Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Opening Statement of Chairman Lucas at Business Meeting to Consider H.R. 6083, the Federal Agriculture Reform and Risk Management Act
Tamara Hinton, 202.225.0184
Good morning. Thank you all for joining us to consider the Federal Agriculture Reform and Risk Management Act.
Consideration of this bill is the next step in the process of authorizing the 2012 Farm Bill, and I appreciate the efforts of my colleague, Ranking Member Collin Peterson, and the bipartisan nature in which this legislation was written.
I am and will always be a farmer and a rancher. While my wife now heads our cow/calf operation in Oklahoma, my mind never leaves the farm. I know how risky it is to make your living as a farmer. I still check the weather every day, usually multiple times a day because I know at a moment’s notice a dream crop can turn into a disaster.
Our goal was to give producers choices to better manage risk, whether it is through improved crop insurance products, a new revenue program or through a price protection mechanism.
I’ve said this many times before, but it is worth saying again: a safety net is written with bad times in mind. These programs should not guarantee that the good times are the best, but rather that the bad times are manageable.
In general, the bill provides deficit reduction and reform. It is a tough farm bill, but a fair one. We face huge deficits and the heavy burden of debt. We needed to go deeper in finding savings and we needed to do it in a more balanced way. At the end of the day, the FARRM Act will contribute more than $35 billion to deficit reduction with $14 billion coming from the farm safety net, $6 billion coming from conservation programs, and $16 billion from nutrition reforms.
This bill is a culmination of years of work. We started the process of holding 11 comprehensive audit hearings - focusing our attention on the U.S. Department of Agriculture - to look for ways to improve programs for farmers, increase efficiency, and reduce spending.
We then went out to the countryside this spring to hear directly from producers in the field. This was a continuation of the field hearings held when Mr. Peterson was Chairman.
Finally, we wrapped up the hearing series in Washington where we gathered agricultural leaders to discuss their policy priorities. The information we gathered from those hearings have led us to where we are today: to consider a bill that is balanced, reform-minded, and fiscally responsible; to consider policy that works for all regions and all crops; to consider improvements that increase program efficiency, integrity, and accountability.
Reducing government spending and reforming government programs is never an easy task. We face difficult choices, but it is our responsibility to cut costs and improve program efficiency so that we can once again live within our means.
The FARRM Act includes numerous reforms. Not only does it reduce the deficit by $35 billion, but it also repeals or consolidates more than 100 programs. Specifically, it repeals direct payments. In the past, I have defended direct payments because they are an effective and trade-compliant way to help producers manage price, production, and cost risk. The direct payment has been a lifeline for a lot of farmers. But there were no sacred cows. If it cost money, it was on the table for cuts. Ultimately, we decided to repeal direct payments because the size of the cuts we are making made it impossible to keep them. In fact, beyond the marketing loan program, we repealed all current farm programs now in place, which saves taxpayers over $14 billion.
We also made historic changes to the conservation title. This is a title that has been close to my heart for a long time. Instead of the piecemeal approach we have used for years, we made a comprehensive overhaul of conservation programs, which eliminates duplication and improves efficiency. We consolidated the current 23 programs to 13. This saves $6 billion.
We also close loopholes and eliminate fraud, waste, and abuse in the Supplemental Nutrition Assistance Program or SNAP. Some say the cuts we propose to food stamps are not enough, while others say the cuts are too much. I believe most Americans would agree a two percent cut to food stamps is reasonable.
I’d like to be clear that this legislation will not prevent families that qualify for assistance under SNAP law from receiving their benefits. We are working to better target the program and improve its integrity so that families most in need can continue to receive nutrition assistance.
We do that in a number of ways:
First, SNAP’s resources have been stretched because this administration has encouraged states to take liberties in how the program is administered.
Some states are making nominal Low Income Home Energy Assistance Program (LIHEAP) payments to households so that they get an income deduction to help them receive a higher amount in SNAP benefits. In practice, that means that states can game the system by sending a $1.00 check which can trigger an increase of up to $130 in SNAP benefits. Closing this loophole ensures that both LIHEAP and SNAP are targeted to the families who need assistance.
Similarly, most states have implemented categorical eligibility for SNAP, which means that any household who benefits from a low-income assistance program is automatically eligible for SNAP benefits. Some of these benefits can be as simple as providing a household with a pamphlet or access to a 1-800 number hotline. When states implement categorical eligibility, these households do not need to meet SNAP asset or gross income tests.
This provision changes nothing for households that qualify for the program under the rules of SNAP law, and those households will continue receiving the benefit level for which they qualify. Families that receive cash assistance can still take advantage of categorical eligibility for SNAP. But by ensuring that only cash assistance triggers SNAP eligibility—and not other benefits like brochures —we can save billions of dollars over 10 years.
We’re also trusting states to do their job in administering SNAP. Currently USDA awards $48 million per year to states for improving program efficiency. We all support good government efforts, but taxpayers cannot afford to pay bonuses to states that are essentially just doing their job. The FARRM Act ends state performance bonuses.
The bill also cracks down on waste, fraud, and abuse by ending SNAP benefits for lottery winners and providing additional resources to USDA to prevent trafficking of benefits.
To further the goal of targeting nutrition programs for those families in need, the FARRM Act increases assistance for our local food banks, which have been struggling during the current economic climate. Food Banks have been successful in effectively using government dollars and securing private-sector donations to feed the hungry.
I urge you to approve this common sense, reform-minded approach. It is a balanced bill that underscores our commitment to production agriculture and rural America, achieves real savings, and continues to provide nutrition assistance for needy American families.