Congress shouldn't sneak farm bill into fiscal cliff deal

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Article Highlights

  • “The farm bill food fight must be left for another day” writes @AEI’s Vince Smith.

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  • It makes no sense that federal subsidies go overwhelmingly to the largest landowners and farm operators.

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  • Since 1995, the top 10 percent of farm subsidy recipients have cashed 74 percent of all subsidy checks.

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  • One trillion dollars in spending merits full and open consideration by Congress. #FarmBill

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  • Congress needs to focus on the larger fiscal issues at hand and pick up the farm bill again next year.

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As Congress and the White House wrestle over how to come up with $4 trillion in spending cuts and tax increases, the last thing they need is a distracting and ill-timed skirmish over whether to throw a $1 trillion farm bill package into the mix. The farm bill food fight must be left for another day.

Some advocates for subsidized agriculture tout the savings proposed in the House and Senate versions of the farm bill as a reason for including it in a deficit reduction package. But the $23 billion in 10-year savings in the Senate bill or the $35 billion in the version passed by the House Agriculture Committee would be a trivial contribution to coping with the pending fiscal cliff. What’s more, they represent a fraction of the savings to be had if Congress got serious about reforming outdated and wasteful farm subsidy programs.

The time could not be better for reform.

Farm income has soared, tripling over the last decade. Even this year, despite a historic drought that withered much of the corn and soybean crops, farm income is projected to stay high, thanks in part to the generously subsidized federal crop insurance program and the corn ethanol mandate.

It makes no sense that federal subsidy dollars go overwhelmingly to the largest, most successful landowners and farm operators — precisely those who need it least. Since 1995, the top 10 percent of farm subsidy recipients have cashed 74 percent of all subsidy checks. In 2011, for instance, 26 individual holders of crop insurance policies collected more than $1 million each in subsidies to help pay their insurance premiums.

Neither the House nor Senate bills would do enough to rein in these lavish handouts. They do take the positive step of ending one type of farm subsidy — the discredited and wasteful direct payment program — but both proposals turn right around and funnel most of the savings into other new or expanded subsidies. In fact, if prices for major crops such as corn, soybeans and wheat drop even modestly from their current record levels, those new House and Senate subsidies would be very costly for taxpayers and do nothing for the budget deficit.

While nearly everything else in the House and Senate bills has been slashed in the name of deficit reduction, large commodity farmers will enjoy higher price guarantees and gold-plated insurance options. So it’s not surprising that some farm and congressional leaders want to sneak a secret farm bill through the lame-duck session. They would rather not have to defend these giveaways in the light of day on the House floor. They would rather tuck them into a larger deficit package that cannot be amended and not look back.

It would be wrong to pull this flagrant bait and switch on the American taxpayer. One trillion dollars in spending merits full and open consideration by Congress. The House should have the chance to debate amendments that would cut subsidies, eliminate target prices and rethink the currently open-ended insurance premium entitlements.

With less than three weeks left on the legislative calendar, the current Congress long ago missed its opportunity to fully debate and pass a new five-year farm bill. Right now it needs to focus on the larger fiscal issues at hand and pick up the farm bill again next year.

Vince Smith is a professor of economics at Montana State University and an American Enterprise Institute visiting scholar. Scott Faber is the vice president of government affairs for Environmental Working Group.

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About the Author

 

Vincent H.
Smith
  • Vincent H. Smith is Professor of Economics in the Department of Agricultural Economics and Economics at Montana State University and co-director of MSU’s Agricultural Marketing Policy Center. He received his Ph.D. from North Carolina State University in 1987 and his bachelor’s and master’s degrees from the University of Manchester in 1970 and 1971. Dr. Smith’s current research program examines agricultural trade and domestic policy issues, with a particular focus on agricultural insurance, agricultural science policy, domestic and world commodity markets, risk management, and agricultural trade policy. He has authored nine books and monographs and published over 100 articles on agricultural and other policy and economic issues. His work has been recognized nationally through multiple national awards for outstanding research programs. In 2008, he became a Distinguished Scholar of the Western Agricultural Economics Association. Currently he is a Visiting AEI Scholar and co-director of AEI’s agricultural policy initiative. Dr. Smith is married and he and his wife, Laura, have two children, Karen and Meredith.
  • Email: uaevs@montana.edu
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    Email: neil.mccray@aei.org

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