Crop subsidy payments reduced; other programs frozen or eliminated...President Obama revealed his $3.8 trillion budget for 2011 today, which calls for $53 billion in tax cuts and $50 billion in job-creating measures. The USDA, like many other departments, has had the budgets of a number of its programs frozen or eliminated. But the budget fully funds the government's expected requirements for USDA's three major nutrition assistance programs - WIC, the National School Lunch Program, and SNAP, and proposes $10 billion over ten years for the Child Nutrition and WIC programs.
At a moment in time when child nutrition is getting more attention than it has ever had, and First Lady Michelle Obama is leading the administration-wide campaign to combat childhood obesity, having fully funded federal nutrition programs is critically important, because more than 30 million children participate in federal feeding programs each day. Still, there will be much discussion of the budget numbers in the coming months; child advocates have been lobbying for years to get far more funding than currently exists for federal feeding programs, especially for school lunches. The budget changes in crop subsidy payments for what the USDA identifies as "wealthy farmers" could also cause much controversy, too.
Agriculture Secretary Tom Vilsack issued a statement calling the 2011 budget a "reflection of reality."
"This budget uses taxpayer dollars wisely, taking common-sense steps that many families and small businesses have been forced to take with their own budgets," Sec. Vilsack said. "We are investing in American agriculture and the American people without leaving them a mountain of debt. We care deeply about farmers and ranchers and have worked hard to maintain the agricultural safety net, while instituting some targeted reductions in farm program payments."
The budget also invests more than $1 billion for efforts to reduce foodborne illnesses from USDA-inspected food products, another area that is very important for all Americans. (Above: President Obama discussing the 2011 budget today in Washington, flanked by Treasury Secretary Tim Geithner and OMB director Peter Orszag)
Crop subsidy levels and other changes
The largest of the "targeted reductions" is a proposal to reduce commodity crop payments to wealthy farmers. A similar proposal caused a firestorm of controversy for the 2010 budget, when President Obama first suggested it, and was eventually dropped from consideration. No doubt there will be the same level of controversy for the 2011 budget.
The line-item for reducing subsidy payments, on page 71 of the budget, seeks to reduce Direct Payments to wealthy farmers from $40,000 to $30,000 per person per year. Direct Payments are cash outlays from USDA that are made to farmers based on historic levels of production, regardless of whether they are currently producing crops. There's also a new definition of "wealthy farmers;" it used to be those whose average gross income from activities related to farming, ranching or forestry was $750,000 annually, and now it is those who make $500,000. The proposal is intended to allow USDA to target payments to those who need and can benefit from them most, while at the same time "preserving the safety net that protects farmers against low prices and natural disasters." The thinking behind the current cap is that USDA commodity payments "distort production and drive up the value of farm land." They do.
The 2011 budget makes one other mention of commodity payments: Peanut and cotton farmers will receive no further compensation for storing their crops when these are put under loan with USDA. Peanuts and cotton are the only two commodities that have received this kind of funding (p. 17).
However, the new budget also sets limits on USDA's Community Facilities Grants (p. 72), which were recently earmarked into USDA's Know Your Farmer, Know Your Food (KYF2) program, which supports local farmers and farm to school food sourcing. The 2011 budget calls for $30 million for the grant program, down from $45 million in 2010, and includes no funding for either the specialized community facilities grants, called the economic impact grants, or the set-asides. Last August, in advance of the launch of KYF2, Deputy Agriculture Secretary Kathleen Merrigan sent out a memo to USDA employees, calling for creative use of the Community Facilities Grants for things like farmers markets, boosting farm to school programs, and community cooking classes, which are important for families to eat more healthfully. At the moment, it's unclear what impact the $15 million reduction of the grants will have on any of these programs.
The 2011 budget also reduces the funding for USDA's Capital Improvement and Maintenance Program by $100 million (p. 68). The administration is also proposing that the Market Access Program (MAP) be reduced by 20 percent in 2011 (p. 84), because it overlaps with other USDA programs, in particular the newly launched Government Export Initiative, which President Obama announced in his State of the Union Speech. Exporting goods will have little direct impact on Mrs. Obama's campaign, however.
There will be no new funding, as well as cancellation of an existing $75.5 million balance for new facilities for USDA's Agricultural Research Service, which has outlets around the country. The budget cites this as replicated funding; research can be accomplished in already existing facilities (p. 63). On p. 61, the budget proposal calls for cancelling USDA's Watershed and Flood Prevention program, because it has a lower economic return than other Federal flood prevention programs. Farmers being protected from flooding is important, but apparently USDA has not been accomplishing this well enough to warrant further funding. On p. 46, the budget terminates USDA's Resource Conservation and Development Program, because it has "outlived its need for Federal support." USDA will also no longer receive Public Broadcasting Grants, which fund the digital transmission of USDA radio and video programs to media outlets (p. 41). On page 36, USDA's Multifamily Rural Demonstration Program gets ditched, because it has outlived it's usefulness. P. 30 eliminates High Energy cost grants because it replicates an existing program.
USDA is also tossed out of the healthcare business with the termination of the Health Care Services Grant Program. The Administration proposes to support health care services in rural areas through Department of Health and Human Services (HHS) programs and eliminate the duplicative Department of Agriculture (USDA) Health Care Services grants program. "USDA.. unlike HHS, has no expertise providing grants for health care services." (p. 28) Lastly, the budget proposes termination of USDA's Economic Action program, because it duplicates existing programs (p. 19).
*Download a full copy of the budget terminations here [PDF]; there's more information on what gets funded here. Getty Photo.
