Government Budgeting

 Was alerted to this substack post going back in history to efforts in federal budgeting and spending.

As I commented, I didn't follow some of the argument, but it triggered memories.  Back in the old days ASCS could use CCC funds as a piggy bank and its status to bypass some restrictions.  For example, if we had a rush print job for program signup involving the notices of bases and yields and the signup form, the print branch could justify bypassing the Government Printing Office's rules by claiming the material was to implement CCC programs, enabling them to go directly to a printer. 

Details of interest only to oddball types like moi.

Data Sharing in USDA

 It's been almost 25 years since I retired. In my absence USDA has made progress in getting data sharing among agencies.  

Consider this release about Emergency Relieft Program payments. 

(I guess I'm losing my grasp on what's happening in USDA--I'm not at all clear on how these payments fit with crop insurance, NAP, or other programs.  My impression, which may well be wrong, is  that the Biden/Vilsack regime is following the precedents of the Trump administration's use of CCC funding.

The Commodity Credit Corporation Piggy Bank

 CCC was set up in the 1930's. One of the reasons was to handle the money for entitlement programs: farm programs which established payment rates for doing or not doing things without an appropriation, a cap.  

When I worked at ASCS there was still a sharp division between CCC and ASCS. CCC decisions were made by the CCC, composed of the administrators of affected agencies and the secretary's office.  There were a couple bureaucrats handling the development of "dockets" for the board, which recorded the rationale for the decision and included the regulations to be published in the Federal Register, Chapter 7, secs. 1400-1499. 

There were bureaucratic implications: if Congress passed a program with authority to use CCC facilities, it meant that the Printing and Distribution Branch could tap CCC funds to print forms and handbooks on an emergency basis and, I believe, bypass the Government Printing Office's time-consuming process. And the expenses weren't charged to ASCS administrative appropriation.

On the equipment side, similar logic applied.  If equipment could be tied to CCC operations, then it was charged to CCC and not ASCS.

As automation came along, first with programmable calculators and then System/36, etc. the IT types were able to use CCC money.

It was in the early 1990's I think that Congress, specifically House Appropriations, woke up to this loophole.  I know SCS people were jealous of ASCS ability to use CCC.  Did someone blow the whistle on ASCS?  Possibly. More likely the USDA IT office complained about ASCS/FSA bypassing them by using CCC. 

Meanwhile the different administrations have found the ability to tap CCC funds for various programs.  By now I've lost track of who has done what.  The most recent announcement is this, pilot projects for climate change.

Nondelegation Doctrine

 Volkh Conspiracy has a guest poster writing on the "nondelegation doctrine", the idea that Congress should grant power to the executive only with strict guidelines.

For anyone interested but too lazy to go to the Reason magaizine, here's my comment:

1. “Major policy decisions”? Do we know what that means? There’s a standard of economic impact of $100 million for regulations–but that’s been unchanged since it was first adopted in the 1970s in relation to inflation concerns, not policy.

   Arguable the USDA/Trump decision to spend billions from the Commodity Credit Corporation was a major policy decision. But it wasn’t particularly controversial, because it was too esoteric and there were no significant opposing voices to make a fuss. https://www.forbes.com/sites/stuartanderson/2020/01/21/trump-tariff-aid-to-farmers-cost-more-than-us-nuclear-forces/?sh=4fe7a4966c50

   I suspect the operational definition is an issue about which there’s a big fight between the parties and/or interest groups. I think the reality is such issues don’t get resolved in legislation, just kicked down the road to the faceless bureaucrats who can be blamed if they screw up and/or offend people.

   Reply 

Pushimg the Envelope--CCC

 The former guy pushed the envelope of governmental laws and norms across the board.  That included the use of the Commodity Credit Corporation authority in ways which I think were unprecedented.  He mostly escaped criticism and legal challenges because there was no one, no group whose interest would be served.  Farm groups were receiving dollars. Conservatives were blind to Trump's efforts. Members of Congress responded to the interests of their constituents. Good government groups mostly aren't interested or informed about agriculture and USDA.

