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Tom Cotton and the Farm Bill

12:00 AM, Jun 19, 2014 • By JAY COST
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Earlier this year, Arkansas Republican Tom Cotton—now locked in a toss-up Senate race with Democrat Mark Pryor—voted against the farm bill. According to politicos and pundits in Washington, D.C., this is a politically dangerous vote to have cast. This recent article from Politico mentions his farm bill vote several times in that context. The Pryor campaign itself has taken to attacking Cotton for his vote. And Charlie Cook had this to say:

Cotton Pryor

Tom Cotton (R), Mark Pryor (D)

Although Cotton unquestionably has deeply held conservative principles that persuaded him to vote against the farm bill, it sure wasn't politically expedient for the Senate candidate to vote in opposition. My hunch is that there is a lot of head-scratching over that vote among farmers and folks in rural and small-town Arkansas. ... It's times like this when voters have that "Whiskey Tango Foxtrot" moment, wondering why a member of Congress from a largely rural state would take such a position. This race is far from over, and Cotton still could win. But my guess is, his vote on the farm bill will be a cudgel that Pryor will swing at him from now to November, providing an opening that the incumbent needed and the challenger could ill-afford to give. If Cotton doesn't regret the vote already, he soon will.

According to Politico, Cotton does not have any regrets. And he shouldn’t. The farm bill represents everything that is wrong with Washington, D.C. And politically, it is little more than a paper tiger.

Let’s take the politics of it first. Cook captures well the mythology of the farm bill, that it helps “farmers and folks in rural and small-town Arkansas.” But that is simply not correct. The farm bill helps the wealthiest farmers because its subsidies are ultimately keyed to agricultural output. You have to farm more to get more from Uncle Sam, which means that small farms get very little.

More than this, economists have found that the only groups to benefit from the farm bill are those possessing inelastic inputs. Say, for instance, that you are a cotton worker, and the feds just increased the subsidies to cotton. Will you receive a bump in your pay because cotton output has become more valuable? Maybe, for a time. But labor is an elastic input, so the better wage rates will attract non-farm workers or maybe those working on soybeans. Soon, much of your labor gains will have evaporated. Instead, the real winners will be the landowners—because you cannot make more land.

So, let’s drill it down in Arkansas. In 2012, there were about 45,000 farms in the Razorback State. Of them, only about 16 percent had more than $100,000 in sales. This is where most of the subsidies will go, and the benefits will accrue mostly to the landowners. So a vote against the farm bill is really a vote against maybe 7,200 or so landowners in Arkansas.

But that’s not all. Since the 1960s, the farm bill has been linked to food stamps in a logroll. The reason for this is that, with the egregious cost of farm subsidies and the shrinking farm population, farm subsidy advocates have struggled to put together enough votes in Congress. So, they linked the program to food stamps, which have since grown to unbelievable proportions—46 million people according to the last count by the Department of Agriculture (which only runs the food stamp program because of this logroll). How well does that play in a state like Arkansas? Urban liberals might think nothing of such a figure, but in a conservative state like Arkansas the number probably frightens and appalls more than anything.

What about the farm bill as public policy? I am currently writing a history of political corruption, to which I dedicated a chapter to farm subsidies, and I say without hesitation: the farm bill represents everything that is wrong with the federal government. It is far from the sexiest topic of policy discussion, and at this point it is not the most wasteful program out there (although 50 years ago it probably was), but it is nevertheless the quintessence of Beltway dysfunction.

There are many reasons why, so let’s just hit the highlights:

1.) It is a transfer of wealth from the poor to the wealthy. Farmers used to be much poorer than non-farmers, but not anymore. Farm income now exceeds non-farm income on average. Moreover, the farm subsidies tend to benefit the wealthiest of farmers, so the distributional effect is even more perverse.

2.) It wastes substantial money every year. The costs to taxpayers (in the form of higher taxes) and consumers (in the form of higher food prices) is actually greater than the net subsidy direct to farmers. This is known as “deadweight loss.” The actual figure is hard to calculate, but in the 1990s economists tagged it at roughly $5 billion.

3.) It lacks an intelligent design. As Mercatus scholar Matthew Mitchell put it recently, the farm bill is a “grab bag of subsidies, in-kind transfers, protectionist trade barriers, and price and revenue supports for agribusiness.” The number of farm programs has actually increased over the last 30 years even as the number of farmers has declined. The reason has to do with the logroll. None of the individual programs in the farm bill could pass by themselves on the floor of the House or the Senate, so they are linked together. The more, the merrier, in fact.

But what this means is that the farm bill often pushes and pulls simultaneously. It provides incentives for retiring acres from production but also provides generous insurance subsidies to induce farmers to farm on marginal land. It has programs to encourage healthy eating while also subsidizing the high fructose corn syrup industry. And so on.

It used to be that the large organizations—like the Farm Bureau—could provide some overarching rationality to the program, but they have been in decline for generations. Today, the politics tend to be dominated by commodity groups and agribusinesses. So, it is really just a smorgasbord of givebacks without any rationality to it.

4.) It is political payola. Congress loves the farm bill, which is why it has not passed a permanent one since 1948. It prefers to do it in five-year, temporary increments to keep all these groups coming to Washington, D.C., with their hands out, asking for subsidies. Importantly, the interest groups give an enormous portion of the bounty back to members of Congress, in the form of campaign contributions. In 2012, total contributions from individuals and PACs connected to the farm industry amounted to $82 million. Independent expenditures kicked in another $10 million.

This is a great scam, if you can get it. You get elected to Congress, use the byzantine structure and impermeable complexity of the farm bill to funnel $20 billion or so of taxpayer money to the farm industry, then they turn around and fund your campaign. If you did this in the waste disposal industry in New Jersey, the FBI would label you a mafia boss and send you to jail for racketeering. But do it in Congress and everybody calls you the, “Honorable So-And-So.”

And this is why conservatives should be so excited about Tom Cotton. He said no to this corruption. It would have been politically easy to vote for the farm bill; the rest of his state delegation did, after all. So did Pryor, and the safe move would be to vote the same and neutralize the issue altogether. But he understood just how pernicious the farm bill really is, and took a stand against it.

It would be nice if Republicans took control of the Senate this cycle, but as conservatives have learned the hard way over the last 20 years, any old Republican will not do. There are some great Republican leaders, some so-so ones, and some who are no better than the Democrats. This, after all, is why we still have a farm bill, despite Republican control of the House for all but four of the last nineteen years; too many in the GOP are willing to play the same old, crooked Beltway game.

Cotton isn’t, and it is why having him in the Senate would be great for conservatism.

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