Agriculture Secretary Tom Vilsack said Wednesday that the level of cuts farmers face in safety-net programs because of sequestration “is still up in the air,” but the cut would fall in that 6.8% to 7.3% range unless Congress acts to avoid those budget cuts.
The agriculture secretary took the opportunity to criticize further cuts to farm-program payments and the impact those could have on producers. DTN reported earlier in the week that Agricultural Risk Coverage and Price Loss Coverage payments would be lower because of budget sequester.
“Your question basically outlines why sequester is such a bad idea,” Vilsack told DTN. “You have a situation where producers are coming in now, signing their contracts for ARC and PLC, and technically, they would be subject to a 7.3% reduction under the sequester law that is in effect for items that are obligated before Sept. 30.”
Yet, Vilsack noted that a farmer coming into the same FSA office on Oct. 1 and signing up a different farm under a different program would see those payments subject to a 6.8% reduction. “It underscores how goofy this idea is.”
Vilsack said his instructions to Farm Service Agency leaders are to be as equitable as possible in dealing with producers and sequester cuts. “We’re working through the process of trying to figure out what that means and trying to fit it through the technical rules of sequester,” he said. “We haven’t yet finished that process. Obviously it will be finished before the end of the month.”
Sequestration was passed by Congress in 2011 and spells out specific percentage cuts for mandatory and discretionary federal programs. The White House budget proposal earlier this year called for getting rid of sequester. “If you are adamant about maintaining budget cuts but you want increased defense spending, then you ought to increase domestic spending by a like amount,” the ag secretary said.
Under sequester, federal payments obligated for fiscal year 2015 are required to take a 7.3% cut while payments under fiscal year 2016 are required to take a 6.8% cut.
Farmers have until Sept. 30, to enroll in the Agricultural Risk Coverage or Price Loss Coverage commodity programs that they elected earlier in the year. According to a statement from USDA’s Farm Service Agency public affairs, once farmers are enrolled, then they’re eligible to claim payments that will be made after Oct. 1.
ARC-PLC payments are capped at $125,000 for an individual or $250,000 for a married couple with both spouses eligible for payments. Under a 7.3% cut, a couple hitting the ceiling on ARC payments, for example, would see those payments reduced $18,250. With a 6.8% cuts, those payments would be $17,000 lower.
Farm groups are getting engaged in drafting letters to both Congress and USDA expressing concern about the impact of sequester cuts. A lobbyist for one farm organization said the group hadn’t considered the impact of sequester cuts until DTN’s article earlier in the week.
Vilsack said the best option that could happen is for Congress to do away with sequester. He added, “At this point in time I’m not sure what Congress’ intention is, but the reality is sequester doesn’t allow you to make priorities and it creates circumstances where people are treated inequitably. It hurts programs that are doing a good deal of good and disproportionately hurts a department like the Department of Agriculture that has had to absorb, on top of sequester, additional reductions.”
The sequester battle also is playing out at a higher level as Congress again has struggled to pass funding bills for federal agencies. As of now, Congress only has nine working days to pass a federal budget before fiscal year 2016 begins on Oct. 1.
White House spokesman Josh Earnest was asked Tuesday if President Barack Obama would be willing to shut down the government if Congress doesn’t change sequester spending levels. Earnest said the president wants a budget that ensures the economy and national security “don’t have to suffer from the mindless austerity that was brought about in the sequester.”
When pressed, Earnest added, “The president’s position on this has been very clear that he will not sign into law a budget bill that would lock in sequester levels of spending.”
Even if the White House succeeds in getting Congress to drop sequester for fiscal year 2016, farmers could still face a 7.3% payment reduction if it’s ruled that their ARC-PLC payments were obligated for 2015 instead of 2016.