Republican Study Committee Budget

Following are excerpts from the RSC budget (not Rep. Ryan's):

SUPPORT MARKET-BASED PROGRAMS BY ELIMINATING THE DIRECT PAYMENT (DP) PROGRAM.
The DP program provides cash subsidies to commodity producers, capped at $40,000 annually. The payments are based on a historical measure of a farm’s production acreage, and they do not vary based on actual production or commodity prices. Direct payments were originally established in 1996 as a transitional program. However, the subsidies have not been reduced over time.

The Washington Post estimated that between 2000 and 2006, the federal government made $1.3 billion in direct payments to people who do not even farm. Recently, the Iowa Farm Bureau proposed eliminating the DP program. While the President has called for lowering the cap in FY 2012, this plan would eliminate the Direct Payment program entirely. The savings would amount to $4 billion in FY 2012 and $50 billion over ten years. Although this non-market based program would be terminated, growers could still receive support payments from other support programs such as the Average Crop Revenue Election (ACRE) and Marketing Loan Assistance programs.

PROHIBIT NEW ENROLLMENTS IN THE CONSERVATION STEWARDSHIP PROGRAM.
The Conservation Stewardship Program (CSP) provides annual payments to producers for five years in exchange for undertaking various land improvements. However, payments under the program can be made to producers who have already undertaken conservation measures.

Beginning in FY 2012, new enrollees would be prohibited from entering into the program. This policy would result in FY 2012 savings of $35 million and approximately $10.5 billion in savings over ten years. The CBO stated that the “criteria used to determine improvements in existing conservation practices are not readily apparent, and the absence of objective measurements could result in higher payments than necessary.” The RSC’s proposed option is based on the National Commission on Fiscal Responsibility and Reform’s recommendation to put limits on this program.

PROHIBIT GENERAL ENROLLMENTS IN THE CONSERVATION RESERVE PROGRAM (CRP). The CRP was established by the 1985 Farm Bill. Its purpose is to remove land from agricultural production, and it is the federal government’s largest private land retirement program. Under the CRP, producers are paid to plant grass or trees on retired acres. Currently, approximately 31 million acres of land are enrolled in the program. The program is economically destructive and takes away farm land that could be used for things such as corn and biomass production. Beginning in FY 2012, new general enrollments in CRP would be prohibited, resulting in approximately $9 billion in savings over ten years.

REDUCE THE PREMIUM SUBSIDY IN THE CROP INSURANCE PROGRAM.
Farmers use the Federal Crop Insurance Program to protect their crops from perils by purchasing policies that are sold and serviced by private vendors. The federal government subsidizes about 60 percent of the premiums paid for this program. Beginning in FY 2012, the federal government’s subsidy would be reduced to 50 percent of the crop insurance premium. This would result in a savings of $400 million for FY 2012 and $11.8 billion over ten years. Reductions of this magnitude in the subsidy rate likely would not substantially affect the level of program participation.

ELIMINATE THE FOREIGN MARKET DEVELOPMENT PROGRAM (FMDP).
The FMDP is used by agricultural trade associations and commodity groups to help promote exports and provide nutritional and technical assistance to other countries. This program would be terminated beginning in FY 2012, resulting in FY 2012 savings of $35 million and savings of $350 million over ten years. This initiative is something that the private sector would otherwise be spending money on anyway. The private sector should be responsible for promoting its own products, as it receives the profits from the sales of these products.

ELIMINATE THE MARKET ACCESS PROGRAM (MAP).
The MAP is intended to promote overseas marketing of U.S. agricultural products. MAP funds consumer promotions, market research, trade shows, advertising campaigns, and other programs designed to subsidize the sale of brand-name products in foreign markets by private cooperatives, trade associations, and businesses. Taxpayers should not be forced to pick up the tab for this kind of corporate welfare. The National Commission on Fiscal Responsibility and Reform even targeted this program as one in need of change. This program would be terminated in FY 2012, resulting in an annual savings of $200 million and $2 billion in savings over ten years. According to the CBO, some analysts believe MAP “does not warrant additional funding because the extent to which it has developed markets or replaced private expenditures with public funds is not known.”

ELIMINATE WOOL AND MOHAIR SUBSIDIES.
The federal government first enacted price support for wool and mohair in 1947, and the National Wool Act of 1954 established direct payments for wool and mohair producers for the purpose of encouraging production of wool as an essential and strategic commodity. This support was last re-authorized in 2008 despite a complete lack of a compelling need for government support of mohair. Beginning in FY 2012, wool and mohair subsidies would be eliminated, saving taxpayers $4 million in FY 2012 and $40 million over ten years. This budget would return control over supply, demand, and price of wool and mohair to the free market.