Skip to comments.$1 Trillion Farm Bill Full of Subsidies, Special Favors
Posted on 02/18/2014 9:32:51 AM PST by MichCapCon
President Obama was in Michigan last week to sign a 10-year, $1 trillion farm bill. While much of the debate has centered around the spending on food stamps, buried in the 1,000-page plan are many other provisions that are indefensibly bad policy.
While some are praising, and others complaining, about slightly rolling back spending on food stamps and eliminating some of the direct payments to "farmers" (who did not actually farm), the bill goes far beyond that. This bill continues special subsidy deals to farmers in every area in the country from corn and beans to rice and peanuts to sugar and catfish.
The farm bill also pays 62 percent of the premiums for crop insurance costing billions annually. The program is administered through 18 private companies.
According to The New York Times, "Crop insurers scored a major victory from a provision in the bill that bars the Agriculture Department from renegotiating lesser payments to those companies over the life of the bill. In previous years, the Agriculture Department's renegotiations with insurance companies have resulted in billions of dollars in savings for the government."
While the Congressional Budget Office said the bill will reduce federal spending by $16.6 billion, the R Street Institute, a free market think tank with its headquarters in Washington, D.C., said only $8.6 billion of that comes from trimming farm subsidies. Comparably, the 2014 White House budget wanted $37.8 billion in net cuts to farm subsidies. So the GOP, which provided most of the votes on this bill, soon will be campaigning on fiscal prudence, but could not manage to cut less than the president.
"The Obama administration is not exactly known for austere budgets, so the fact that the White House would cut $29.2 billion more in wasteful agriculture spending than the farm bill Congress approved underscores just how terrible this legislation is," said R Street Senior Fellow Andrew Moylan, in a press release.
The Economist noted that the bill is a 50 percent increase in spending over the 2008 law, with 80 percent going to spending that has nothing to do with farming.
The median farm household income is 25 percent higher than the national average and 75 percent of the subsidies in the bill go to the largest 10 percent of farm businesses. In practical terms, this means the rest of society is subsidizing wealthy agriculture companies.
Among Michigan's Congressional delegation, the bill was supported by Sens. Debbie Stabenow, D-Lansing; and Carl Levin, D-Detroit.
In the House, it was supported by most representatives on both sides of the aisle: Reps. Dan Benishek, R-Iron River; Bill Huizenga, R-Zeeland; Dave Camp, R-Midland; Dan Kildee, D-Flint; Fred Upton, R-St. Joseph; Tim Walberg, R-Tipton; Mike Rogers, R-Howell; Candice Miller, R-Harrison Township; John Dingell, D-Dearborn; and Gary Peters, D-Bloomfield Hills.
The four representatives who voted against the bill were: Reps. Justin Amash, R-Cascade Township; Sander Levin, D-Royal Oak; John Conyers, D-Detroit; and Kerry Bentivolio, R-Milford.
Republicans who were opposed to the massive far bill said they were against it for spending reasons while the Democrats said they were opposed because of the cuts to food stamp cuts.
"This is not your father's farm bill," said Sen. Stabenow, chair of the Senate Agriculture Committee, who co-wrote the bill, in a press release.
It's certainly not, nor your grandfather's. While the American economy was once mostly families working in agriculture, today many of the people and businesses that farm are much larger and wealthier. And yet we continue to give them hundreds of billions of dollars in subsidies. And much of the spending goes to an increasing number of federal programs and bureaucracy rather than the family farm.
Today, the annual budget of the Department of Agriculture exceeds the net incomes of all U.S. farmers.
Agriculture still is an important part of our economy, and there are many people working land that has been in their families for generations. But few industries, if any, get the special subsidies and deals doled out to Big Agriculture.
These favors are given to a growing number of industries in more and more states, making the farm bill a "Christmas tree budget" filled with gifts to please the beneficiaries, bureaucrats and politicians involved. But taxpayers are much worse off.
This raises the question of means testing. The problem here is that means testing the commodities programs means deliberately adopting policies that discriminate agaist our most innovative and efficient farmers. So strap on your Sherlock cap and think through that carefully.
Then throw in the international dimension. As bad as U.S. farm policies have been, they are generally better from a free market, anti-subsidy point of view than the policy regimes in most other countries. U.S. agriculture is one of the few goods-producing sectors that earns a consistent surplus for the U.S. in international trade. We expect less-subsidized U.S. farmers to compete with much more heavily protected furriners. So again, we need to be careful. There are some pick-your-poison issues here.
Finally, always remember that 80% of the "farm bill" funding is for nutritional programs. By all means, let's debate the farm programs on their merits, but let's keep the dollars straight.
$1 Trillion Farm Bill Full of Subsidies, Special Favors
Why do you think they call it a Bill? Because we, no our great grand children, will get to pay it..........
Oh and EVERY Bill passed by Congress is full of subsidies and special favors..................
