In an engaging presentation at the Longworth House of Representatives Office Building on Wednesday, leading agricultural economists examined the budget implications of two programs contained in the House Agricultural Committee’s proposed 2012 farm bill, reflecting a recently released AEI American Boondoggle working paper. Barry Goodwin of North Carolina State University began by explaining how farm households have benefitted from high crop prices and government assistance, now earning more than the median U.S. household and carrying very low debt-to-asset ratios relative to other business sectors.
Vince Smith of Montana State University and AEI then alleged that the Congressional Budget Office’s scoring of the Price Loss Coverage and Supplementary Coverage Option provisions fails to examine scenarios under which crop prices fall to recent historical average levels. In this scenario, he cautioned, the costs of these programs would balloon to $20 billion annually, drastically exceeding those of the direct payments program they would replace.
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