Farm Bill Fiasco
Big Ag’s big subsidies.
Jul 29, 2013, Vol. 18, No. 43 • By ANDREW MOYLAN
With this month’s passage of a farm bill that doles out tens of billions of dollars in subsidies to agribusiness interests, the Republican-controlled House has signaled that the class of 2010 dream of a genuinely “small government” majority is well and truly dead.
Passed by a narrow margin after just 12 Republicans joined every House Democrat in voting against it, the bill gets almost everything wrong. It’s an exercise in client politics passed through antidemocratic tactics and expands some of the least useful federal programs while outspending both the Democratic Senate and the profligate Obama White House.
In a move reminiscent of the Pelosi era, Republican House leaders decided behind closed doors to cleave off the Supplemental Nutritional Assistance Program (formerly known as “food stamps”) and move the bill’s agriculture titles as stand-alone legislation. In a late-night session, the Rules Committee adopted an “emergency” rule governing debate on the bill that would close it off to any amendments whatsoever. Then, despite commitments to make bill language available 72 hours ahead of time, they dropped a 608-page package of legislative text a mere 10 hours before votes were called. Tucked inside were hastily drafted and poorly understood provisions that eliminated traditional five-year sunsets for commodity subsidies.
In short, the process mimicked the worst abuses of the previous Democratic majority, all in pursuit of lavish big government legislation.
On the policy front, the bill itself was no better than the process that ushered it to the floor. At a cost of nearly $196 billion over 10 years, it spends $1 billion more than companion agriculture language passed by the Democrat-controlled Senate, $18 billion more than called for in the Republicans’ own “Path to Prosperity” budget resolution, and fully $25 billion more than President Obama requested in his otherwise laughably expensive budget. Though proponents claim that it will reduce the deficit by more than $12 billion over the next decade, it actually increases spending by more than $1 billion next year and schedules most of the savings for years 6 through 10, by which time Congress will likely have passed a new farm bill to supersede this one.
The bill increases price guarantees for commodity crops and, perhaps worst of all, creates a new open-ended “shallow loss” program to insulate farmers from even small declines in prices. The law sets as a floor today’s near-record high prices, thus putting taxpayers on the hook for huge outlays in future years should prices drop. The 2013 farm bill, like its predecessors, will thus almost certainly cost dramatically more than currently estimated by the Congressional Budget Office. The 2002 farm bill cost 30 percent more than CBO originally projected and the 2008 bill cost 43 percent more.
Furthermore, the House bill is devoid of structural changes that have broad bipartisan support in both chambers. For example, its crop insurance scheme includes no limitations or caps to prevent costs from spiraling out of control. It also fails to include a common sense Reagan-era policy called “conservation compliance,” which has helped ensure that taxpayers are not on the hook for risky and environmentally destructive farming on sensitive lands. The Senate-passed legislation makes both improvements, including a modest means test that reduces subsidies for those with adjusted gross incomes of more than $750,000.
All of this comes at a time we should be phasing out U.S. agriculture’s government supports. Average farm income is now about 25 percent higher than the average household income, and the former is rising while the latter is falling. Prices that farmers receive for their products are at or near record highs. And America’s fiscal challenges remain enormous. When combined with the decades-long bipartisan consensus in favor of trimming agriculture subsidies, it seems reasonable to say that doing so will never be easier than it is right now. Unfortunately, the response of House Republicans has been to resist reform in order to preserve a robust system of subsidies in which the richest 10 percent of operations rake in 74 percent of all payments.
While much was made of the fact that the bill separated farm and nutrition policy for the first time, even that was botched. Splitting the two components held promise because it could, in theory, break the unholy logrolling alliance of urban and rural interests that shield both from fundamental reforms. But House leaders simply took most of the farm language that failed last month and put it up for a vote again without any amendments. As a result, none of the improvements that might have been possible for a “farm-only” bill saw the light of day.
Republican leaders will claim that this bill takes a small step in the direction of reform, since large steps aren’t possible. But that simply isn’t true. Reform would have meant limiting crop insurance subsidies, particularly for rich farmers, and not adding expensive new entitlements like “shallow loss.” Then the House could have pursued a food stamp bill with a similar eye to reforms to trim costs while preserving the safety net.
Republicans resent the caricature that they lavish support on the rich and care little for the poor. They need look no further than the latest farm bill vote to see why the label is so enduring.
Andrew Moylan is a senior fellow at the R Street Institute, a free-market think tank based in Washington, D.C.
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