TRANSCRIPT OF AGRICULTURE SECRETARY MIKE JOHANNS NEWS CONFERENCE REGARDING USDA'S FY 2008 BUDGET REQUEST
WASHINGTON D.C. - FEBRUARY 5, 2007
SEC. JOHANNS: Well, why don't we go ahead and get started here? I do have some somewhat lengthy prepared comments, and then I'll take some questions. But if I - I might point out within the room today we have undersecretaries, we have a lot of folks that can answer any questions that you might have about the specifics of the budget. So I'll take a few questions and then I'll step aside and you can approach them and ask any other questions you might have.
Let me start out, if I might and just say thanks for being here this afternoon. It is the first Monday in February, and that's time to present the president's budget, and this will be the budget proposal for the USDA for Fiscal Year 2008.
As I mentioned, I am joined today by members of the sub-cabinet and by Scott Steele, who is the U.S. budget officer who will be available after this press conference to provide any additional information that any of you might need.
You do have, I believe, a paper copy of some charts that I'll be talking about, and as I said, I'll walk through those in a few minutes. You should also have a copy of our budget summary and annual performance plan which provides a more comprehensive review of the proposals that would be contained in the budget.
Over the past year, we have worked with and heard from Americans across this great country about the importance of agriculture to the American economy. I am happy to report that we've made much progress in meeting the needs of the nation in improving the rural land agriculture economy, so I would like to just point out a few.
Under President Bush's economic policy, U.S. ag has prospered and the rural economy is very strong by any definition. Renewable energy production has grown dramatically, which is contributing to the energy security of the United States and, I might also mention, improving the farm economy. We're continuing to work on and regain our beef export market. We've reopened or maintained the markets in 25 countries that closed or threatened to close their borders to U.S. beef products after the first detection of BSE. We've made progress in countries like Vietnam and Thailand and Mexico.
We are making considerable progress in ensuring the safety of meat and poultry and egg products. Recalls of meat and poultry and processed egg products have been cut in half during the last four years and the CDC reports a sustained decline in rates of food-borne illnesses.
We've had tremendous response to My Pyramid -- what an incredible success story. We've had nearly 3 billion hits on the My Pyramid web site. I'm confident that the health of Americans will increase awareness, and as awareness increases, the importance of balancing a nutritious diet with physical activity will also be there.
The '08 budget continues the president's pro-growth philosophy. It reflects his priorities to encourage economic growth and increase our security while recognizing that fiscal discipline is absolutely necessary. Last week I announced a comprehensive set of Farm Bill proposals for strengthening the farm economy in rural America. Now, to avoid confusion, I should mention that this budget is based upon a continuation of the current bill. Last week, of course, we proposed an entirely new Farm Bill that includes a comprehensive set of proposals to strengthen the farm economy and rural America.
The Farm Bill proposals we announced are estimated to cost $5 billion more than the current Farm Bill over the next 10 years, and we've added funding, $500 million annually to cover that cost. This funding would be reflected in the Commodity Credit Corporation estimates as a place holder. It would be available for use, though, under all of the titles of the Farm Bill.
I would also point out that our Farm Bill proposals would spend $10 billion less than what was spent over the past five years under the 2002 Farm Bill, and I would also mention that our proposals definitely fit within the president's balanced budget plan, as we signaled last week.
Let me get back now to the '08 budget and briefly point out how it supports our priority items. The budget continues programs vital to the protection of ag, from disease and pests and human threats. It significantly increases investment in bioenergy, it fully supports food assistance programs, provides record funding to enroll a record number of acres into our conservation programs. It supports policies that led to decreases in the level of food-borne illnesses.
But as with any budget, tough choices have to be made as well to keep spending under control and to achieve the president's goals of a balanced budget. This means doing more with less, and then eliminating programs that quite simply are just not getting the job done. So you will see throughout the '08 budget, proposals that terminate or reduce spending. In my judgment, the president has chosen the right course for America, a course of discipline to balance the budget, and I respect and admire the president for his leadership.
