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U.S. Farm Bill Analysis Presentation for The World Outlook Conference Jim Langley, CBO

U.S. Farm Bill Analysis Presentation for The World Outlook Conference Jim Langley, CBO May 16, 2002. C B O. Role in the Budget and Farm Bill Process. The 2002 Farm Bill. Who is CBO? (www.cbo.gov).

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U.S. Farm Bill Analysis Presentation for The World Outlook Conference Jim Langley, CBO

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  1. U.S. Farm Bill Analysis Presentation for The World Outlook Conference Jim Langley, CBO May 16, 2002

  2. C B O Role in the Budget and Farm Bill Process The 2002 Farm Bill

  3. Who is CBO? (www.cbo.gov) • Began operations in 1975; Authorized by the Congressional Budget and Impoundment Act of 1974 • Staff agency of Congress • Nonpartisan: serve entire Congress • 535 bosses • Main boss: Budget Committees • Work closely with other Committees • CBO does not make policy recommendations; • we may, if asked, provide broader analyses of policy options and their economic impacts

  4. More on CBO • “Budget” is our middle name -- we provide Congress with analysis for economic and budget decisions; largely focused on federal costs • In practice this means • Baselines (10-year spending projections) • Cost Estimates (difference in spending under new proposal VS baseline)

  5. CBO Ag Team • Jim Langley, Dave Hull, Greg Hitz (jiml@cbo.gov) • All 3 have extensive experience at USDA analyzing farm programs and spending

  6. 2002 Farm Bill Score (10-Year Total) ($ Bil)

  7. 2002 Farm Bill – Title I Programs ($ Bil)

  8. 2002 Farm Bill Total Spending (10-Year Total, $ Bil)

  9. CBO Models for Farm Bill • Our analysis is very detail oriented. Hence, we require a wide variety of models. • Types of models include: • Back of the envelope • Supply / Demand equilibrium spreadsheet models for major commodities • Telephone • CBO incorporates probability scoring in the major commodity models

  10. Probability Scoring • Why? • Used when traditional “point-estimate” scoring fails to provide a defensible answer • Result of price trigger is uncertain and asymmetrical • One-Sided Bets • Heads, they win • Tails, they don’t lose anything relative to current law

  11. Probability Scoring • Ag Price Supports are a natural trigger • Low or no costs when prices are high • Big costs when prices are low • Example for cotton

  12. Cotton Marketing Loan Benefits

  13. Probability Distribution

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