Thursday, October 27, 2011

Farm policy and the Super Committee

It is possible -- but not certain -- that the major "Farm Bill 2012" decisions will be made sooner than expected, in November, 2011.  Critics of the process are calling it the "secret Farm Bill" with "no accountability."

Everybody involved in farm policy had been expecting the next Farm Bill to pass in 2012 or 2013. However, the strange new Congressional Joint Select Committee on Deficit Reduction -- the "Super Committee" -- may make the important decisions very soon.

The Super Committee process is confusing.  Here is my summary of the key points.

If the Super Committee succeeds, Congress promises to swallow a laxative.

As part of the recent fight over raising the debt ceiling, Congress delegated a peculiar and almost unprecedented decision option to the bi-partisan Super Committee. This committee's power comes from its option to make a recommendation before Thanksgiving on $1.5 trillion in deficit reduction over ten years. If the committee succeeds in making a recommendation, Congress has agreed to give the proposal an up-or-down majority vote, with no filibusters.

If the Super Committee fails, Congress promises to swallow a poison pill.

If the Super Committee fails to make a recommendation, there will be ferocious mandatory across-the-board deficit reductions.  Congress has already passed these reductions, with a conditional trigger stating that they kick in when the Super Committee fails to make a proposal.

The Super Committee process may or may not leave the Agriculture Committees out of the loop.

Out of the $1.5 trillion in deficit reduction over ten years, the Super Committee is expected to take perhaps $23 billion in savings from farm subsidies and nutrition programs that are normally included in the Farm Bill.  Leaders on the House and Senate Agriculture Committees are tempted to move quickly in the next two weeks on their own Farm Bill proposals, so that at least the composition of the cuts will be decided by traditional farm policy leaders rather than by the non-farm-policy people on the Super Committee.  Philip Brasher reports this week that deficit hawks suspect that the traditional farm policy leaders can find a way to sneak weaker and more easily reversible cuts into the supposed $23 billion savings.

If the Farm Bill is essentially decided this month, what will it look like?  It would in that case probably include cuts or elimination of direct subsidy payments (which don't depend on commodity prices).  It might or might not include some traditional deficiency payments (which pay farmers only if market prices are lower than a target price), but these subsidies don't matter much right now one way or the other, because commodity prices are currently high and quite likely to stay that way for a while.  The most interesting open question is whether a rushed Farm Bill will include some type of strange insurance mechanism, perhaps even more convoluted than the complex ACRE program.

What to monitor:

So here are the three decisions to watch in the next month, one of the most exceptionally intense periods of food policy decision-making I have ever witnessed.

1.  Will traditional farm policy legislators in the House and Senate Agriculture Committees this month submit their own proposed Farm Bill, with about $23 billion in cuts over ten years, in time for the Super Committee to consider it?

2.  Will the Super Committee exercise its option to make a highly influential deficit reduction proposal of $1.5 trillion over ten years before Thanksgiving?

3.  If the Super Committee does succeed in making a proposal without Agriculture Committee input, will traditional farm policy legislators fight it, or will it represent a sort of coup-d'etat in U.S. farm policy, demoting the traditional deal-makers to bystanders?

And here is one more decision to watch in the longer run.

4.  If the Super Committee does not succeed in making a proposal, how will the slower Farm Bill process in 2012 be affected by the across-the-board mandatory cuts?

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