The Farm Bill: Best If Used By Sept. 30
Lost in the noise regarding the impending government shutdown is a separate deadline Congress faces on Sept. 30 – the expiration of the farm bill. While there’s been incredibly heated debate on the right over strategies for the continuing resolution, when it comes to the nation’s farm programs, it turns out that there’s relatively little disagreement between conservatives, libertarians, and even liberals over the necessary reforms. Unfortunately, neither the House nor Senate is listening.
The farm bill is a prime example of special interests at their finest, with a litany of programs too numerous to detail at length here. The most egregious is the direct payments program, which grants farmers cash payments based on the historical production of their land, rather than what they actually plant each year. In a nutshell, you could not farm at all and still get paid.
The most expensive program (costing $14 billion last year alone) is the nation’s crop insurance program. The federal government picks up roughly 62 percent of the tab for farmers’ crop insurance, regardless of their size or income. It also subsidizes insurance companies that sell the policies and provides them with cheap reinsurance.
The most offensive program from a free-market perspective is probably the Soviet-style sugar program, where the government basically limits the amount of sugar in the market and inflates the price, and then buys any leftover sugar to create ethanol. The list could go on and on.
There’s simply no argument for keeping subsidies at the current levels. Farm income is significantly higher than the income of average Americans, and the subsidies tend to flow to the largest, richest farms over the small family farmer made famous by American folklore and Dodge truck commercials. Analysts and activists across Washington acknowledge this truth, promoting solutions along the lines of means-testing or payment limits to impose a much needed check on these subsidies. Yet when the farm bill came up last year, Congress couldn’t find consensus, passed a one-year extension, and in typical fashion, now finds itself in a bind created by its own punting.
So instead of accepting any of the changes proposed by bipartisan coalitions across D.C., the Senate and the House passed farm bills that are even more generous to agribusiness. While both chambers eliminated direct payments and enacted a few other minor reforms, they also created even more generous revenue protections for many commodity farmers, guaranteeing against even modest dips in price. This is incredibly dangerous, given that food prices are at an all-time high and are unlikely to stay there. Payout is almost guaranteed. And what do these new programs cost to for participants? Nothing.
The only reason for the delay in reaching a final bill is the inability to find a compromise on the other half of the farm bill, the Supplemental Nutrition Assistance Program (commonly referred to as food stamps). The Senate cut a miniscule $4.5 billion, while the House passed a separate bill that cut almost $40 billion. Rather than winding down support for million-dollar enterprises, the House prioritized cuts to programs aimed at helping those the labor market has hit the hardest.
It’s certainly reasonable to have a post-recession conversation about government’s role in helping the needy, but it’s an undeniable messaging (and, I would argue, moral) disaster to pick that battle rather than engage in honest dialogue about these anachronistic, overly generous subsidies for an industry that no longer needs government support. The GOP is entirely inconsistent, arguing basically that we should control spending by cutting the benefits of Americans who are suffering in Obama’s economy, yet we should spend more on our nation’s farm programs for the wealthiest Americans.
Fortunately, it looks as if the GOP will get another chance. The food stamp portions of the House and Senate bills seem too far apart to find compromise at conference, making yet another extension of current law likely and giving the GOP a golden opportunity to actually be the party of limited government by reforming farm programs.
This would require recognizing that dependence comes in more than one fashion. Agribusiness and large farms have become addicted to government handouts. In fact, this type of dependence is the most insidious, given that moneyed interests are much more capable of extracting the subsidies they desire. Cutting support for these well-connected groups with incomes in the top brackets should be the lowest-hanging fruit in the federal budget.
A positive side effect of doing the right thing on farm subsidies is that the House would then have much more cover for the changes it wishes to make to nutrition programs. Here, the House should tread more carefully, through better messaging, more open dialogue and honest analysis of the state of today’s labor markets. The growth in nutrition spending is worrying, and to the extent that it’s driven by standards that are too loose or that abuse of the system, adjustments need to be made. Last week’s nutrition bill in the House took a stab at solving these problems.
But we also have to acknowledge that jobs for the middle and lower class have disappeared, forcing millions either out of the labor force or into part-time, low-paying jobs. It’s therefore crucial to think through ways not just to cut benefits, but to create opportunity as well. If anything, the fact that next year is an election year should hopefully make Republicans more sensitive to anything that reeks of the GOP once more sticking it to the poor and struggling.
Will the GOP get the message this time? That remains to be seen. An immense lobbying and grassroots effort on farm programs took place both this year and last, with Americans for Prosperity, FreedomWorks, Heritage Action, and many, many others (including my organization, the R Street Institute), yet all we have to show for it was a more egregious bill in terms of farm support. For a supposedly tea party house, we should demand more. Hopefully the third time will be the charm.
Lori Sanders is the Outreach Manager and a Senior Fellow for the R Street Institute.