Sequester deal eliminates direct payments, renews disaster aid

Published on: Feb 14, 2013

Currently, sequestration cuts are slated to take effect on March 1 if Congress and the Administration cannot agree to a plan that saves revenue and replaces the across-the-board spending cuts. Senate Democrats revealed details of a plan Thursday that would cut defense spending and net farm bill spending each by $27.5 billion over the coming decade.

Without new action by Congress, sequestration will cut farm commodity and conservation programs by some $7 billion and reducing every USDA discretionary program by 5%.

In the Senate's plan, the total elimination of direct commodity production subsidies yields $31 billion, but the bill also reinvests $3.5 billion to pay for a full farm bill extension, including the programs left stranded by the earlier partial farm bill extension plus disaster assistance for 2012 and 2013. The unfunded programs include renewable energy, rural small businesses, value-added agriculture, new and beginning farmers, conservation, specialty crops, organic farming, minority farmers, and local food producers.

The plan would also raise an additional $55 billion by closing two tax dodges and placing a minimum tax on millionaires to counteract the effect of tax loopholes, to raise an additional $55 billion. The automatic budget cuts known as sequestration would be delayed until January 2014, in hopes that in the meantime a larger long-term deficit reduction deal could be reached by Congress and the White House.

It also requires a quarter of the savings to come from the defense budget, half of what would occur under the sequestration requirements.

Senate Agriculture Committee chairwoman Debbie Stabenow (D., Mich.) said the decision allows agriculture to do its part of deficit reduction, while avoiding the "irrational and irresponsible cuts" that come with across-the-board sequestration. Eliminating direct payments was overwhelmingly agreed upon in the farm bill discussions last year.

She said the estimated savings from including the elimination of direct payments "frees up" the committee to write a farm bill without the fight over how much money can be saved. "That doesn't mean we won't debate other cuts or changes, but this satisfies the deficit reduction goal we've had as a committee."

Stabenow said she expects the Senate to take up the bill once returning from its Presidents' Day recess before March 1.