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CHIMPS-agriculture

CHIMPS Are Not Chump Change

Tuesday, March 3, 2015

Funding cuts in the Agriculture Committees’ mandatory spending programs in the next farm bill or from sequestration have been mainstream news for some time. The same attention has not been given to funding cuts from CHIMPSCHanges In Mandatory Program Spending enacted in an appropriations law. (See below). CHIMPS cutting the Ag Committees’ program funding is just as predictable as the farm bill cuts. Further, cuts from CHIMPS can be expected to be deeper than those from sequestration—if sequestration happens.

A major difference among the three is that cuts from the farm bill and sequestration go toward deficit reduction, while cuts from CHIMPS does not. Instead, the Appropriations Committees use CHIMPS to cut funding from the Ag Committees’ mandatory spending programs, with the savings used to offset the costs of funding their discretionary spending programs at levels higher than would be possible without CHIMPS. In theory, CHIMPS is deficit-neutral. In practice, though, some CHIMPS—those that cut and spend the same money year-after-year—actually increase the deficit.
 
How do estimated cuts compare? According to the Congressional Budget Office (CBO), enactment of the Senate version of the proposed farm bill would cut $23.1 billion over 10 years (relative to CBO’s March 2012 baseline), while the House version would cut $35.1 billion. The Office of Management and Budget (OMB) estimates that Budget Control Act (BCA) sequestration—part of the fiscal cliff—would, if not stopped, cut the Ag Committees’ “nonexempt” mandatory spending programs by $1.1 billion for FY2013. Assuming that annual cuts for each of the next eight years covered by sequestration would also be $1.1 billion, the 10-year sequestration total would be $9.9 billion.

Before looking at how much CHIMPS cuts might be, let’s look at how they work. While CHIMPS rules and impacts are complex, here are the basics. As noted above, the Appropriations Committees have for many years used CHIMPS to cut funding from the Ag Committees’ mandatory spending programs, using the savings to offset the costs of funding their discretionary spending programs at levels higher than would be possible without CHIMPS. The Ag Committees have no say on which programs get cut or by how much.  Worse, the Ag Committees get no credit for deficit reduction because no deficit reduction occurs. In addition, CHIMPS breeches the “firewall” that separates discretionary and mandatory spending programs and their different budget rules. While other authorizing committees are CHIMPed, the hit to agriculture typically is disproportionately high.

For FY2012, CHIMPS reduced total budget-year funding for Ag Committee programs by an estimated $1.632 billion. This included cutting $929 million from conservation, $116 million from energy, $144 million from nutrition, $110 million from trade and $333 million from other Ag Committee programs.

For 10 fiscal years FY2003-12, CHIMPS cut budget-year funding for the Ag Committees’ programs by $10.6 billion. CHIMPS cuts have been increasing—from $762 million in FY2010 to $1.532 billion for FY2011 to $1.632 billion for FY2012. Projecting the FY2012 CHIMPS over 10 years gives an Ag Committee budget-year funding cut of $16.3 billion—equal to 71% of the $23.1 billion in 10-year cuts from the Senate farm bill, 46% of the $35.1 billion in 10-year cuts from the House Ag Committee farm bill and 165% of the projected $9.9 billion in 10-year sequestration cuts. Yes, CHIMPS cuts are significant.

As Congress and the Administration look to reform both tax and entitlement laws, they should also look to reform budget laws and rules. Final farm bill provisions represent months of negotiations and compromises on funding for a wide range of the Ag Committees’ programs. CHIMPS overrides these funding compromises. To allow one committee to raid another committee’s funding—especially without any input from the other committee or any formal limit—is not only unfair but undermines committee jurisdiction and diminishes the legislative process. Unless the rules are changed, CHIMPS will likely increase as committee budgets tighten. After all, for the appropriators, CHIMPS is essentially a free lunch.


Craig Jagger Craig Jagger (craigjagger1@gmail.com)
President, Legis Consulting

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The views and opinions expressed in AgChllenge2050 blog posts are solely the opinions of the authors, and not those of Farm Foundation, NFP.