Page 43 - Farm Bill Series_The 7 Things You Should Know

they turned to replace the 2002 farm bill. Increases in commodity prices in 2006 – as the demand
for biofuels started to ramp up – and rising price projections in the following years, forced CBO
to lower the baseline available to the Ag committees for the 2008 farm bill.

But Democrats took control of both the House and Senate in 2007 for the first time in 12 years
and were looking to solidify their gains in rural House districts and farm states. One way to do
that was to spend more money on farmers and rural
development.

House Agriculture Chairman Collin Peterson, D-Minn.;
Senate Budget Chairman Kent Conrad, D-N.D.; and Senate
Finance Chairman Max Baucus, D-Mont., worked together
to find additional money. The fiscal 2008 budget resolution,
passed in 2007, earmarked a $20 billion reserve fund that
authorized committees to find spending and revenue offsets
for the farm bill.

Ultimately, the 2008 farm bill provided $10 billion in
additional spending over the projected baseline. The extra
funding came from customs user fees, a change in estimated
corporate tax payments and other provisions.
The 2014 farm bill: Direct payments pave the way. By
2011, as lawmakers turned to replacing the 2008 farm bill,
the budget situation was very different. In the wake of the
Tea Party rebellion, Republicans won control of the House in 2011 and forced President Obama
to cut a deal on a landmark bill, the Budget Control Act, to rein in spending and cut the deficit.

The agreement created a “super-committee” to recommend a grand plan for reducing spending.
If the super-committee couldn’t reach a deal, which it didn’t, the law called for 10 years of
automatic spending cuts, known as sequestration.

Despite the super-committee’s failure, the leaders of the House and Senate Agriculture
committees agreed on a plan to make $23 billion in farm bill cuts that were the super-
committee’s target. Under the lawmakers’ plan, $15 billion would come out of commodity
programs with the rest split between conservation programs and the Supplemental Nutrition
Assistance Program.

The key to minimizing the impact of the cuts on commodity and conservation programs was that
lawmakers had two big pots of money to work with: the roughly $5 billion in annual direct
payments that the government had been providing to grain, oilseed and cotton growers
since 1996, and the Conservation Reserve Program (CRP).

For some farmers, the direct payments had become an embarrassment when commodity prices
skyrocketed, so eliminating them was politically advantageous. More importantly, it created a
pot of money that could be used to create new, countercyclical programs that would be based on
fluctuations in commodity prices or farm revenue.

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