It seems the Biden administration is following in Trump's footsteps, judging by their announcement of using CCC for what to me seems like a grab bag of goodies.

CCC Powers

 "While CCC operates according to a large number of statutory authorities, its broad powers allow it to carry out almost any operation required to meet the objectives of supporting U.S. agriculture"

That's from this CRS report on CCC.

I note from the report that in previous posts on CCC I missed an important element.  In response to 2009 actions by the Obama administration Congress put limits on CCC authority in FY2012-2017,  but failed to renew the restrictions in 2018 on. 

CCC and Climate Change--Carbon?

 No sooner had I written yesterday's post on CCC's past Politico issued this piece on the corporation's possible future--Vilsack might have his lawyers come up with a theory to justify using CCC funds for climate change work, specifically a carbon bank.

😉

MFP Revisited and CCC

 Three academics at U of Illinois examine some issues of the Market Facilitation Program.  As they say at one point, the questionable legality of the program is academic, because Congress didn't challenge it when they gave the Commodity Credit Corporation more money.

A history of CCC would be interesting. It was created under the New Deal, following examples from WWI and the Hoover administration of using government corporations to gain administrative flexibility, particularly IMO to evade the requirement for yearly appropriation bills passed by Congress.

USDA bureaucrats during my time used it creatively.  The administrative people used CCC authorities to go around the Government Printing Office rules to get fast printing of forms and directives when we were implementing new legislation and disaster programs.

In 1983 IIRC the Reagan administration used it for a disaster program for Texas counties which was part of a deal to get conservative Texas Democrats (which used to exist) in the House to vote for legislation.

Also in 1983 there was the Payment-in-Kind program, which used creative lawyering to transform CCC loan collateral into payments for farmers to divert acreage from production.

As computers came along, the procurement and IT people used CCC financing for computer equipment, setting off a 10-15 year battle with the Congress which ended with Congress tightening the restrictions on ASCS/FSA buying of computers.

After I retired there were further special programs authorized--I think by both the Bush and Obama administrations, but I don't remember the specifics.

No Federal Money for Tobacco, Except in Pandemic

 In 2004 when Congress provided for the ending of the tobacco program, they included a blanket provision that no CCC money could go to tobacco growers.

That was fine, except when things change.  It's 2020, an election year, and North Carolina is a battleground state, and tobacco is still important to the state, and the pandemic hit.  So USDA will provide up to $100 million to tobacco growers from the second pandemic law (CARES Act), but they'll do it bypassing CCC.   All this from here.

USDA ended most of its tobacco reporting shortly after the program was ended, but I did find it in the crop report--NC grows about half the US acreage--150,000 acres in 2018.  (Got there from a hit on a CDC publication. ) That's about a third of what we grew in 2000 and about a tenth of what China grows now.

Why No Commodity Purchase Program Under Sec. 32?

This is triggered by a twitter exchange I had today.

"Never" is a long time. While it's true they don't get direct payments, except when natural disaster destroys production. Produce farmers very occasionally get assistance from USDA purchases under Sec. 32 authority when prices have gone to hell.

— Bill Harshaw (@BillHarshaw) April 8, 2020

Back in the day USDA might have used "Section 32" authority to purchase fruits and vegetables (I don't think milk, but milk is its own complicated story) which were in temporary surplus, meaning prices were depressed below the level farmers expected/wanted/needed.  USDA purchases were intended to drive up prices, since the established programs covered only storable commodities (including milk, storable as butter and cheese).  The commodities would be donated to school lunch programs or various other food programs. (At some points in the past surplus potatoes were destroyed--see this Congressional Record reference.) For example here's an appropriations hearing in 1964 discussing the sweet potato removal program. I was never involved in administering these purchases, but ASCS/FSA was.

