Reviewing CBO’s Baseline for First Trillion-Dollar-Plus Farm Bill

Reviewing CBO’s Baseline for First Trillion-Dollar-Plus Farm Bill

Increased cost of TFP alone greater than all other farm program spending combined

The following is a slightly edited version of analysis of the CBO forecasts from Senate Ag Committee Republicans. Note: Given the time-sensitive nature of this information, some estimates may change upon further clarification from CBO. February 2023 baseline cost estimates reflect the 10-year period beginning with fiscal year 2024, and comparisons to the May 2022 baseline use the 10-year period beginning with fiscal year 2023.

For the 10-year period beginning with fiscal year 2024, the Congressional Budget Office (CBO) projects total outlays for USDA Mandatory Farm Programs, Conservation Programs, and the Supplemental Nutrition Assistance Program (SNAP) total approximately $1.4 trillion, an increase of nearly 65% or $559 billion from the score of the 2018 Farm Bill at enactment, and 10%, or $126 billion, higher than the May 2022 10-year baseline projections.

Once outlays related to the Inflation Reduction Act (IRA) are included with other miscellaneous farm bill titles, the total cost of the 2023 Farm Bill is expected to approach $1.5 trillion. And if current projections hold, the 2023 Farm Bill would be the first trillion-dollar-farm bill in U.S. history.

Nutrition

Based on the 10-year period of 2024 to 2033, SNAP spending is nearly 82% larger than the 2018 Farm Bill score at enactment of $663 billion. A large portion of the increase is due to the administration’s re-evaluation of the Thrifty Food Plan (TFP) which resulted in a quarter-trillion-dollar increase in SNAP benefits from July 2021 to the May 2022 baseline. In the most recent baseline, CBO increased its estimate of outlays for SNAP by $93 billion over the 2023–2032 period for technical reasons. The technical reasons include higher enrollment in SNAP and recognizing USDA’s ability to increase SNAP benefits administratively in future 2026 and 2031 reevaluations of the TFP (see the GAO report on USDA’s mishandling of the most recent TFP reevaluation).

Combining the costs of the TFP re-evaluation in August 2021 of approximately $266 billion with the most recent increase in scoring for 2027 and 2031 (following a TFP reevaluation), the increased cost of the TFP alone is estimated to be greater than all other farm program spending combined, i.e., well over $300 billion in TFP adjustments relative to approximately $225 billion in agriculture- and conservation-related programs.

Farm Programs and Conservation

As it relates to farm programs such as crop insurance and commodity programs, crop insurance outlays including delivery expenses, premium cost-sharing, and underwriting gains across fiscal years 2024 to 2033 are projected at $97 billion, representing 7% of total expected outlays and up 22% from the May 2022 baseline due to changes in crop acreage insured, crop price expectations, and the growth in participation in livestock-related policies.

Outlays for commodity support programs such as Price Loss Coverage (PLC), Agriculture Risk Coverage (ARC), Dairy Margin Coverage, and Livestock and Tree Disaster Programs, among others, are estimated at $62 billion across fiscal years 2024 to 2033, approximately 4% of the total score and only 1% higher than the May 2022 estimate. For ARC and PLC specifically, outlays are expected to increase to $16.7 billion, from $11.8 billion, and to $31.9 billion, from $31.5 billion, respectively. The increase for ARC and PLC reflects recent increases in commodity prices and the use of Olympic moving average prices in administering each program. These increases in ARC and PLC were offset by reductions in outlays related to the dairy safety net and livestock-related disaster programs.

Outlays for conservation programs, not including additional budget authority and outlays related to the IRA, such as the Conservation Reserve Program, the Environmental Quality Incentives Program, or the Conservation Stewardship Program, among others (and including sequestration) are estimated at $57.5 billion across fiscal years 2024 to 2033, down 3% from the May 2022 baseline and largely due to a 10% reduction in estimated CRP outlays. Notably, USDA Conservation Program outlays funded in the Inflation Reduction Act were unchanged in the February baseline from the original CBO score of IRA. When including IRA outlays with farm bill-related outlays, total outlays related to conservation total $74 billion.