U.S. citizens know the importance of a healthy economy which creates jobs and raises incomes. The president is committed to keeping the economy strong. Every federal agency shares the president's vision and is therefore making difficult but important budget decisions, and USDA will be no exception. As I delve into the specifics of the budget, I remind you that all of the information I present to you is based upon the federal fiscal year. So starting with chart one, "Outlays by Major Activity:"
When you look at USDA expenditures by major program activity, you will see that the department manages a very diverse set of programs. Of that total, well over half - in fact, 59 percent - support domestic nutrition assistance programs, including food stamps, school lunch, and the WIC program - Women, Infants and Children. Spending for farm programs, including commodity payments, farm loans and crop insurance accounts for about 19 percent. The remaining 22 percent of the department's spending covers a wide range of programs that would include everything - as you can see on the chart, from conservation to rural development, research and food safety activities.
Chart number two will deal with total outlays, budget outlays. Total USDA expenditures for '08 are estimated to be $89 billion; that would be the same level as '07. Within this amount there's an increase in food assistance programs, which is offset by reduced spending for commodity programs funded by the Commodity Credit Corporation. The CCC reduction is due to higher commodity prices which, of course, triggers fewer payments. But I'll also propose reductions in other programs.
The 2008 budget achieves the president's direction to focus on addressing the nation's priorities while also restraining spending. Chart number three deals with the Food and Agricultural Defense Initiative. As the chart indicates, the budget proposes $325 million for ongoing programs to support the multi-agency Food and Ag Defense Initiative. This would include $148 million to - a $148 million increase for USDA to continue improving the safety and security of America's food supply and agriculture.
Here's where the funding increases would be: $36 million to strengthen response to food emergencies related to training and research for food defense; $35 million for research to improve animal vaccines and to facilitate rapid response to ag threats; and then $76 million to enhance surveillance and monitoring of pest and disease threats and to improve response capabilities and other efforts.
In addition, the budget includes an increase of $16 million to design a new consolidated poultry research facility that would be in Athens, Georgia. This facility will be a premier center for conducting critical research on exotic and emerging animal diseases that could have devastating impacts on animal and, for that matter, human health.
Chart number four deals with funding for avian influenza. USDA continues to be a full partner in the government-wide effort to prepare the country for a potential pandemic. And the worldwide effort to stop the spread of the H5N1 virus at its source overseas. In '06 and '07, we significantly increased our efforts to prepare for a potential influenza pandemic. Utilizing over $91 million in emergency supplemental funding. These funds have been used for international efforts, domestic surveillance of poultry and migratory birds, diagnostics, emergency preparedness and response, and for research. The '08 budget requests funds to continue these efforts.
Chart number five deals with energy initiatives. We have seen what I would describe as real - really explosive growth in bioenergy due to the surge in demand for ethanol. U.S. agriculture has been up to the challenge in meeting this demand and contributing to the nation's energy security. I am very pleased that this budget continues to provide funds to support the development of renewable energy resources.
For '08, the budget proposes nearly $400 million in guaranteed loans, grants and other support for energy projects, an increase of about $160 million. Of this increase, roughly $130 million is for rural development -- renewable energy investments through guaranteed loans, grants and other efforts. The remaining increase of about $30 million supports research and development activities to enhance bioenergy feedstocks and improve conversion technologies for cellulosic ethanol.
Chart number six shows agricultural exports. As I discussed in priorities, it's important to include one that is measured not by dollars that would be invested in it, but rather by dollars that are generated as a result of it. We have worked very hard to continue to push the president's aggressive trade agenda. This has helped to bring ag exports to record levels in the last three years. We are forecasting that U.S. ag exports will achieve a new record in '07, projected to top $77 billion. That's up more than 50 percent since 2000, and we expect that number to continue climbing.
We continue to press for progress in trade talks for greater market access. We recognize the importance of our exports to the ag economy.
