Ag Policy Blog

Spending Cap Amendment Could Put a Lid on Commodity Programs

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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One of the amendments that sort of flew over my head when it was being debated on the floor Wednesday was from Rep. Virginia Foxx, R-N.C., that caps spending on the for the proposed House commodity programs at 110% of projected budget scores by the Congressional Budget Office from 2016 to 2020.

Foxx argues the Farm Risk Management Election Program --- which is combination of the Revenue Loss Coverage and Price Loss Coverage programs --- is scored to cost $23.4 billion over 10 years. Foxx argues the commodity provisions could cost much more. She noted the 2008 farm bill --- the full bill -- cost 51% more than the Congressional Budget Office projected.

Foxx called her provision the "Spending Safeguard Amendment" that she said would put a finite cap on the cost of the Revenue Loss Coverage and Price Loss Coverage programs.

"My amendment makes sure taxpayers won't be forced to pay for another costly Washington mistake," Foxx said on the House floor.

House Agriculture Committee Chairman Frank Lucas, R-Okla., and ranking member Collin Peterson, D-Minn., both opposed the amendment. Still, it passed with a 267-156 vote.

Lucas said in the floor debate he understood the restraint in fiscal spending that Foxx was advocating. But Lucas also noted the payments are capped and farmers face an income eligibility test for commodity payments. Lucas also pointed out farmers are already giving up more than $5 billion in direct payments.

"We are no longer making payments for the sake of making payments," Lucas said. Further, if the costs of the commodity program reached 110% of the CBO score, "it would only be because there is a catastrophic drop in the market."

Lucas also noted "it would be an absolutely nightmare to administer" for USDA by putting a cap on payments for crops that have different growing seasons.

"It would tie USDA in knots."

Foxx said in the floor debate she was disappointed in Lucas' response. She said the amendment would hold the CBO accountable. If the CBO is correct, then Foxx said her amendment would never go into effect. Foxx said then the House Agriculture Committee chair would come forward and explain why more money needs to be appropriated for commodity payments.

The Price Loss Coverage is more likely to be used than the current counter-cyclical program because target prices are raised for major commodity crops under the bill.

Peterson, in an interview off the House floor, said the risk of the Foxx amendment would put the entire target-price program at risk if farmers go from high prices without using the program into a price spiral.

"Say this year is good and all the prices are above target prices, but next year we have a price collapse," Peterson said. "You couldn't move the target prices if they exceeded more than 10% of what you spent this year. It could end up making it completely ineffective."

The Foxx amendment, if it survives through the final bill, would not go into effect until the 2016 crop year.

FYI, if you are a farm-bill junkie and keeping tabs on amendment votes, the Republican cloakroom website keeps a good running tab. http://repcloakroom.house.gov/…

I can be found on Twitter @ChrisClaytonDTN

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John Olson
6/20/2013 | 5:44 AM CDT
Amazing how blind many are to the criminals in congress and various farm groups that have a history of designing government schemes that guarantee the most wealthy with income and subsidies of the greatest value. Also amazing how large the severity of penalties for those who steal only a little. (the petty crimes)