Vilsack Blogs About Obama's Deficit Plan

Transcript: No mention of proposal to eliminate Direct Payments to farmers... 
Agriculture Secretary Tom Vilsack issued no statement on Monday after President Obama released his deficit reduction plan, which includes a proposal for some big changes and cuts to USDA programs. Instead, Vilsack today published a post on both the White House and USDA blogs, re-assuring America's hardworking farmers, ranchers and growers that the plan is good for the nation. The President's plan, Vilsack wrote, is bipartisan, and "sets us on a path to compete by asking everyone to pay their fair share, while investing in the innovation and economic opportunities we need to win the future." (Above: Vilsack holds a copy of the American Jobs Act, which is paid for under the President's proposal)

"The plan will strengthen our disaster assistance programs," Vilsack wrote. "After witnessing flood, drought, hurricanes, tornadoes and wildfires this year – I am even more certain of the importance of this component of the safety net."

Vilsack also praises plans to streamline crop insurance programs, as well as reduce federal subsidies to these, and he notes that the three percent budget cut proposed for conservation programs "challenges us to leverage our still-significant investments in conservation to attract more private sector investment."  But the Secretary doesn't mention the elimination of Direct Payments to farmers, which could be the most contentious part of the President's proposal.

The Administration says more than 50 percent of Direct Payments go to farmers who earn $100,000 or more annually, whether or not they actually grow crops, and eliminating these payments will save $3 billion annually.

Direct Payments "a lot of times pay large farms for crops that they don't grow," President Obama said on Monday.

"Taxpayers continue to foot the bill" for farmers who "are experiencing record yields and prices," the Administration notes in the text of the President's plan.

Asking high-income Americans to "pay their fair share" is something the President and Administration officials have repeated over and over in recent weeks.

"This is not class warfare. It’s math," President Obama said on Monday. "The money is going to have to come from someplace. And if we’re not willing to ask those who've done extraordinarily well to help America close the deficit and we are trying to reach that same target of $4 trillion, then the logic, the math says everybody else has to do a whole lot more."

Under that thinking, eliminating Direct Payments is not Agri-class warfare, it's math.

The President's proposal got trounced on Monday in a joint statement from Representative Frank Lucas (R-OK), Chairman of the House Agriculture Committee, and Senator Pat Roberts (R-KS), Ranking Member of the Senate Agriculture Committee, but they didn't mention the elimination of Direct Payments, either. Download the President's full plan [PDF].

Vilsack's full blogpost:

Lessons From The Farm To Strengthen America

A week ago, President Obama released the American Jobs Act, a specific plan to jumpstart our economy and put Americans to work today. It contains ideas that both parties in Washington have supported. And yesterday, he laid out a plan that will pay for it – and for other long-term investments we need to stay competitive – while reducing our deficits.

His plan takes a balanced approach. It looks for savings across government. And it asks everyone to do their part and pay their fair share so we can live within our means.

For agriculture, the plan focuses on what the President and I believe is one of the most pressing challenges facing producers right now: maintaining a strong safety net and disaster assistance programs that will work for all farmers and ranchers, no matter what they produce or where.

The plan will strengthen our disaster assistance programs, which are currently set to run out of funding at the end of the month. It means that farmers knocked down by natural disaster can get their operations back on track. After witnessing flood, drought, hurricanes, tornadoes and wildfires this year – I am even more certain of the importance of this component of the safety net.

By modernizing our crop insurance program and making modest changes to the subsidy that crop insurance companies receive, we’ll make sure that we improve the programs and implement them more efficiently.

The plan proposes reducing conservation funding by 3 percent to help control the deficit. But it challenges us to leverage our still-significant investments in conservation to attract more private sector investment so we don’t lose ground in our effort to conserve soil and water resources.

Farmers and ranchers have worked over the years – especially following the farm crisis of the 1980s – to reduce their debt but thrive by investing wisely, adapting, innovating, and cutting back when necessary. Agriculture shows us that by investing wisely and cutting wisely, we can grow the economy for the long term, and get our country’s fiscal house in order.