Chart number seven deals with Commodity Credit Corporation outlays. Taking a look at our proposed farm program spending, I think it's important to put this part of the budget into some perspective. As you can see in the chart, CCC expenditures are highly variable. This trend reflects the impact of weather and growing conditions on crop production and the resulting changes in commodity prices. Emergency disaster funding also impacts Commodity Credit Corporation expenditures in some years. The chart displays the original estimate of CCC expenditures developed at the time that the Farm Bill was passed in '02 and the actual expenditures that have occurred through '06. It also shows our current estimates for '07 and '08.
As you can see on the chart, during the first few years after enactment, expenditures were somewhat lower than originally projected. Beginning in '05 and continuing through '06, the situation changed and expenditures increased to near-historically high levels, well above the projections. Through '07 and '08 we project that net outlays by CCC will be near the original estimates. The decline from '06 has been the result of higher commodity prices, largely again due to the growth in ethanol production.
As I indicated, I announced a comprehensive set of Farm Bill proposals to strengthen the farm economy and rural America. This budget sets aside $500 million as a stakeholder to cover the estimated additional costs of these proposals and fits within the president's balanced budget plan.
Chart number eight deals with our domestic nutrition assistance funding. The budget proposes $5.5 billion in budget authority to support the estimated level of participation in the nutrition program for Women, Infants and Children known as WIC. It also includes a $200 million contingency fund, should costs increase beyond current estimates. WIC is our largest discretionary program.
For the Food Stamp program, the budget includes resources to fully fund estimated participation and also provides a $3 billion contingency fund, should actual costs exceed the estimated level. The budget includes a $632 million increase to accommodate the projected increased level of School Lunch participation.
Chart number nine deals with domestic nutrition assistance participation. The budget fully funds the expected requirements for the Department's three major nutrition assistance programs - WIC, Food Stamps, and the School Lunch Program. WIC participation is estimated to increase from 8.2 million participants this year to 8.3 million in '08. We expect 26.2 million participants in the Food Stamp Program in '08, just below the level that was estimated for this year. School Lunch participation is estimated to reach a record level of 31.5 million children each day in 2008, which is consistent with the increase in school age population.
Chart number 10 deals with Farm Bill conservation program funding. The budget proposes $3.9 billion to continue implementation of the conservation programs that are authorized in the '02 bill. The largest of these programs, the Conservation Reserve Program, CRP, is estimated at approximately $2 billion in 2008. CRP represents more than one half of the total funding for conservation programs. The 2008 budget maintains funding of $1 billion for the Environmental Quality Incentives Program, which would be known as EQIP. Also within the conservation total, $316 million is included for the Conservation Security Program to continue support of existing contracts. The budget estimates that nearly 19,000 farmers and ranchers are now participating in this program. No new CSP enrollments will be offered in '07 or in '08.
Chart number 11 deals with Farm Bill conservation program enrollment. In the aggregate, funding in the budget will support enrollment of an additional 17.8 million acres in conservation programs, largely in EQIP. This brings the total cumulative enrollment to 215 million acres, and that would be the highest enrollment level in the history of this country. The budget projects CRP enrollment will total about 37 million acres in '07 and about 34 million acres in '08. A general sign-up of 1 million acres was held in '06. No general sign-ups are assumed in '07 and '08 due to the increase in corn production needed to meet the demand for ethanol.
Chart number 12 deals with the Wetlands Reserve enrollment. To help meet the president's commitment to create, improve and protect at least 3 million wetland acres by 2009, the budget includes $455 million for the Wetlands Reserve Program. This is an increase of more than $191 million over '07. This would allow an additional 250,000 acres to be enrolled in the program in 2008, which would bring total cumulative enrollment to more than 2.2 million acres. That's the maximum level authorized in the 2002 Farm Bill.
Chart number 13 deals with Healthy Forest Initiative. The budget continues the implementation of the president's Healthy Forest Initiative to mitigate the threat of catastrophic wild fires. Resources proposed in the budget will reduce hazardous fuels on nearly 3 million acres of land; that's 50,000 acres more than in'07. The budget for the Forest Service also provides sufficient wild land fire resources to protect communities and natural resources. It provides for sustainable forests and communities through full funding of the Northwest Forest Plan and continuation of the Payments to States Program.
