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

Report No: 577
Date: 06/05/2002

  1. LAW NUMBER: P.L. 107-171 (H.R. 2646)

  2. BILL TITLE: Farm Security and Rural Investment Act of 2002

  3. BILL PURPOSE: Extends and expands federal agriculture and nutrition programs, including farm income support, conservation, credit assistance, trade, marketing assistance, rural development, and research programs.

    4.  

  4. OMB ESTIMATE: P.L.107-171 provides additional farm income support payments to producers for commodity programs including: new counter-cyclical payments; existing fixed, decoupled payments; and existing marketing assistance loans and loan deficiency payments. The Act also provides additional funding for other agricultural programs, including conservation, farm credit assistance, rural development, and research programs. In addition, the Act restores and expands the Food Stamp Program benefits to certain legal immigrants and simplifies the program administration. The Act also provides additional funding to expand other nutrition programs, including commodities for soup kitchens and food pantries, farmers' markets for the elderly, and child nutrition programs.

    5. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Agriculture...................... 2,233 9,845 11,023 10,453 9,229 8,150
    Nutrition.......................... 151 350 430 612 695 744
    Net costs..................... 2,384 10,195 11,453 11,065 9,924 8,894

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Agriculture...................... 1,544 7,992 9,381 9,565 9,107 8,436
    Nutrition.......................... 69 414 473 647 760 817
    Net costs..................... 1,613 8,406 9,854 10,212 9,867 9,253

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. CBO estimates net costs of the Act at $ 49.2 billion over the period 2002 through 2007, $4.7 billion less than the OMB estimate of $53.9 billion. Of the $4.7 billion difference, $3.0 billion is due to differing price assumptions and baseline loan rate assumptions, which affect the cost of the new counter-cyclical program and the existing marketing loan and loan deficiency payment programs. The remaining difference is largely the result of different assumptions regarding how a new conservation program, the Conservation Security Program (CSP), is going to be implemented (OMB assumes $1.1 billion more in outlays), and, to a lesser degree, differences in spend-out rates for other conservation programs. OMB's estimates of CSP outlays differs with CBO in two main areas--the total amount of agricultural acres enrolled, and the rate acres are brought into the program.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Outlay effect.............. 2,204 34,370 35,866 34,897 19,143 9,894
    Receipt effect............ 0 -86,866 -106,319 -107,744 -126,474 0
    Net costs.................... 2,204 121,236 142,185 142,641 145,617 9,894