The President’s plan follows that mold. It will invest to create jobs now, maintaining a strong safety net and creating a better market for our agricultural goods. And it sets us on a path to compete by asking everyone to pay their fair share, while investing in the innovation and economic opportunities we need to win the future.
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*USDA photo by by Christopher Rolinson/StartPoint Media, Inc, taken at Point Park University in Pittsburgh, PA, on Friday, September 16, 2011.

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National Sustainable Agriculture Coalition Responds To President Obama's Deficit Plan

Today the National Sustainable Agriculture Coalition issued a statement about President Obama's proposed cuts and changes to agriculture programs, unveiled Monday as part of his deficit reduction plan. The NSAC is an alliance of grassroots organizations that advocates for federal policy reform to advance the sustainability of agriculture, food systems, natural resources, and rural communities. Policy Director Ferd Hoefner issued the statement, which includes a letter [PDF] that will be sent to the Super Committee, as well as a nine-page document that details NSAC's 2012 Farm Bill Platform [PDF]. The GOP Ag response IS HERE.

NASC's statement:

Washington, D.C. September 20, 2011 -- The National Sustainable Agriculture Coalition urged the congressional deficit reduction or super committee today to take a policy and reform-oriented approach to reducing total farm bill spending while renewing investments in underfunded areas including new farmers, rural development, conservation, renewable energy, agricultural research, and new market development.

The NSAC letter to the Committee urged them to resist further cuts to farm conservation beyond the $2 billion Congress has already cut since the 2008 Farm Bill, to place hard caps on farm commodity and crop and revenue insurance subsidies, to end subsidies for the conversion of prime grasslands, to renew funding for critical mandatory farm bill programs that have no secured baselines after the end of the current farm bill cycle in 2012, and to protect anti-hunger programs from cuts.

A more detailed nine page document accompanies the letter and includes the full scope of the NSAC farm bill budget proposal.

NSAC Policy Director Ferd Hoefner contrasted the NSAC view with the farm bill cuts proposed by President Obama yesterday:

The Obama proposal holds promise, especially in the call for the end of direct payments. The farm bill cuts the President offered, however, are disproportionate to the size of the farm bill budget relative to total federal mandatory spending. In addition to the unfair size of the cut, the Administration proposal has three other problems.

First, the Administration would cut direct payments without offering a new alternative safety net proposal, even while proposing to leave a largely failed disaster program in place at a very substantial total cost equaling roughly half of the total savings. Disaster assistance should be built into the new safety net at a significantly lower cost, and eliminated as a free-standing program.

Second, all of the subsidies they do propose to leave in place are available without any effective limit on the size of the subsidy any one farm can receive. As such, they would focus the cuts on small and mid-sized farms, while allowing the largest farms continued access to the loopholes currently written into law to largely avoid the cuts that apply to everyone else.

Third, they do not take account of the dire need to put money into farm, food, and rural programs that create jobs, new business opportunities, and new healthy food options but that have shrinking or soon to be non-existent budgets.

The NSAC proposals by contrast would keep farm bill cuts at more equitable levels, target cuts so that the largest and wealthiest farms would actually have to contribute to deficit reduction, and align spending policies with widely supported public values with respect to increasing farm and rural economic opportunity, conserving natural resources and protecting the environment, and improving access to healthy food.

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Sen. Roberts, Rep Lucas Give GOP Response To Agriculture Proposals In Obama's Deficit Plan

"The President turns a deaf ear to America’s farmers"...
Representative Frank Lucas (R-OK), Chairman of the House Agriculture Committee, and Senator Pat Roberts (R-KS), Ranking Member of the Senate Agriculture Committee, today issued a joint statement in response to President Obama's deficit reduction plan, which includes changes and cuts to agriculture programs that will reduce the deficit by $33 billion, according to the Obama Administration.

"The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us," Lucas and Roberts said. "The President does nothing to address waste, fraud, abuse, and other integrity issues within nutrition programs, which account for 80 percent of USDA spending."

House Agriculture Committee Ranking Member Collin C. Peterson (D-Minn) and Senate Agriculture Committee Chairman Debbie Stabenow (D-MI) did not issue statements about the President's plan.

