Budget Conference Update

- from Ferd Hoefner, Sustainable Agriculture Coalition

Congress is still at a standstill over how to complete action on a set of ‘must-pass’ bills dealing with budget cutting legislation, hurricane and drought relief, and appropriations for Defense programs and Labor–HHS programs before they leave town for the end of the year.

A matrix of overlapping plots and strategies designed to get around filibusters in the Senate, and the loss of key moderate Republican votes in both chambers, have them negotiating over the size and methods for cutting programs, administering disaster assistance, and drilling in ANWR.

As all negotiations over the agriculture portion of the spending cut bill are happening behind tightly closed doors, we cannot be entirely certain about what is going on. But here is what we think we know.

Good news: the food stamp cut contained in the House bill is off the table and will not be in the final package. Bad news: the Conservation Security Program cut is at the higher Senate level, jeopardizing a 2007 sign-up.

Good news: the Value-Added Producer Grant program has been saved from a $40 million cut in 2007, which leaves authorization for funding in FY 07 intact and protects the programs baseline funding for the 2007 farm bill; $120 million in VAPG carryover funding from previous years is still cut, however.

Good and bad news: the 2-year extension of the MILC dairy payment program is included in the bill, but will not be counted as a cost to the agriculture package, which should limit the size of cuts to other conservation, rural development, and research programs, though we are also led to believe that there are still more of each in the package.

A further word on CSP – we are working on a last minute attempt to backload the cuts (frontload the funding) so that the 2006 sign-up of at least the size already announced by NRCS can proceed and so that there may be enough money left in 2007 for at least a small sign-up, keeping some momentum alive going into the next farm bill. No word yet whether this small adjustment will be accepted or not.

Commodities: The big major intrigue on the agriculture package has been on the commodity side. Senator Cochran (R-MS) is getting push back from the White House on his proposal to give commodity farmers a bonus, direct (AMTA) payment in 2006. Cochran intends to attach such a provision to the supplemental appropriations package for hurricane and drought relief that will be attached to the Defense appropriations bill (see below). He started the bidding at a 50 percent bonus, but is rumored to be down now to something closer to 20-25 percent. Even the lower percentage would still be in the neighborhood of $1 billion of additional commodity spending. (There is also a large battle being waged on the size of the disaster package, with Cochran pushing for $35 billion, the House $25 billion, and the White House $17 billion.)

We expect the final package will likely at least approach $30 billion. Most of that sum will be previously appropriated funds to FEMA reallocated to other programs and agencies. The White House opposes the Cochran direct payments bonus, and on Thursday insisted that cuts to the commodity programs in the budget cutting package be completely frontloaded to hit farmers in their entirety in 2006, rather than spreading the cuts out over the five-year life of the bill. They also insisted that the Senate extension of commodity program authority to 2011 be dropped.

House Agriculture Chair Goodlatte (R-VA) pushed the White House provisions in discussions with Senate Chairman Chambliss (R-GA), and almost immediately the major farm and commodity groups sent a letter to both chairmen opposing the frontloading and the elimination of the 2011 extension. We are told Friday morning’s meeting between the chairs ended quickly and on fevered pitch. If Cochran does not back down on a direct payment bonus, the Goodlatte-Chambliss negotiations will be saddled between the commodity groups wanting immediate relief and slow cuts and the White House insisting on major cuts in 2006.

Conference: A formal conference between the House and Senate on the budget reconciliation spending cut bill has been scheduled for Monday; however, there is still a chance the key GOP negotiators will reach a compromise this weekend and move to a floor vote without going to conference. In either event, the actual conference committee is expected to be a formality, yet another example of how nothing major in Congress is completed according to regular order anymore.

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