Risk Management Policy: Issues and Options - Department of ...

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Risk Management Policy: Issues and Options - Department of ...

Basics of the Policy Process

1


Federal Spending and Debt

2


2010 Proposed Budget $3.55 Trillion (Wikipedia)

3


2010 Mandatory Versus Discretionary (Wikipedia)

4


Longer Term View of Federal Debt as

Percent of GDP

5


Risks due to increasing entitlement spending, according to GAO's projections of future trends

Main article: United States federal budget

6


How to Reduce Deficit

7


Three Ways to Reduce Deficit

• Grow your way out of it.

• Increase taxes.

• Cut spending.

8


Growth of the U.S. Economy

(Bureau of Economic Analysis)

U.S. Real GDP Growth by Decade

1930's 20.16%

1940's 58.09%

1950's 37.71%

1960's 50.55%

1970's 37.12%

1980's 35.06%

1990's 34.18%

2000-2008 18.58%

9


Some Questions About Taxing

• Raising government revenues

– How much do you tax citizens?

• Are we already over taxed or under taxed?

– Do you tax rich people more?

– Do you tax income (earned or

unearned), consumption, bad habits?

– Do you tax business (corporate income

tax)?

10


Sources of Revenue

11


Net Salary to Employee After Social and Income Tax

Europe 1 (Forbes)

Georgia 88.00%

Russia 87%

Ukraine 86.89%

Slovakia 80.87%

Romania 77.65%

Latvia 74.05%

Estonia 73.88%

Lithuania 73.00%

Czech Republic 72.50%

Cyprus 72.30%

Switzerland 66.46%

Luxembourg 66.35%

Turkey 65.82%

France 64.05%

United Kingdom 62.74%

Germany 62.03%

Ireland 62.00%

12


Net Salary to Employee After Social and Income Tax

Europe 2 (Forbes)

Spain 60.62%

Greece 60.47%

Poland 60.04%

Portugal 59.09%

Austria 58.53%

Hungary 56.57%

Norway 55.41%

Netherlands 53.49%

Italy 52.80%

Finland 49.73%

Sweden 47.48%

Denmark 46.22%

Belgium 46.02%

Slovenia 43.45%

13


Net Salary to Employee After Social and Income Tax

Americas (Forbes)

USA and Reform 83.99%

Brazil 73.19%

USA 72.82%

USA and Texas 72.82%

Mexico 71.09%

USA and Illinois 70.03%

Argentina 65.98%

USA and NY 62.17%

Canada (Ontario) 58.43%

14


Net Salary to Employee After Social and Income Tax

Asia/Middle East (Forbes)

Hong Kong 84.00%

Japan 67.25%

India 66.68%

Indonesia 65.13%

China 63.39%

Malaysia 63.03%

Australia 55.77%

Israel 53.91%

15


2010 Proposed Budget $3.55 Trillion (Wikipedia)

What do you cut?

16


Policy Making Process

17


The Process of Enacting a Law

• http://law.nd.edu/library-andtechnology/students/legal-researchguides/federal-legislative-history-research/

18


How a Bill Becomes a Law

• Authorizing

committees

– Write Law

• Budget Committees

– Set funding priorities

• Appropriation

Committees

– Actually determine

expenditures

• Example:

Conservation

Security Program

• Authorized by 2002

Farm Bill

• Appropriations

committee cut

funding

19


Farm Bill

20


What is a Farm Bill?

• Omnibus Authorizing legislation for a

number of agricultural programs.

• Normally written to cover 5-6 years.

• Recent Bills written in 1990, 1996, 2002,

2008.

21


What are the Farm Bill Titles

I. Commodity

Programs

II.

III.

IV.

Conservation

Trade

Nutrition

V. Farm Credit

VI.

Rural

Development

VII. Research

VIII. Forestry

IX.

Energy

X. Horticulture and

Organic Ag.

XI.

Livestock

XII. Crop Ins. and

Disaster Assist.

XIII. Commodity

Futures

XIV.Miscellaneous

22


Some Important Terms

• Mandatory Spending- program rules are defined

with authority for treasury outlays.

– Examples: Farm commodity programs and food

stamps.

• Discretionary Spending- Funding is set in

appropriation committees.

– Examples: Ag Research, USDA Agency budgets,

Rural Development.

• PAYGO Rules – Bills proposing new spending

must also propose offsets.

• Budget Baseline – A projection of future federal

expenditures if current law is unchanged.

23


Agriculture Committee: Subcommittees

• Conservation, Credit, Energy, and Research

Department Operations, Nutrition, and Forestry

• General Farm Commodities and Risk

Management

• Horticulture and Organic Agriculture

• Livestock, Dairy, and Poultry

• Specialty Crops, Rural Development, and

Foreign Agriculture

24


USDA Budget 2011

Nutrition

Assistance

70%

Conservation

and

Forestry

7%

All

Other*

6%

Farm and

Commodity

Programs

17%

25


CBO Budget Baseline

2006 2007 2008 2009 2010

COMMODITY CREDIT CORPORATION PRICE

SUPPORT AND RELATED ROGRAMS 18,226 10,070 8,062 8,029 7,805

CCC CONSERVATION PROGRAMS 1,919 2,224 2,376 2,338 2,291

NRCS CONSERVATION PROGRAMS 1,496 1,556 1,789 1,754 1,804

CONSERVATION PROGRAM TOTAL 3,415 3,780 4,165 4,092 4,095

By Crop

FEED GRAINS 9,542 3,516 2,474 2,496 2,473

WHEAT 1,080 1,033 1,210 1,218 1,221

RICE 605 274 555 544 540

UPLAND COTTON 3,982 2,497 1,530 1,497 1,407

SOYBEANS 591 558 685 687 655

PEANUTS 404 326 177 191 168

TOBACCO 77 0 0 0 0

SUGAR 10 9 200 170 130

DAIRY 412 433 87 82 73

OTHER COMMODITIES 200 259 238 238 237

26

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