Of course these purchases were in response to lobbying by the producer group--if they could build the heat on USDA hot enough the Secretary would pull the trigger on the purchases, which would take the heat off until the next time. Over the years, as briefly described in this  description of the authority, the expansion of crop insurance to more crops and the establishment of the Non-insured Crop Disaster Assistance Program (NAP) (one of the reasons I retired, though that's a story for a different time) lessened its use, and in 2008 the law was changed further to restrict the Secretary's authority.

I Told You So--MFP/CCC Financing

The Rural Blog reports moderate House Democrats are willing to fund CCC, meaning it can continue to make MFP payments.

Actually my title is wrong, at least for this blog.  I know I had the thought, but I tweeted it.  Social media is too complicated.

I don't expect Rep Lowey's plan on CCC funding to last--Dems have representatives in Iowa and elsewhere to worry about. https://t.co/xLIaqC0wXa

— Bill Harshaw (@BillHarshaw) September 12, 2019

Re-upping CCC Money for MFP

Today the Post reports that Representative Lowery is not planning to include replenishing CCC's borrowing authority in the stop-gap continuing resolution   Depending on the timing, that means CCC will run out of money before it completes the full $28 billion in MFP payments.  (It's hard to find the current CCC balance.  The USDA website doesn't show it; you have to dig through the Treasury accounts to get an idea of how much is available of the $30 billion it's authorized by statute. The last time I did that, maybe 6 weeks ago, there seemed to be around $15 billion left.)

This is a followup to the Post story of a couple days ago on the rather unprecedented use of CCC for the MFP.. Unprecedented at least in terms of the size of the payments and also, IMO, in the basis for the use.

MFP II

Farm Policy blog has a post on the announcement of signup for MFP II

If I'm correct, CCC may be getting close to exhausting its borrowing authority by the end of MFP II, requiring Congress to replenish it.

Congress Reluctant on CCC Program

If China puts tariffs on soybeans and other farm commodities, there's been discussion by the Secretary and President of the possibility of providing help to affected farmers, using the authority of the Commodity Credit Corporation.  That's getting some pushback from some in Congress, including Republican bigshots according to this article by Chris Clayton .

Mistake at the Post on Food

Annie Gowen commits an error in the third paragraph of her piece on declining federal aid for food banks:

Scorching drought and rising demand across the globe have pushed the price of U.S. food exports to record highs this year.

That is good news for American farmers. But it’s bad news for the hungry, especially on the eve of the holiday season.

The booming market means that the federal government does not need to buy as many excess crops from farmers, resulting in a precipitous drop in government donations to food banks.

I may be wrong, but it seems to me the days of the government donating surplus CCC inventory were gone long before recent price rises.

FSA and CCC: the Magic Numbers

Are 8.2 and 7.6.

What does that mean? Based on a very fast skim of the OMB report on sequestration, FSA would take an 8.2 percent hit to its administrative funds, and CCC would take a 7.6 percent hit to part of its funds. I don't understand the CCC calculation but the cut amounts to $469 million, with a good portion of the $19,175 billion either exempt or offset.

[Update: Appendix B has a breakdown of sequestrable versus exempt.  Unfortunately I can't copy the text, but something called the "Discrimination Claim Settlement" is sequestrable.  Is that Pigford, or the women and Hispanic?]

The Debt Limit and CCC Payments

John Phipps notes that farm program payments made through CCC (Commodity Credit Corporation) could be impacted by failure to raise the debt ceiling. 

That fits with my memory of the old days--our release of deficiency payments would be delayed until Congress got through with the debt limit. Of course, I could be misremembering; it might be the delay was in passing language giving CCC money.  CCC has statutory authority to borrow money from the Treasury for its operations.  So if CCC writes drafts on the Federal Reserve Bank of Kansas City up to its limit, it has to suspend payments until Congress appropriates money to reimburse the Treasury.  Complicated, I know, but that's what happens when you have both lawyers and accountants messing around in your business.