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OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 509
Date: 06/30/00

  1. LAW NUMBER: P.L.106-224 (H.R. 2559)

  2. BILL TITLE: Agricultural Risk Protection Act of 2000

  3. BILL PURPOSE: Authorizes a comprehensive reform of the federal crop insurance program, provides assistance for agricultural market loss, and includes other provisions pertaining to biomass research and development, plant protection, and inspection animals.

  4. OMB ESTIMATE: P.L. 106-224 prohibits OMB from including all but the crop insurance reform costs in the PAYGO scorecard. Therefore, only the crop insurance spending increases of $6.8 billion over the 2001-2005 period are subject to PAYGO. The other costs that are exempt from PAYGO total $7.2 billion over the five-year period. A significant portion of this total is income assistance payments to agricultural producers in 2000 and 2001. The remaining costs are the net impact of providing various research programs, purchasing additional school lunch commodities, using school lunch applications to identify children eligible for Medicaid and the State Children's Health Insurance Program (SCHIP), and improving oversight of the Child and Adult Care Food Program.

    5. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlays subject to PAYGO:
    Crop insurance............................ 0 739 1,408 1,480 1,565 1,633
    Outlays not subject to PAYGO:
    Agricultural assistance and other.. 5,500 1,670 6 13 25 20

     

  5. CBO ESTIMATE:

    6. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlays subject to PAYGO:
    Crop insurance............................ 0 672 1,489 1,606 1,682 1,770
    Outlays not subject to PAYGO:
    Agricultural assistance and other.. 5,500 1,493 65 31 20 4

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. The difference between OMB and CBO's PAYGO estimates is the result of different assumptions regarding the effect of increased crop insurance subsidies on buyer behavior.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlay effect.............. 34 640 1,306 1,372 1,457 1,524
    Receipt effect............ -8 -620 -698 -746 -781 -768
    Net costs.................... 42 1,260 2,004 2,118 2,238 2,292

    *$500,000 or less.

    NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.