The House and Senate this week are considering legislation that would cut federal farm and food subsidies. A look at the bills:
OVERALL COST: Both five-year bills would cost about $100 billion annually, with almost $80 billion of that annual total going to domestic food aid. The Senate bill would save about $2.4 billion yearly from current spending, and the House bill would save around $3.8 billion, including about $600 million saved in each bill due to across-the-board spending cuts that kicked in earlier this year.
FOOD STAMPS: Food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, have for decades been part of the farm bill in an effort to garner urban lawmakers’ votes for rural programs. The Senate farm bill would cut about $400 million from the $80 billion annual total by targeting states that give people who don’t have heating bills very small amounts of heating assistance so they can automatically qualify for higher food stamp benefits. The House bill would cut $2 billion yearly by making similar changes and also eliminating what is called “broad-based categorical eligibility,” or granting automatic food stamp benefits when people are signed up for certain other programs.
DIRECT PAYMENTS: Direct payments, which cost the government around $5 billion annually, would be phased out in both bills, with the savings split between other subsidy programs and deficit reduction. Those subsidies have been controversial because they are paid out every year regardless of crop prices or crop yield. The Senate bill would eliminate the program immediately while the House bill would phase it out over the next two years for cotton farmers who rely on the program.
CROP INSURANCE: Both bills would increase subsidies for federally-subsidized crop insurance and create a new crop insurance program that covers smaller revenue losses on planted crops before crop insurance kicks in. This revenue protection program favours Midwestern corn and soybean farmers and would be more generous in the Senate bill.
PRICE PROTECTION: Both bills would raise what are called “target prices” for some crops. Certain subsidies kick in if prices drop to those targets, meaning farmers will only receive them if prices are low. While many of these programs haven’t been used for the last several years because crop prices have been at unprecedented highs, these subsidies exist as a safety net. Both the House and Senate bills would raise these target prices for rice and peanuts, since farmers of those crops also often depend on direct payments that would be eliminated. The House bill would raise those target prices higher than the Senate bill would, meaning it would be easier for the subsidies to kick in.
FOOD AID: Neither bill includes an Obama administration food aid proposal to shift the way food aid is sent abroad. The United States now donates much of its food aid by shipping homegrown food overseas, but the Obama budget last month proposed shifting the aid money to more flexible accounts that allow for cash purchases abroad or from U.S. farmers, saying such a move would be more efficient. Both House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., have sided with farm groups against the proposal.