End farm subsidies. Now.
Congress can achieve major cuts immediately, and under a measure of political cover, because of an unusual opportunity.
By Craig Colgan
Lawmakers from both parties have recently agreed to end a single popular farm subsidy, a $5 billion direct payment program. But Congress continues to think up new handouts to big agriculture interests. Now is the time for Congress to take a giant weed whacker to the entire Washington agriculture subsidy scheme.
Direct farm payments are simply not necessary in this country, regardless of the state of the economy. The agriculture economy in this country is booming. The Agriculture Department forecasts that farm profits this year will total $115 billion, 24 percent higher than last year, thanks to soaring crop prices. The persistent impression among most Americans is that farmers need and deserve special publically funded safety nets because farmers must be living their lives on the edge of catastrophe. But the average income for farm households has been higher than all other household incomes every year since 1996. Farmers’ average income was $87,000 in 2010, but $201,000 for families living on large farms. Producers of just five crops -- wheat, cotton, corn, soybeans and rice -- receive nearly all farm subsidies. But only one-third of the country’s $390 billion in annual agricultural production is directly subsidized. All other farmers, including growers of fruits, vegetables, livestock and poultry, receive nearly nothing. If subsidies are necessary to produce an adequate food supply with stable prices and successful farmers, how have these non-subsidized farmers continued to thrive?
Congress can achieve major cuts immediately, and under a measure of political cover, because of an unusual opportunity. The existence of the deficit reduction supercommittee means Congress has a process in place to vaporize not just individual parts but the entire agriculture subsidies program. That group, charged with slashing $1.2 trillion from future budgets, is expected to recommend in its report due in November the targeting of some programs that have avoided the axe for decades. Congress will complete a new five-year farm bill next year, but some lawmakers want to exploit the deficit-cutting process to begin serious overhaul of farm spending immediately. Agreeing essentially to not oppose serious agriculture cuts recommended in the supercommittee report would provide a measure of political cover to lawmakers. Doing so now would also offer a clear signal that the supercommittee process can achieve serious ends, and would set a serious tone ahead of what will undoubtedly be a bruising political year.
Historically, election years are not the times to undertake serious overhaul of entrenched spending programs. The problem then would be whether Congress will somehow restrain itself from turning right around and immediately re-instating any cuts, just by calling a program by another name. The $5 billion direct payment program was created in 1996 to take the place of other, less-efficient subsidies, and was slated to be temporary. But 15 years later, it lives. A proposed new subsidy, however, appearing in a Senate bill introduced last month, is essentially another price-insurance program that could end up costing taxpayers even more. Hence the problem in not killing all such programs for all time.
Finally, every dollar saved from such programs represents one dollar that will not have to be cut from Social Security or Medicare. Direct farm payments in this country amount to $18 billion a year, about one-half of 1 percent of the federal budget. But fully one-third of the budget is made up of programs funded at $25 billion or less. Ranking members of the agriculture committees urged the supercommittee to cut no more than $23 billion over ten years from all farm programs. President Obama at one point recommended cuts of $33 billion over the next ten years. One Republican plan cuts $48 billion. However, recently 20 leading agricultural economists identified more than $100 billion of subsidy cuts that could be made right now without adversely affecting the country’s food supply.
Voters, especially those in Iowa, Illinois, and Texas, where most direct payments end up, should hold accountable their representatives for refusing to take advantage of this brief opportunity before them to forever end a wasteful mistake. The budget supercommittee is required to submit a plan to Congress by Nov. 23, which must then adopt the plan by December 23 or automatic cuts will take place. The farming industry, even after the Great Depression had long ended, remains dominated by the notion that payments to reduce crops as well as fixing prices at higher-than-market levels are necessary. They are not.
©2011 Craig Colgan • ColganWrites.com