Updated Special Report on $1.7 Trillion Omnibus Spending Package

Funding for rice aid, cotton merchandisers, 2022 ag disasters, food & nutrition, Ukraine

Text of the $1.7 trillion omnibus spending package was released early Tuesday morning. The Senate will vote first and intends to pass the measure before Thursday, leaving the House no time to demand changes before the Christmas holiday. Link to text (4,155 pages). Some details:

• $1.7 trillion year-end spending
• Military spending of $858 billion for the current fiscal year, a nearly 10% boost ($76 billion) over current levels. That figure includes a 4.6% pay raise for military servicemembers and Pentagon civilian employees.
• Domestic programs funding at $772.5 billion, including $118.7 billion — a 22% increase — for VA medical care, not counting a $5 billion infusion for the toxic exposure benefits law enacted over the summer.
   
• $44.9 billion in emergency assistance to Ukraine and NATO allies. Lawmakers diverted $10 billion President Biden sought for pandemic aid to beef up Ukraine and disaster relief, depriving the administration of new funds to deal with a winter Covid-19 surge.
   
• $40.6 billion for drought, hurricanes, flooding, wildfire, natural disasters and other matters — $3.7 billion in disaster aid for farmers to cover 2022 crop and livestock losses, with $494.5 million of that to be used for livestock losses due to drought or wildfires. 
• $250 million in aid to rice producers and $100 million to cotton merchandisers to make up for losses related to the pandemic or supply chain disruptions. USDA previously provided $80 million in aid to textile mills and other cotton users. For rice, USDA would determine payment rates based on yield history and acreage.
   
• Reauthorizes the pesticide registration process at EPA and boosts registration and maintenance fees 30% and allows EPA to raise fees by 5% in 2024 and 2026. It would phase in, over eight years, a requirement that pesticide labels be available in Spanish.
   
• Expands a program to hire more police officers, by 32%.
   
• $154 billion for the Supplemental Nutrition Assistance Program (SNAP/food stamps), an increase of $13.4 billion.  
• $28.544 billion for Child Nutrition Programs, including $40 million for the Summer Electronic Benefit program and $30 million for school equipment grants. The bill would make permanent the program, known as Summer EBT, which gives families $40 per month for each eligible child. The omnibus legislation would also give child feeding sites in rural areas more flexibility to use grab-and-go meals and mobile delivery. the omnibus would reimburse families whose nutrition benefits were fraudulently “skimmed" — or stolen from a household’s digital account while it was used for other purchases.
• $6 billion for the Special Supplemental Nutrition Program for Women, Infants and Children, which fully funds anticipated participation and ensures that over 4 million low-income women and children do not see their benefits reduced.  
   
• Funds two programs that provide foreign food aid.  These include the Food for Peace Program (PL 480), which is funded at $1.8 billion, and the McGovern-Dole International Food for Education Program, which is funded at $248 million, for an increase of $11 million over fiscal year 2022.  
   
• $1.92 billion for farm programs, which is $55 million above the fiscal year 2022 enacted level. This includes $61 million to resolve ownership and succession of farmland issues, also known as heirs' property issues. This funding will continue support for various farm, conservation, and emergency loan programs, and help American farmers and ranchers. It will also meet estimates of demand for farm loan programs.
   