Lucas and Roberts' full statement:

"The agriculture community remains willing to do its part in getting our fiscal house in order, but, in essence, President Obama’s plan for economic growth and deficit reduction is not credible.

The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us. For example, cutting $8 billion from the crop insurance program puts the entire program at risk. We have heard again and again from producers that crop insurance is the best risk management tool available. In jeopardizing this program, the President turns a deaf ear to America’s farmers.

Meanwhile, SURE [the largest disaster aid program] has not worked as intended for most crops, but the President proposes extending it. The President only proposes a $2 billion cut, roughly three percent, to conservation despite his claim that conservation spending has increased 500 percent through the years. And, the President does nothing to address waste, fraud, abuse, and other integrity issues within nutrition programs, which account for 80 percent of USDA spending.

Ultimately, cuts to agriculture must reflect its diversity across the country, respect the challenges producers face, and preserve the tools necessary for food production."

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President Obama's Deficit Reduction Plan Eliminates Federal Subsidies For Farmers

Five-part plan for agriculture/rural cuts and changes proposed, because "Taxpayers continue to foot the bill" for farmers who "are experiencing record yields and prices," the Administration says...
"Farmers represent the best of the American dream," President Obama declared on Friday. But this morning in the Rose Garden, the President revealed that farmers who have been living that dream with the help of federal agriculture subsidies will be out of luck under his new deficit proposal, which provides $2 trillion in changes to entitlement programs and tax increases over the next decade. Thanks to a booming Ag economy, Direct Payments to farmers are "no longer defensible" and will be eliminated, saving the Government $3 billion annually, according to the Administration. The President's plan also reduces subsidies to crop insurance companies; better targets agriculture conservation assistance; extends mandatory disaster assistance; and targets Medicare support for rural providers (all fully explained below). These measures will reduce the deficit by $33 billion, the Administration says. (Above: The President during his remarks)

"We reform agricultural subsidies--subsidies that a lot of times pay large farms for crops that they don't grow," President Obama said during his remarks. "We have to cut what we can’t afford to pay for what really matters."

The plan "pays for the President’s jobs bill and produces net savings of more than $3 trillion over the next decade, on top of the roughly $1 trillion in spending cuts that the President already signed into law in the Budget Control Act – for a total savings of more than $4 trillion over the next decade," the White House notes.

The President said that changing agriculture payments and other entitlements is crucial to balancing the budget and growing the economy; the plan, he said, "makes additional spending cuts that need to happen if we’re to solve this problem."

The President previously proposed capping agriculture subsidies in 2009, which was never enacted due to outrage from farm-state lawmakers and interest groups. Most recently, Mr. Obama discussed the need for capping ag subsidies during his Rural Economic Forum in August, in Iowa. Farmers who also happen to be millionaires will be subject to the President's proposed "Buffett Rule," a tax increase for those who earn more than seven figures annually, a crucial part of his plan to raise revenue. The President didn't offer details of the new rule, named for billionaire financier Warren Buffett, nor did Treasury Secretary Tim Geithner during a follow-up briefing with reporters. Download the President's full plan [PDF].

UPDATE, 5:30 PM: The GOP response to the agriculture proposals IS HERE.

1. Eliminating Direct Payments to farmers
Eliminating Direct Payments to farmers will save the government $3 billion annually, the Administration says, and calls these payments "no longer defensible" thanks to recent boom years in the agriculture sector, which includes a net farm income forecast that is 31 percent higher than the 2010 level.

"Taxpayers continue to foot the bill" for farmers who "are experiencing record yields and prices," the Administration notes in the plan.

Direct payments provide producers with fixed annual income support payments for having historically planted crops that were supported by Government programs, regardless of whether the farmer is currently producing those crops—or producing any crop. Direct payments do not vary with prices, yields, or producers’ farm incomes. More than 50 percent of direct payments go to farmers who earn $100,000 or more annually, the Administration notes, and among other problems, these payments make it difficult for new farmers to purchase land.

"In a period of severe fiscal restraint, these payments are no longer defensible," the Administration says.

