Washington currently is a town with a limited focus.
“Budget and appropriations are all we talk about in D.C.,” said John Maguire, vice president for Washington operations for the National Cotton Council, during the 54th annual meeting of Plains Cotton Growers, Inc.
Maguire said the continuing resolution budget passed by the House of Representatives requested $61 billion in cuts from non-defense discretionary spending. “That’s only 12 percent of the U.S. budget,” he said.
The resolution is necessary because the last Congress did not fund the government for the entire fiscal year.
“And the 2012 budget is still to be developed,” he said. That will create even more friction as Congress is committed to “no earmarks, which could be a concern for some agricultural research programs,” Maguire said.
Congress also has to deal with the debt ceiling. Proposals currently include riders on greenhouse gas and dust rules. “The White House does not want riders in an appropriations bill,” Maguire said.
The U.S. House of Representatives will propose what is widely assumed to be an austere budget this week. “It will be far-reaching with dramatic cuts,” Maguire said.”
He said two certainties will be no activity on Social Security and no new taxes. Medicare and Medicaid may be on the table.
“Otherwise, expect deep cuts.” He said the Senate will offer a budget with less severe reductions.
Farm programs will be on the block, Maguire said. Sen. Debbie Stabenow, D-Mich., chairman of the Senate Committee on Agriculture, Nutrition and Forestry, may have an easier job holding onto farm bill funds than will Rep. Frank Lucas, R-Okla., chairman of the House Agriculture Committee.
“We could see changes in the 2008 law before we get to a 2012 bill,” Maguire said. “The budget will be the controlling force of the 2012 farm bill.”
Large spending areas untouched
Draconian cuts will leave more than 60 percent of the nation’s budget untouched. Social Security accounts for 43 percent of the budget and defense accounts for 20 percent. Food Stamps and nutrition account for 2 percent.
“And 75 percent of agricultural spending is on nutrition,” Maguire reminded the audience. “And agriculture is doing well so why should we change when the program is not costing much?”
Maguire said veteran ag committee members think the 2012 farm bill will be a tough one to negotiate. He said Georgia Sen. Saxby Chambliss expects it to be the toughest he’s ever seen.
Lot of newcomers
For one thing, both committees have freshmen members. Sixteen of 28 Democrat members on the last House ag committee were defeated in the last election. Of the 25 Republican members of the House ag committee, 16 are freshmen.
Ten of the Republican House ag committee members are from cotton states; 7 of the Democrat House ag committee members represent cotton constituents.
“We have a lot of education to do,” Maguire said.
The Senate has four new Cotton Belt senators, but no Democrat from a cotton state is on the Senate ag committee.
Maguire said the farm bill will focus on four topics: Equity, reform, duplication and simplicity.
Equity among crops and programs will be a key, Maguire said.
Reform typically means payment limitations and program eligibility.
Duplication efforts will attempt to streamline programs and eliminate or combine programs that overlap.
Simplicity is a critical effort to make programs easier to understand and manage. “ACRE is complicated,” Maguire said. “SURE is the most incredibly complicated program on the planet.
“The number one target,” he said, “will be direct payments. With prices where they are Congress will ask why they should make payments to farmers. So we’re talking margin instead of price. Costs have gone up along with prices. We see no proposals that will deliver the same benefits as direct payments.”
He said three primary philosophies exist for cuts.
- Put everything in deficit reduction. “Freshmen Republicans only hear ‘eliminate.’”
- Reduce direct payments.
- Target payments and create a payment trigger.
Modifying ACRE and continuing to shift to a revenue program may be part of the debate. Maguire said the renewable fuel blenders’ credit may not survive but could be diverted to renewable fuel infrastructure.
He said no funding exists after this year for a permanent disaster program.
Likely targets also include lower payment limitations and cuts in conservation programs. He said NCC and other agriculture interests remind Congress that agriculture took a $6 billion hit last year with the reinsurance reductions. “Do we need to cut ag more?”
He said the marketing loan is another key for the cotton industry. “It’s more valuable to cotton than it is to other commodities, and we’re trying to explain that to new members of Congress.”
And then there’s Brazil looming over farm bill debates. “We will need enough change in the cotton program to convince Brazil that they won or enough change to convince our trade representatives to fight for it.”