The Congressional Budget Office (CBO) as expected late Friday, Aug. 2, released an official House farm bill cost estimate indicating that the House Agriculture Committee’s farm bill would increase the federal budget deficit by $33 billion over the next decade.
The CBO’s report estimates that the farm bill will cost $1.25 trillion over the 2025-2033 period, with a net increase in the federal budget deficit by $33 billion. The primary driver of this increase is the cost of several commodity program provisions, which are expected to rise significantly due to higher reference prices in the Price Loss Coverage (PLC) program and other enhancements.
Commodity Credit Corporation (CCC) Provision
A contentious provision in the bill aims to suspend USDA’s use of Section 5 under its Commodity Credit Corporation (CCC) spending authority. This section essentially acts as a revolving fund used by the USDA to address various agricultural challenges. House Agriculture Committee Chair GT Thompson (R-Pa.) proposed reallocating this authority to boost farm subsidies and crop insurance premium subsidies by between $50 billion and $53 billion over ten years.
However, CBO estimates potential savings from suspending this authority to be between zero and $8 billion, far short of the needed amount. The CBO’s skepticism stems from the provision’s ambiguous language, which could be interpreted in multiple ways, making it unclear whether it would effectively prevent USDA from spending funds under Section 5.
Political and Legislative Implications
The funding gap highlighted by the CBO could force House Republican leaders to either direct the CBO to revise its budget estimate or modify the legislation to align with budget constraints. Any attempt to direct CBO could lead to political backlash and is unlikely to be accepted by the Democratic-controlled Senate.
The House bill includes several enhancements to existing programs:
• PLC and Agricultural Risk Coverage (ARC) programs: Expected to increase payments by $34.9 billion and $9.7 billion, respectively.
• Dairy Margin Coverage Program: Costs would rise by $300 million due to updates in eligible production amounts.
• Federal crop insurance program: Costs would increase by $3.5 billion due to higher premium subsidies and administrative funding.
Conversely, the bill proposes cuts to the nutrition title, saving an estimated $29.4 billion by imposing restrictions on future updates of the Thrifty Food Plan, which sets Supplemental Nutrition Assistance Program (SNAP) benefits.
Of note: CBO’s analysis of the House farm bill language would zero out the sugar program over time. “There was a technical, clerical error in the introduced bill that will be fixed prior to the bill moving to the floor,” said Rob Johansson, Director of Economics and Policy Analysis at American Sugar Alliance. Farm bill writers say efforts will be made to correct any misunderstanding if the House farm bill gets to the floor for debate and votes. The CBO score would then be $58 million.
Reaction:
Thompson expressed dissatisfaction with the CBO’s scoring, particularly regarding the savings from suspending Section 5 of the CCC Charter Act. Thompson believes the CBO’s methodology underestimates the potential savings and has criticized the CBO for what he sees as a history of underestimating CCC outlays. He argues that the House farm bill is designed to provide significant investments in various agricultural sectors, including the farm safety net, biosecurity, and trade promotion. Thompson insists that more work is needed to ensure the bill is financially sound and can be passed into law.
Senate Ag Chairwoman Debbie Stabenow (D-Mich.) has been critical of the House Republican proposal. She argues the CBO score reveals the bill is not financially viable, relying on what she describes as “magic math and wishful thinking.” Stabenow emphasizes the need for a bipartisan agreement that includes realistic negotiations on funding investments for various components of the ag sector. She has called for her Republican colleagues to engage in serious discussions to find viable funding solutions and has expressed her willingness to explore creative funding options outside the traditional farm bill framework. Republicans stress that unlike the House, Stabenow has not officially filed a new farm bill in the Senate, just pages of summaries.
Outlook: Thompson has indicated a willingness to work with CBO and the Budget Committee to clarify the interpretation of the CCC provision and address the funding gap. However, the top Democrat on the House Ag Committee, David Scott (D-Ga.), and Senate Ag Chairwoman Debbie Stabenow (D-Mich.) have called for abandoning the current version of the bill due to its budgetary implications.