• Retirement provisions: Language would require new workplace savings plans to auto-enroll employees, expand a tax credit for low-income savers, allow more catch-up contributions for workers nearing retirement and make other changes to grow Americans’ nest eggs. Exempts employees with income of $145,000 or less from a new mandate that catch-up contributions for workers nearing retirement be made in after-tax Roth accounts, with the income threshold rising with inflation. Pushes back to 2024 the effective date for an offset from the House bill that aligns rules for 401(k) workplace savings plans and 403(b) retirement accounts, which are generally used by nonprofits. catch-up contributions starting in 2025. Catch-up contributions starting in 2025 would increase for individuals aged 60 through 63 to the greater of $10,000 or half what the regular limit for everyone over 50 is that year, with the amounts then tied to inflation.
• Increases the age when individuals must start taking money out of tax-advantaged retirement accounts to 73 starting next year and to 75 a decade later in 2033.
• Cracks down on “conservation easements,” which allow tax breaks when land is dedicated for conservation purposes. The IRS has identified the transactions as a method for avoiding taxes. The conservation easement provision was expected to raise between $6 billion and $7 billion.
• Grants tax- and penalty-free rollovers for up to $35,000 from college savings plans known as 529 accounts to individual retirement accounts.
• Tax credit for low-income retirement savers, turning the credit into a 50% “government match” on savings up to $2,000 directly deposited into savings accounts after 2026.
• More generous expansion of a tax credit for small employers launching new retirement savings plans.
• Allows employers to offer emergency savings accounts to lower-paid employees that can stow up to $2,500 in worker contributions.
   
• Delays an estimated more than $100 billion in automatic cuts to Medicare and other mandatory spending programs until 2025. If not for that exception, the cuts would be triggered early next year under the 2010 pay-as-you-go law, which prescribes a sequester for any “debit” balances resulting from tax cuts or spending increases that were not offset and added to the deficit.

      Add-ons include:

• Legislation to overhaul the Electoral Count Act to clarify that the vice president’s role in counting electoral votes is clerical, and to raise the threshold for the number of senators and representatives needed to object to state-certified electoral ballots.
• A recent Senate-passed bill (S 1143) to ban the use of the social media app TikTok on government devices.
• Enacts the Growing Climate Solutions Act to facilitate ag carbon markets; would authorize USDA to oversee the registration of farm technical advisers and carbon-credit verification services. USDA would be authorized to set up and enforce a registration list for those services and would be empowered to remove entities from the registration list if they fail to meet program standards. Language modifies USDA's role in determining eligible protocols for determining eligibility for credits. USDA would still be required to maintain a list of "widely accepted" protocols.
• Enacts the SUSTAINS Act, a House bill that allows corporations and other private entities to contribute funding for conservation projects and authorizes USDA to match up to 75% in matching the donations. 
• Various oceans-related provisions, including a measure to phase out large-scale driftnet fishing that can endanger protected marine species and legislation to improve disaster relief for fisheries.
• A provision sought by Senate Minority Leader Mitch McConnell (R-Ky.), whose home state is the horseracing capital of America, that would upgrade Federal Trade Commission oversight of an industry regulatory authority enacted in 2020.
• Extensions of various expiring Medicare and other health care-related provisions affecting Medicaid, the Children's Health Insurance Program and more.
• A major public lands package.

— The omnibus package includes funding for specialty crops and remarks on crop insurance/A&O. Some $25 million is being made available for specialty crop equitable relief and report language directing USDA to use its legal authority to index all A&O (crop insurance program) for inflation and provide equitable relief for specialty crops going forward.

     Perspective: This provides immediate and meaningful relief for specialty crops under crop insurance and is a very strong statement by Congress that USDA must correct two big A&O problems going forward. A&O has not been adjusted for inflation since 2015 and an industry insider informs that specialty crop A&0 “has been decimated due to a flaw in the SRA that inflicts disproportionate cuts on specialty crop A&O when row crop prices rise.”

More on rice grower aid in omnibus package. As previously noted, the legislation provides $250 million for USDA to make a one-time payment to U.S. rice producers who planted rice in 2022. A recent study (link) conducted by Texas A&M University that looked specifically at the increase in fertilizer prices across an array of commodities, found rice farms would be hit hardest by rising costs. A second study (link) conducted by the university focused solely on the impact of rising input costs found that two thirds of the rice farms they monitor will fail to breakeven in 2022.

