The Bipartisan Folly of Farm Subsidies

How the latest farm bill provides welfare for the wealthy

Jacob Sullum | May 14, 2008

"We need to stand up to the special interests, bring Republicans and Democrats together, and pass the farm bill immediately," Barack Obama declared last November. It was a weird thing to say, since the farm bill, which subsidizes an arbitrarily chosen section of the economy at the expense of taxpayers and consumers in general, is special-interest legislation by definition.

The latest version, which President Bush has promised to veto, includes tax breaks for racehorse owners, "marketing aid" for fruit and vegetable growers, research funding for organic farmers, enhanced price supports for domestic sugar producers, increased subsidies for dairy farmers, a $170 million earmark for the salmon industry, and billions of dollars in automatic payments and "permanent disaster assistance" for corn, wheat, cotton, rice, and soybean growers. Take that, special interests!

Less than a month ago, the Associated Press reported that "it's not a good year for a farm bill," what with surging food prices, record farm income, a tight federal budget, and a resistant president unconcerned about getting re-elected. But in the logrolling culture of Washington, the solution to wasteful, unjustified spending is more wasteful, unjustified spending.

"This is truly bipartisan legislation," says Rep. Bob Goodlatte (R-Va.), the senior Republican on the House Agriculture Committee. "There was give-and-take on all sides."

Mostly take. In response to fruit and vegetable farmers who have long complained about payments for other crops, the five-year, $300 billion bill expands existing subsidies while paying off the produce growers. In response to food price inflation, the bill continues the price supports and ethanol subsidies that contribute to it while boosting spending on food stamps. It even manages to combine two kinds of farm folly in one program, requiring the government to protect domestic sugar producers by buying imported sugar and selling it at a loss to ethanol refiners.

The bill's supporters are bragging about a new rule that would bar payments to individual farmers earning more than $750,000 a year and couples earning more than $1.5 million. That modest change is expected to affect about 2,000 subsidy recipients, less than 1 percent of the total. But it highlights the extent to which agricultural subsidies are a welfare program for rich people.

Last summer Obama's presidential campaign boasted that the Illinois senator "expressed his support" for "reducing the number of multimillionaires who are eligible for farm bill subsidies." While that sounds better than Hillary Clinton's wholehearted endorsement of the farm bill, which the New York senator says will "help revitalize rural America" and "provide a safety net for our family farms," it's a pretty sad state of affairs when self-styled reformers aspire merely to reduce taxpayer-funded payments to multimillionaires.

Not all farmers are rich, but as a group they are better off than the people footing the bill for their subsidies, with a median income of $55,000 in 2006, compared to the national median of $48,000, and median wealth about five times the national median. Heritage Foundation analyst Brian Riedl notes that most subsidies "go to large commercial farms, which report an average income of $200,000 and a net worth of nearly $2 million."

Riedl estimates that farm subsidies cost Americans $25 billion a year in taxes and another $12 billion in higher food prices. According to a Cato Institute study, the opportunity cost of agricultural support during the last two decades (i.e., the amount we'd have if the money had been invested instead of squandered) is more than $1.7 trillion.

John McCain is the only one of the three remaining major-party presidential candidates who takes a stand against this regressive, market-distorting, trade-disrupting scam. The Arizona senator, who has long opposed agricultural subsidies, recently told voters (in Iowa, no less) that if he were president he'd veto the farm bill because "the subsidies are unnecessary."

By and large, though, Obama is right that farm subsidies "bring Republicans and Democrats together." It's the sort of unity that causes one to lose hope.

© Copyright 2008 by Creators Syndicate Inc.

Comments

Other Matt|5.14.08 @ 7:26AM|#

By and large, though, Obama is right that farm subsidies "bring Republicans and Democrats together."

Yep. And he's got more coming if he makes it to the WH.

Ska|5.14.08 @ 7:55AM|#

I say windfall tax........what's fair is fair.

|5.14.08 @ 8:24AM|#

I have an uncle who's in some soil conservation program that pays him $40k a year not to grow crops on his land. Land he bought specifically to get that money. Land he bought with cash he made as a doctor.

LarryA|5.14.08 @ 9:15AM|#

By and large, though, Obama is right that farm subsidies "bring Republicans and Democrats together."

"Bipartisanship" sucks.

|5.14.08 @ 9:27AM|#

I prefer my grids locked.

|5.14.08 @ 9:45AM|#

I prefer my grids locked.

What are you, a Steelers fan?

|5.14.08 @ 9:50AM|#

Ye gods, no. It was a lame gridlock joke.

|5.14.08 @ 11:55AM|#

oh dear. I thought it was a gridiron joke.

:-D

Other Matt|5.14.08 @ 12:45PM|#

oh dear. I thought it was a gridiron joke.

At least it doesn't degenerate to some discussion about being off grid.

|5.15.08 @ 10:26AM|#

Well, at least it hadn't.....until you made that post.

Lajaw|5.15.08 @ 12:13PM|#

If we don't get rid of the USDA, we will not be able to feed ourselves in the USA. Free trade is a worthy goal, until it prevents a country from actually feeding itself.

Look at the link below to see where "free trade" has gotten the third world countries.
http://www.bloomberg.com/apps/news?pid=20601068&sid=ahjXx.6rVXXk&refer=economy

And Obama/Clinton/McCain will be more of the same.

|5.15.08 @ 2:49PM|#

Jesse,

You lost me at "arbitrarily chosen section of the economy". For close to two years I was a contractor with the USDA working on a statistical survey that supported the Farm Bill. I can confidently say from my bizarre experience there that the current system is fucked. However, agriculture is everyone's lifeline, and so your intimation that the pols could just have easily been bought off by the rubber dogshit lobby is blind. As bad as things are it's certainly tempting to say that anything else would be better, and I'm open to the argument of freeing up agriculture. But like Garth says in Wayne's World, we fear change, because far from being protected arbitrarily, this is one market which must not fail!

|5.21.08 @ 7:38PM|#

But because it's tax dollars paying for the subsidies, Jonathon, the farmers and agribusiness groups end up paying for at least part of it themselves.
Certainly, Dana Carvey's character was absolutely right. I'm a socialist, and even I am a little offended at the amount of subsidy going in the direction of farmers.
What about subsidies for small farmers only? Well, that's something to consider, provided that it doesn't actually close the gap between unsupported big business and subsidized small-timers (don't want to totally kill the incentive to go big, but you do want to give at least some incentive to farm in the first place...)
If you want to insulate the market from failure, subsidize its most vulnerable members, not the captains of the industry.