Chart number 14 deals with food safety and inspection. The budget requests nearly $1.1 billion for the Food Safety and Inspection Service, and that would be a record level of funding. This funding will ensure that the demand for inspection is met and will allow us to build on our success in improving the safety of the food supply. As I mentioned earlier, the budget includes additional funding to strengthen the Food Emergency Response Network. This network will increase the speed with which we can detect and then respond to outbreaks of food-borne illness. We will continue to pursue within available funding the development and the implementation of risk-based inspection systems that are grounded in science. These systems don't save money; they will make us smarter about where we should focus our resources and our expertise.
Chart number 15 deals with rural development. The 2008 budget includes $15 billion in funding for these programs. It proposes to align USDA's single-family housing program with other similar federal programs by shifting from direct to guaranteed loans. Guaranteed loans, which are unsubsidized, have accounted for almost all of the growth in USDA's homeowner assistance. The budget includes $4.8 billion in guaranteed loans, almost $1.7 billion more than 2007, to support over 39,000 home ownership activities.
Further, the 2008 budget includes a substantial increase in funding for the Rural Rental Assistance Payment Program. The administration is committed to protecting the -- to protecting the rents of low-income tenants of its multi-family housing portfolio. To do so requires $567 million for renewing all expiring rental assistance payment contracts. The budget includes $1.3 billion for financial and technical assistance to rural businesses. The budget also includes $4.8 billion for electric and telecommunications loans.
Chart number 16 deals with research. The budget requests $2.4 billion to support the USDA research program. For '08, the budget continues to emphasize the use of competitive grants through the National Research Initiative and other programs, but I will note that $438 million in congressional earmarks are not funded. The budget supports high-priority research needed to encourage economic growth by significantly increasing funding for bioenergy research, specifically research aimed at improving technologies needed to convert cellulose to biofuels. As discussed earlier, research is an important component in key budget initiatives for Avian Influenza and Food and Ag Defense. Increased funds are proposed to improve our detection and our response capabilities. Other priority research areas include initiatives within ongoing programs for emerging diseases in crops and livestock. The budget also includes funding to conduct the '07 Census of Agriculture.
A couple of concluding thoughts: In addition to the highlights I've given you, you'll find that we are proposing funds to support other important initiatives and priorities. These include meeting our commitments for foreign food assistance, promoting healthier eating habits through the continued improvement of My Pyramid, and facilitating agricultural marketing.
Again, I want to emphasize the president is deeply committed to improving the security of our country and promoting its economic growth. He is working for a stronger and a more robust America. This budget helps to accomplish his goals for restraining spending while continuing to meet our priorities. USDA will continue to be a team player in strengthening the nation and will implement reforms that will improve our programs and generate savings that will help balance the budget and strengthen the economy.
Thank you for coming today. As I said, I'll take a few questions and then I'll step down and our staff can take it.
Q Mr. Secretary?
SEC. JOHANNS: Yes?
Q Thank you. Let's start with the biggest share of USDA spending, public nutrition. Could you tell us how many people would be added to Food Stamps under the administration proposal to allow more elderly and working poor Americans into the program. Also, how many people will be denied Food Stamps under the administration's recycled proposal to deny automatic access to Food Stamps to people on (TANF ?) and Supplemental Security income programs? And then the essay question, your department says 35 million Americans have trouble getting enough to eat during the year. Why did the administration decide to do nothing on increasing the monthly benefit for Food Stamp recipients?
SEC. JOHANNS: Somebody can answer those questions and give you the statistics, and I'll refer you to Scott Steele. Nancy will take your last question. So -
Q (Off mike) - what about the policy question, sir?
SEC. JOHANNS: Which is? I didn't catch a policy there.
Q (Off mike) - proposal to increase Food Stamp benefits.
