The federal government narrowly avoided a debt default when Congress passed the President Biden-Speaker McCarthy brokered compromise, the Fiscal Responsibility Act, to extend the debt limit. Absent a deal, the federal government would not have been able to borrow money, effectively shutting down the government and creating turmoil in global financial markets. Jonathan Coppess with the Department of Agricultural and Consumer Economics at the University of Illinois details the compromise bill and how it could impact farm programs and agriculture spending by the federal government in a recent farmdoc daily article.
Unlike previous legislation raising the debt limit, the 2023 version suspends the limit through January 1, 2025. In other words, the federal government can borrow any amounts necessary to fund government through the beginning of 2025 with no limit. A new limit will be established on January 1, 2025, based on the amount borrowed up to that point. The bill also places caps on discretionary spending. Coppess says the caps would apply to farm bill program areas like rural development, agricultural research, and farm loans, but would not apply to mandatory programs like farm payments, conservation programs, and SNAP.
A rescission or capture of unspent funds appropriated by Congress for the COVID-pandemic is included in the bill which Coppess says could apply to approximately $57 million provided to the USDA. And the bill phases in an increase in the age for which adults without dependents must comply with work requirements to receive SNAP benefits from 51 years of age to 55 years. The legislation also removes work requirements for homeless individuals, veterans, and those under 24 years of age who spent time in foster care. The Congressional Budget Office estimates the SNAP changes altogether will increase total benefits.
Renewal of the 5-year farm bill is to be discussed in Congress this year. A question for many in agriculture is how the debt compromise might impact these discussions. Agriculture leadership in the House and Senate have said the debt compromise should smooth the path to renewal because SNAP revisions will now be off the table. Yet, the discussion of farm bill renewal will occur under the shadow of spending more than $1 trillion on programs authorized under the bill. A fact that will surely garner attention from fiscal hawks. Moreover, the debt compromise could remove flexibility in funding non-discretionary programs. As always, it should make for interesting farm bill discussions. For more details on the debt deal and potential impacts to agricultural spending, go to: https://farmdocdaily.illinois.edu/2023/06/reviewing-the-debt-limit-deal.html