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Tax Legislation and the Specter of Sequestration on the Farm Bill

A recent analysis by the Congressional Budget Office (CBO) has raised concerns about the potential impact the Congressional tax bills could have on farm programs and the farm bill. In short, the concern raised is that if the tax bills increase the deficit by $1.5 trillion over 10 years, existing statutory requirements for sequestration and Pay-as-you-go (PAYGO) would require automatic reductions to offset the deficit increases. The following reviews the issue from the perspective of the potential implications for farm programs, crop insurance, conservation and the upcoming farm bill debate. Sequestration is triggered automatically. OMB's role is to calculate and implement it, as well as to issue reports to Congress. Recent sequestration reports under the 2011 BCA provide examples but not the full scope of the potential concern for the farm bill.The next farm bill will be written using the 10-year baseline estimated by CBO in 2018. Therefore, the concern is that sequestration would eliminate the entire baseline for commodity programs, as well as a substantial portion of the baseline for conservation programs.

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Farm Doc Daily