The biggest single cost factor in food is labor, downstream of the farm. I do not begrudge this a bit, because the grocery industry is extremely competitive, with many options and price points. I could eat a lot cheaper, but I personally like being able to walk into a full-service supermarket and have 24/7 access to fresh fruits and vegetables and other foods from around the world. That availability is a big part of what we are paying for.
Take out "Farm Bill" and substitute any other bill you want and the title would still be the same.
Congress is not empowered to tax for those purposes which are within the exclusive province of the States. Justice John Marshall, Gibbons v. Ogden, 1824.
So the farm subsidies that corrupt DC lawmakers are using to win votes from the farmers should have never left the states in the first place, Congress arguably using the farmers own money, money stolen from farmers in the form of constitutionally indefensible federal taxes, to win the farmers' support.
But there's an even bigger problem with the farm bill imo. Note that the Supreme Court had officially clarified in United States v. Butler, in terms of the 10th Amendment nonetheless, that the states have never delegated to Congress, via the Constitution, the specific power to make laws addressing intrastate agricultural issues.
From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited. None to regulate agricultural production is given, and therefore legislation by Congress for that purpose is forbidden (emphasis added).Mr. Justice Roberts(?), United States v. Butler, 1936.
Note the statement in the excerpt above, "The same proposition, otherwise stated, is that powers not granted are prohibited." This statement indicates that Congress cannot make laws to regulate / subsidize farming any more than it can make laws to regulate our 1st Amendment-protected freedoms.
Finally, note that farmers can work with their state lawmakers to establish 10th Amendment-protected state agricultural subsidy programs if farmers want such subsidies. And if the states decide that Congress can manage agricultural subsidy programs better than the states can (ahem), then the states can always amend the Constitution to delegate to Congress the specific power to regulate intrastate agriculture that way.
That was a very eloquent defense of corporate welfare on the farm. I get no welfare payment price supports for my product. Agribusiness can do just fine without all the pork. Oink oink.
but could not manage to cut less than the president
The abundance produced by American farms preceded government takeover of the industry, it exists now in despite of government control, and would increase dramatically were the government to butt out.
Yes, agribusiness will do just fine without the pork. So will the big farmers, most of them. What will disappear will be the small and mid-sized farms. Perhaps that is ok. My point is simply that people need to be aware of what they are proposing. The big players don’t need the subsidies.
I disagree. Government has subsidized overproduction and excess capacity.
Surely small farms existed in the US prior to the introduction of federal farm subsidies. What has changed to now make those subsidies vital to the existence of small farms?
No, the government has subsidized the over production of politically favored farm produce; production which the marketplace would otherwise not support. The net productivity of farming in economic terms is not thus increased; it’s decreased (because the crops which the market would otherwise dictate are not produced.)
Thanks for posting. HOORAY Amash and Bentivolio!
As late as the 1930's, 40% of the U.S. population was still rural, and 25% of Americans were still on the farm. Small farms were the norm, as they had always been historically. The exception in the U.S. was large scale plantation agriculture in the South, but even there, large plantations were a very small percentage of farming units; small yeoman farms were the norm. The farm population probably peaked in the mid-1930's and has been declining ever since due to mechanization and farm consolidation.
To complicate the story, three things happened more or less concurrently. One was the advent of mechanization, which of course took several decades to fully run its course. The second was the Great Depression and a massive deflation in commodities prices. The third was the Dust Bowl, which was regional in impact, but very large and sustained. Put the three together, and farmers by the millions were being displaced -- this during the Depression, with very high rates of unemployment in the cities. So, rightly or wrongly, we went into the farm stabilization business.
Since that time, farm programs have slowed but certainly not stopped farm consolidation. They helped permit an orderly exodus. Today, about 150,000 large farms account for about three quarters of our output. At the other extreme are a million-plus hobby farms. In between are the remaining mid-sized farms, which are being squeezed. On a majority of them, farming is a secondary income, with the bulk of the family income being earned from off-farm employment. It is for this vanishing middle that farm programs are designed.
I don't particularly care to defend that policy choice. Neither do I particularly oppose it; put me down as an agnostic. But people should understand the underlying tradeoffs. U.S. farmers are now competing against producers in the Ukraine and Brazil, some of whom are farming in units of 250,000 acres or more. This is industrialized factory farming on steriods. Given historical patterns of land ownership, it will take generations for us to reach the same point of consolidation, but the market will tend to push us there. Given the U.S. self-conception of a land of small freeholders and a countryside largely in private ownership, a lot of people are uncomfortable with the idea that a consortium of large agribusinesses, probably under tight government regulation, will own most of the acreage. That is not the only thing at stake, but it is a significant factor.
These considerations are not mere historical observations. Around the world, many countries are just now facing the implications of agricultural modernization. China, for example, has less arable land than the U.S. but still has 600 million people in the countryside. They can't all move to Shanghai and make widgets for the U.S. market. This is a very challenging social transformation. It was difficult in the U.S., and we only had about 35 million people on the farm, at our peak. This is why farm policy is so difficult around the world.
Clarification: the countryside is largely in private ownership from Kansas and Nebraska east. The desert and mountain west are largely federally owned. But that is another story.