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Answers to Questions for the Record Following a Hearing on The Budget and Economic Outlook for 2015 to 2025 Conducted by the Senate Committee on the Budget 1 (March 4, 2015)

handle is hein.congrec/cbo2069 and id is 1 raw text is: FEBRUARY 27, 2015; UPDATED MARCH 4, 2015 Answers to Questions for the Record Following a Hearing on the Budget and Economic Outlook for 2015 to 2025 Conducted by the Senate Committee on the Budget On January 28, 2015, the Senate Committee on the Budget convened a hearing at which Douglas W Elmendof, Director of the Congressional Budget Office, testified about CBO's report The Budget and Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/ publicationl49892. Following that hearing, Chairman Enz Ranking Member Sanders, and other Members of the Committee submitted questions for the record. This documentprovides CBO answers. Chairman Enzi Question. The baseline includes drastic increases in the cost of price support programs in the farm bill. The cost projections of the Price Loss Coverage program, for instance, nearly doubled in the ten-year window from last April's baseline. The Agricultural Act of 20143 passed about a year ago, was based on the May 2013 baseline. When it passed, there were complaints that the price support baseline no longer accurately reflected the agricultural market. Can you explain if the savings that CBO attributed to changes in the price support programs included in the Agricultural Act of 2014 will still materialize? Answer. The Agricultural Act of 2014 ended direct payments to agriculture producers, who previously had been paid about $4.5 billion annually regardless of the market prices of the crops they produced. Under that act, direct payments were replaced with two new price and revenue support programs known as price loss coverage and agriculture risk coverage. The size of any federal payments under each of those programs depends on crop prices; if those prices fall below the reference prices in the law, then payments to producers are triggered. Estimates of future costs under those programs are much less certain than estimates of future savings from ending direct payments, which did not depend on crop prices. According to CBO's most recent projections, the replacement of direct payments with the two new programs will probably still yield budgetary savings, but those savings are likely to be smaller than CBO estimated when the legislation was enacted. CBO's final cost estimate for the Agricultural Act of 2014, which was made in January 2014, indicated that ending direct payments would save $40.8 billion over the 2014-2023 period.' 1. Congressional Budget Office, cost estimate for H.R. 2642, the Agricultural Act of 2014 (January 28, 2014), www.cbo.gov/publication/45049. The Agricultural Act of 2014 also eliminated two price and revenue support programs-countercyclical payments and the average crop revenue election program-yielding additional savings, estimated to be $6.2 billion relative to the May 2013 baseline, over the same period. Spending for those programs depended on prices and yields. Note: Originally transmitted to the Senate Committee on the Budget on February 27, 2015, this document was updated on March 4, 2015, to include answers to questions from Senator Corker, which were inadvertently omitted earlier. Those answers appear at the end of this document.

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