Iowa Public Television


USDA Budget Unveiled

posted on February 10, 2006

Hello, I'm Mark Pearson. Consumers' confidence in the economy and their own financial fortunes climbed to a 16-month high as better prospects for jobs and wages rose. A consumer survey conducted by an international polling firm *showed consumer confidence up 17 points from January. More confidence may be due to a stronger labor market. *In January, businesses created 193,000 new jobs. *And the jobless rate fell to a 4 and-a-half year low of just over 4 percent. A less optimistic outlook may be said of the federal government as it faces a record deficit expected to hit $423 billion dollars this year. The Bush Administration is said to be considering asking Congress to increase the national debt limit ... which is currently capped at 8 point-184 trillion dollars. To help cope with the deficit, the Treasury department this week reintroduced long term, 30-year Treasury bonds – locking in low interest payments for the government and offering investors a relatively safe long term investment. But borrowing money won't be enough. The government also has plans to cut spending. While the president's 2007 budget would provide substantial increases in funding for the military and homeland security ... nine cabinet agencies would face budget reductions. The largest suggested cuts would be to the departments of Transportation, Justice and Agriculture.

USDA Budget Unveiled

The 2007 budget calls for a five percent cut in all direct payments, or subsidies, the government pays to farmers. In addition, the proposal would lower the cap on total payments from $360,000 to $250,000 per person and close loopholes that have allowed large rice and cotton operations to receive payments beyond current limits.

For sugar, the plan calls for producers to pay a 1.2 percent marketing assessment.

And for dairy, producers would pay a tax of 3 cents per hundredweight of milk. That assessment alone is expected to cost the average-sized dairy farm more than $700 annually.

Mike Johanns, USDA Secretary: "These proposals are made in the spirit that everybody has to contribute to deficit reduction. Now if I have one overriding vision, and I'd say this whether I was the Secretary of Agriculture or Interior or Commerce-- it's very, very clearly you can't leave a massive deficit behind."

Democrats blasted the cuts to farm programs.

Sen. Blanche Lincoln, D-Arkansas: "There is no doubt in my mind that the average American person very much wants to know they are secure in the domestic production of their agricultural food sources. We produce the safest most abundant and affordable food supply in the world. We're not going to be able to maintain that unless we support our producers with just a safety net, not a hammock, just a safety net, and the kind of backing in trade negotiations where they can be competitive in a global market place."

While farm programs seem destined to be curtailed, they account for less than 25 percent of USDA expenditures. The department's major expense -- well over 50 percent of the total budget -- is for mandatory food assistance initiatives including Food Stamps, School Lunch and the Women, Infants and Children's programs, where the Bush administration is proposing a half-a-billion dollar increase in funding.

The Bush administration is proposing cuts to farm programs that were rejected by Congress last year.

Since the President's total fiscal year '07 budget forecasts an annual deficit of $354 billion, lawmakers will be eyeing more cuts again this year. And Johanns claims the fate of American agriculture rests in the nation's ability to eliminate the red ink.

Mike Johanns, USDA Secretary: "If we don't get the deficit under control it's hard to imagine that there's a good future out there in agriculture. The two don't work together -- high deficits and the future of agriculture. It's not a fit. We've got to deal with the deficit. And again, it is never an easy thing."


Tags: agriculture Congress government news policy USDA