The Administration defends eliminating direct payments to farmers by noting that "Farm income has been high and continues to increase, with net farm income forecast to be $103.6 billion in 2011, up $24.5 billion (31 percent) from the 2010 forecast—the highest infla- tion-adjusted value for net farm income recorded in more than 35 years. The top five earnings years for the past three decades have occurred since 2004, attesting to the profitability of farming this decade."

2. Reduce subsidies to crop insurance companies
Noting that "crop insurance is a foundation of our farm safety net," the Administration proposes "streamlining" administrative costs and changing the way crop insurance rates are calculated in order to save money. The Administration says that crop insurance is "highly subsidized" and costs the Government approximately $8 billion a year to run: $2.3 billion per year for the private insurance companies to administer and underwrite the program and $5.7 billion per year in premium subsidies to the farmers.

The President's proposal includes a four-pronged plan to trim this, with three points aimed at insurance companies, and one aimed at producers.

1. Lowering ROI: Crop insurance companies’ rate of return on investments should be reduced from 14 percent to 12 percent in order to save $2 billion over 10 years, according to the plan.

2. 2006 Cap level: Noting that the current cap on administrative expenses is based on 2010 premiums, which were among the highest ever, the Administration proposes a cap based on 2006 premiums.

"The Administration, therefore, proposes setting the cap at $0.9 billion adjusted annually for inflation, which would save $3.7 billion over 10 years."

3. More accurate pricing for CAT policies: The Administration proposes to price the premium for catastrophic (CAT) coverage policies more accurately, which will "slightly lower the reimbursement to crop insurance companies."

"The premium for CAT coverage is fully subsidized for the farmer, so the farmer is not im- pacted by the change. This change will save $600 million over 10 years."

4. Changing insurance subsidies for Producers: "Today, producers only pay 40 percent of the cost of their crop insurance premium on average, with the Government paying for the remainder," the Administration notes, and proposes to "shave two basis points off any coverage premium subsidy levels that are currently offered above 50 percent. This would save $2 billion over 10 years. Farmers who have premium subsidies of 50 percent or less would not be affected.

3. Better targeting for agricultural conservation assistance
The Administration proposes to slash conservation funding by $2 billion over 10 years by better targeting funding to the most cost-effective and environmentally beneficial programs and practices.

While noting that private sector conservation efforts need to be supported, the Administration says that the 500 percent increase in funding since the 2002 Farm Security and Rural Investments Act has "led to difficulties in program administration and redundancies among our agricultural conservation programs." High crop prices have strengthened market opportunities for farmers, as well as decreased the need for government to fund conservation initiatives.

"Even under this proposal, conservation assistance is projected to grow by $60 billion over the next decade," the Administration notes.

4. Target Medicare support for rural providers
The plan notes:

"Given the importance of Medicare to rural seniors, the program provides special payments to rural hospitals and doctors. Some of these payments, however, are not justified and threaten to undermine those that are. The proposal would better target Medicare’s Critical Access Hospital program and eliminate the new special add-on payments to providers in some, but not all, rural States – saving $6 billion over the next decade from the $60 billion Medicare is expected to spend on supplemental payments to rural providers."

5. Extend mandatory disaster assistance
To be eligible for federal farm disaster aid for crop losses related to weather, insects, or other catastrophes, farmers will be required to purchase crop insurance. The full text of this component:

"The Administration strongly supports disaster assistance programs that protect farmers in their time of greatest need. The Food, Conservation, and Energy Act of 2008 provided producers with mandatory disaster assistance programs for the 2008 to 2011 crops. To strengthen the safety net, the Administration proposes to extend these programs, or similar types of disaster assistance that are of a similar cost, for the 2012 to 2016 crops.

The programs provide financial assistance to producers when they suffer actual losses in farm revenue, loss of livestock or the ability to graze their livestock, loss of trees in an orchard, and other losses due to diseases or adverse weather. To be eligible for the programs, farmers must purchase crop insurance. The Supplemental Revenue Assistance Program provides whole farm revenue coverage to farmers at a revenue level that is essentially 15 percent higher than their crop insurance guarantee. Payments are limited so that the guaranteed level cannot exceed 90 percent of expected farm income in the absence of a natural disaster."
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The President's Rose Garden remarks:



*Photo by Pete Souza/White House

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