuts represent not only systemic reform but also more than twice the agriculture savings that the Simpson-Bowles commission proposed. And the Agriculture Committee approved the bill on a bipartisan basis.” – Washington Post Editorial, 6/11/12 Myth #3: Crop insurance is a subsidy like direct payments. Facts: Crop insurance is completely different from direct payments and other subsidy programs. Direct payments provide farmers tax dollars for crops they don’t grow, and even if a farmer doesn’t take a loss. On the other hand, farmers pay into crop insurance, and crop insurance only pays claims when farmers suffer a loss. The Agriculture Reform, Food and Jobs Act cuts spending by $23.6 billion overall. Cutting subsidy programs and moving to a risk management approach based on crop insurance reduces the deficit by $15 billion, the bulk of the bill’s savings. It is important that farmers—and farm jobs—are not wiped out by weather disasters. Protecting from widespread farmer bankruptcy also protects American families from sudden spikes in food prices. While many farmers and farmers’ organizations have agreed that direct payments are indefensible, ensuring affordable crop insurance is available is the number one priority of farmers to keep themselves protected. Federal crop insurance support is not money into farmers’ pockets, it’s a discount on the high premiums farmers pay to protect themselves. Major cuts to crop insurance would likely mean more spending in ad hoc disaster relief. And putting strict caps on crop insurance support could mean larger operations opting not to purchase crop insurance—raising premiums for small producers and increasing costs for taxpayers. Real reform means shifting from the current system of subsidies to a responsible risk management approach that requires farmers to have skin in the game and only qualify for support when they take a real loss. Myth #4: The Senate Farm Bill cuts food assistance benefits for families in need. Facts: The Agriculture Reform, Food and Jobs Act does not change the standard benefit structure for needy families. Instead, the bill reduces fraud and abuse and improves the integrity of the Supplemental Nutrition Assistance Program (SNAP) to help ensure every dollar is going to families based on need. These changes save $4 billion in SNAP while leaving standard benefits and eligibility rules unchanged. The Senate’s Farm Bill: • Eliminates gaps in standards to stop overpayments. Currently, a small number of states are providing individuals $1 in home heating assistance, even if they don’t have a heating bill, so they can get additional cash benefits above and beyond what similar SNAP recipients with the same expenses receive in other states. Ending this practice prevents overpayments while still maintaining standard benefits for families. • Stops lottery winners from continuing to receive assistance. In the past year, cases were uncovered in which a lottery winner accepted a large lump sum payment, then continued to (accurately) claim a lack of income while having hundreds of thousands of dollars or more in the bank. • Ends misuse by college students still being supported by non-low-income families. • Cracks down on retailers and recipients engaged in benefit trafficking. • Increases requirements to prevent liquor and tobacco stores from accepting food assistance benefits. The above savings reduce the deficit while continuing support for food banks, seniors’ food programs and healthy school lunch initiatives, as well maintaining a strong Supplemental Nutrition Assistance Program (SNAP). The Senate Farm Bill also provides funding for Double-up Food Bucks, a partnership that leverages private dollars so that SNAP recipients’ benefits are worth double their normal value when used to purchase healthy foods at farmers’ markets. The 2012 House Republican budget (a.k.a the Ryan budget) attempts to slash the food assistance program by nearly $130 billion over 10 years. The House Agriculture committee recently approved $33 billion in cuts. Unlike the Senate Farm Bill, these proposals would change benefit and eligibility requirements, rather than focusing on fraud and improving program accountability.