— More info on pandemic assistance to cotton merchandisers. The omnibus spending package provides $100 million for USDA to make payments to merchandisers of cotton that endured significant financial losses caused by pandemic-related supply chain challenges. Cotton merchandisers serve as the link between producers and textile mills. Those that purchased cotton from U.S. producers, or marketed cotton on their behalf, and experienced economic losses during the pandemic would qualify for this relief.

— Review of other major ag-related add-ons to omnibus package include:

• Summer Meals Program Modernization: Updates the summer food service program to permanently allow states to provide non-congregate meals and summer electronic benefit (EBT) options nationwide to eligible children in addition to meals provided at congregate feeding sites. Non-congregate meals, such as grab-and-go or home delivery, would be provided in rural areas to eligible children, and summer EBT benefits would be capped at $40 per child per month. This provision is fully offset and based largely on the Hunger-Free Summer for Kids Act, which Boozman authored and introduced earlier this Congress.
• Growing Climate Solutions Act: Incorporates updated language from the Growing Climate Solutions Act, which directs USDA to establish a program to register entities that provide technical assistance and verification for farmers, ranchers and foresters who participate in voluntary carbon markets with the goal of providing information and confidence to producers.
• Pesticide Registration Improvement Act (PRIA 5) Reauthorization: Reauthorizes pesticide registration and review process user-fee programs administered by the Environmental Protection Agency (EPA) and increases registration and maintenance fees to support a more predictable regulatory process, create additional process improvements, and provide resources for safety, training, bilingual labeling, and other services to advance the safe and effective use of pesticides.
• Pesticide Registration Review Deadline Extension: Extends deadline for EPA to complete registration review decisions for all pesticide products registered as of October 1, 2007. EPA is facing a significant backlog of pesticide registrations due to a variety of factors over the past several years, which raises potential implications for continued access to numerous crop protection tools. The agency will be allowed to continue its registration review work through October 1, 2026, as a result of this extension.
• Supplemental Nutrition Assistance Program (SNAP) EBT Skimming Regulations and Reimbursement: Requires USDA to coordinate with relevant agencies and stakeholders to investigate reports of stolen SNAP benefits through card skimming, cloning and other similar fraudulent methods. This provision aims to identify the extent of the problem, develop methods to prevent fraud and improve security measures, and provide replacement of benefits stolen through these fraudulent actions.
• Livestock Mandatory Reporting Extension (LMR) Extension: Extends livestock mandatory reporting requirements until September 30, 2023. LMR requires meat packers and importers to report the prices they pay for cattle, hogs, and sheep purchased for slaughter and prices received for meats derived from such species to USDA who then publishes daily, weekly, and monthly public reports detailing these transactions.
• Commodity Futures Trading Commission (CFTC) Whistleblower Program Extension: Enables CFTC to continue payment of salaries, customer education initiatives and non-awards expenses related to the whistleblower program to ensure it can continue to function even when awards obligated to whistleblowers exceed the program fund’s balance at the time of distribution.

— Some ag sector items that did NOT make the omnibus package:

• Nothing for the proposed farmworker labor reforms from Sen. Michael Bennet (D-Colo.) and others.
• Also left out: Legislation to reform cattle markets or appoint a special investigator at USDA to investigate possible anti-competitive behavior in the meatpacking sector.

— A slate of expired and expiring tax provisions are not included in the omnibus spending package after lawmakers failed to come to an agreement on expanding the child tax credit and some key business tax breaks. Tax breaks favored by industry, including one for research and development, and more favorable tax rules for interest expenses and capital expenditures, were not included. Another 28 temporary tax benefits that have already expired or will at year end, known as extenders, also failed to make the legislation.

      Next Congress. House Republicans, who will take over the Ways and Means Committee in the new Congress, said one of their top priorities next year will be extending the research and development break. It’s possible that the break wouldn’t need a larger legislative vehicle because of the amount of bipartisan support backing it, Rep. Adrian Smith (R-Neb.) said.