There's an old saying in Washington that it's easy to cut government programs, or programs in the private sector for that matter, when you don't understand the logic behind them or choose not to believe in it.
That's one of the thoughts that comes into mind when you read a report prepared by the Republican Study Conference, entitled “RSC FY 2007 Budget: Contract with America Renewed,” or as some wags are calling it, “The Contract on Agriculture.”
The RSC budget plan calls for reform of agricultural production programs to save an estimated $20.4 billion in fiscal years 2007-2011, with $1.3 billion of the savings proposed for 2007. The plan also calls for the elimination of the Market Access and Foreign Market Development Programs and P.L. 480 Title I.
The RSC, which is comprised of more than 100 of the 232 Republicans in the House says that in 2005, the federal government spent $2.47 trillion — 49 percent more than it spend in 1995 after adjusting for inflation.
To reverse that trend, the Republican Study Conference would eliminate or greatly reduce funding for several agricultural programs and agencies, including the Agricultural Research Service, Cooperative States Research Extension and Education Service grants like the Great Plains Sorghum Initiative and the Food for Peace programs. (To see the proposal, go to <http://www.house.gov/pence/rsc/.)
For openers, the plan would tackle the Foreign Agricultural Service, forcing a 30 percent reduction in the 97 ag attaches the Foreign Agricultural Service currently maintains at foreign posts to assist overseas development of markets for U.S. farm commodities. The attaches collect information on foreign government's policies, market conditions, etc.
“This function could be performed by the private sector that benefits from such services,” the plan says. “This proposal calls for a 30 percent reduction in such attachés and a 10 percent reduction in all other activities, except the general sales manager.”
What the plan would actually mean is that the major grain companies and commodity trading firms could continue gathering marketing information in foreign countries but farmers and “Mom and Pop” country elevators would be operating in the dark about conditions in competing countries.
Targeting agricultural research and Extension activities, the RSC says research and grants provided by USDA's Agricultural Research Service, the Cooperative State Research, Education, and Extension Service and the Economic Research Service replace funding from the private sector.
“Requiring the government to scale down this research would permit the private sector to finance more of its own research,” the RSC says. “This proposal would reduce funding by the ARS by 10 percent; it would eliminate all special research grants within the CSREES, thereby requiring all grants to be awarded competitively.”
The RSC also wants to reduce funding for the National Agricultural Statistics Service by 20 percent at a time when farmers are asking for more unbiased information on domestic crop and livestock production and market conditions, not less.
It would also reduce the budget of the secretary of agriculture by 10 percent to “eliminate unnecessary bureaucracy in the Department of Agriculture.”
The RSC paper assumes direct agricultural spending will be reduced by $20.4 billion from currently anticipated levels from fiscal year 2007 through 2011, with $1.3 billion in reductions required in FY2007.
It doesn't say what it bases those assumptions on, but notes that farmers will benefit greatly from other provisions in the RSC budget, including the extension of the 2001 and 2003 tax cuts and the elimination of the estate tax scheduled in 2010 and increased domestic drilling to lower energy costs.
“As a result of the 2002 farm bill, the farm sector is currently enjoying historic levels of federal taxpayer support,” the RSC says. “At the same time, USDA continues to pronounce that the financial state of the U.S. agriculture sector is sound.
“For instance, according to USDA: ‘The two-year rise from 2002 to 2004 of $46 billion in farm sector net income is unmatched in the history of the U.S. farm income accounts.’ USDA says that farm business asset, debt and equity values are expected to rise through the end of 2005, supported by high levels of net cash income and profit realized in 2004.”