SEC. JOHANNS: Actually there are outreach dollars in this budget, and again, that's something we pay close attention to. We look at the statistics of people who may need our assistance, and so part of what we have funded into this is outreach dollars to try to reach out to those people. Because if they qualify, we want them to receive the benefit.
Go ahead. Yeah.
Q First of all, just really quickly, the numbers in here for 2006 and before that, are those the numbers that the administration requested, or is that what was actually enacted, when you look at these charts? And then beyond that, for the WIC program, I wanted you to speak a little bit about why you decided to cap administrative funding at fiscal 2006 levels and how that compares to other initiatives to cap funding for administrative costs in the past - if you're going to save more this way or not?
SEC. JOHANNS: The 2006 numbers are actual numbers. So the administrative expense, you know, our goal is to try to get every possible dollar we can to people who need the food benefit. And so consequently, we try to be as - as forceful as we can in keeping administrative costs down. We would much rather see the dollars spent for food than - than dollars spent for administration, so we pressed that. How that would compare with other government-wide initiatives, I would guess pretty similar. I think administrative costs are always the hardest to justify, and that just kind of goes with government.
Q (Off mike) - if this way, by capping it - saving more?
SEC. JOHANNS: Somebody here can probably answer that for you.
Q The Department has continually expressed support for the Conservation Security Program, yet if I read this, you all are saying no enrollments, no new enrollments in 2008. Why did you make that decision, particularly since it's already taking years to -
SEC. JOHANNS: Actually, if you look - first of all, I would reference you to our Farm Bill proposals, which I think are good proposals for a conservation security program, from the standpoint of two areas. One is that we had additional funding; we add about $500 million. The other is that if you look at CSP and look at how the funding goes out, it's like in the eighth or ninth year that the funding goes up dramatically, and I think it's $2 billion plus. What we are proposing to do with our proposals is to lay that over and spread that funding out over the life of the program, which quite simply will be a better program to administer and it'll get money out there faster. So this is one area where our proposals, I would suggest, do a lot of good.
The other thing I would tell you about conservation this year is that there just doesn't seem to be a lot of doubt that there is a lot of pressure there, just simply because the price of corn is very, very high. People are trying to make decisions about what they might want to do in the future with their conservation program.
Q Mr. Secretary, there is considerable concern throughout the research community, not only in the U.S., but in the world. The United States is standing down on agricultural research. Your budget numbers look like almost a 20 percent decrease in two years, at a time when we're having a food-versus-fuel debate on ethanol. Can you address the issue of will the United States become less competitive?
SEC. JOHANNS: I think our research dollars are actually up, excluding earmarks. And Scott would give you the detail on that, but I think if you look at the earmarked piece of that, set that off to the side, I think you're seeing an improved funding situation there.
The other thing I would tell you about research, again, this is an area where we put the stakeholder in, but go to our proposals in the research and development area. I think they're very impressive, whether you're talking about specialty crops, cellulosic ethanol. I think they're very, very impressive, as a matter of fact.
One last question, and then I'll turn you over to my undersecretaries.
Q Yes, about the $438 million in agricultural research earmarks. What are you saying by taking this position, that these projects have no value? I don't quite understand that. and also, what is your expectation that would happen with these earmarked projects? They would just cease? And are there any other earmarks in other parts of the budget that are not funded - I mean, construction programs or something in some other section besides research?
SEC. JOHANNS: I'll turn you to Scott on the last piece of your question.
I can tell you this: I think if you look back over not only this administration, but previous administrations, earmarks are not funded. That is not an unusual phenomena. However, what has really gotten heightened attention these days is an effort that the president has called Congress to try to achieve, and Congress I think is committed to achieving, and that is cutting way back on the earmarks.
You know, in terms of the individual merits of each project, you'd almost have to look at each project. But the whole idea here is to bring some transparency to the process. I suspect not only in the USDA budget, but throughout the budget process, you'll have quite a discussion on earmarks and what should or should not be funded.
With that, I'll turn it over to Scott. Why don't we wrap up, and I think people can just gather around and whatever questions you have for these folks, they can answer. Okay