A Long Row to Hoe

Obama's ill-fated effort to cut subsidies to wealthy farmers

At least someone is getting a bonus this year.

Bankers may be out of luck, and things aren't looking too good for autoworkers, but boy howdy, things are right as rain down on the farm. Food prices are holding fairly steady, energy costs are low. And even as Congress snatches bonuses from the hands of the corporate execs who ran unprofitable banks, it cheerfully cuts checks to folks who have been running unprofitable farms for years. In this year's budget battle, Congress even fought President Barack Obama for the privilege of cutting those checks to relatively high-earning farmers.

In recent weeks, it's hard to find much good fiscal news coming out of Washington. People made nervous by the government spending ever larger amounts of money that we don't have (read: the 59 percent of Americans who say they are "very concerned") are hard-pressed to find something to be cheery about. Even those who have remained optimistic about the Obama administration—in its early days still, after all—are bound to find the 2010 budget document, versions of which passed the House and Senate on Thursday, full of the small heartbreaks that always come with a new budget.

For instance, there seemed to be a spot of good news in President Barack Obama's budget proposal for the Department of Agriculture. He suggested cutting direct federal payments to farmers who bring in more than $500,000 in revenue. These are just the direct payments—they are on top of all of the other price supports, buybacks, and protective tariffs that keep the prices of certain staple crops artificially high. (Obama has proposed limits on some of those payments as well, with some small congressional support.)

Understandably busy with other things, Obama threw the agriculture proposal out pretty casually, without the prepping and grooming of allies one might expect in calmer times. And before you could say "corn as high as an elephant's eye," the amendment was crushed so effectively in the agriculture committees of both branches of the legislature that it won't be revived any time soon.

Remember when $9.7 billion still sounded like a number big enough to care about? That's how much Obama's cap on direct payments to farmers would have saved over a decade. Instead of those billions in savings, taxpayers will be getting a tiny $350 million trim in federal money currently subsidizing crop insurance. You'd have be quite an oldtimer to remember when that seemed like a lot of money in the federal budget.

In fact, the Obama proposal—and a very similar version of the cut proposed by George W. Bush before him—may not have even been about the money. Corporate welfare is corporate welfare, whether its recipient drives a Lexus or a tractor (or both, for that matter). High subsidies to agriculture have gotten the U.S. in trouble again and again in world trade negotiations. A cut like this one would signal a good faith effort to stop stacking the deck so blatantly in favor of farmers whose major virtue is that they happen to be growing and hoeing on American soil.

As Obama's proposal put it so succinctly: "Presently, direct payments are made to even large producers regardless of crop prices, losses, or whether the land is still under production. The program was introduced in the 1996 Farm Bill as a temporary payment scheduled to expire, but was included in the 2002 and 2008 Farm Bills." Congress likes writing checks to farmers so much, sometimes they even write checks to dead ones. In fact, it was almost a miracle when the 2008 farm bill actually cut into the payment amount significantly; the cap for farm income alone was $2.5 million before last year's tweaks.

According to the terms of last year's farm bill, a farming couple taking in up to $2.5 million, including up to $1 million in non-farm income, can still get support from the federal government. If you and your spouse are bringing in $500,000 each in non-farm income and you still need federal money to keep your farm afloat, you should probably consider getting out of the farming game and focusing on whatever it is that's earning you a million bucks.

There are probably a few folks running something that is recognizable as a "family farm" who bring in half a million dollars in revenue yet still have trouble keeping their heads above water. But like the little old lady who will be thrown into the street if rent control is abolished in New York, the middle-class mid-sized farmer is an elusive character. Just like all the archetypal little guys used to justify transfer payments or other special consideration for big guys.

On Capitol Hill, it may not be a buyers market or a sellers market, but it's always a farmers' market.

Katherine Mangu-Ward is an associate editor at Reason magazine.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • EJM||

  • Xeones||

    Yo, fuck farm subsidies.

  • ||

  • ||

    Oopsy.

    CHANGE!

    or not.

  • Nihixul||

    As of 3:45 eastern, the actual article title still contains "subsides" instead of "subsidies".

    Just a heads up.

  • ||

    Ava Gabor was hot.

  • ||

    Make that Eva Gabor was hot. Eva, not Ava was Mrs. Douglas

  • Vines & Cattle||

    Obama isn't going to cut farm subsidies, just like he's not going to relinquish control of GM, and he's not going to allow repayment of TARP funds.

  • fyodor||

    Obama isn't going to cut farm subsidies

    Well, at least he tried.

    If...not very hard.

  • ||

    If we had anything but a state run media, BO's refusal to accept TARP repayments would be a national scandal. It is the most outragous think he has done. It his denying the tax payers money that they are owed so that he and his chronies can control the banks. It is criminal.

  • ||

    If we had anything but a state run media, BO's refusal to accept TARP repayments would be a national scandal. It is the most outragous think he has done. It his denying the tax payers money that they are owed so that he and his chronies can control the banks. It is criminal.

    WTF? Got a link? This is the first I've heard of that.

  • ||

    While I'm sure it varies greatly from product to product, does anyone know what kind of profit margin farmers make? If they make a 10% profit margin, $500k in revenues does not sound like a huge take home salary ($50,000 a year).

  • Paul||

    I keep hoping that Obama will change.

  • Linky||

    WTF? Got a link? This is the first I've heard of that.

    Yep.

  • ||

    One of the many problems with subsidies is that they get "baked into the cake" and become an integral part of the revenue equation. For example, an acre of farm land is priced based on total return, including subsidies.

    When somebody suggests cutting the subsidies, you inevitably get cries of, "But how will the poor farmers make any money?"

    The cost structure will adjust, but it will take time.

  • DJP||

    I'm strongly against farm subsidies (and most other subsidies) but I'd be interested in more meaningful #'s in this article.

    Does the government give you a million dollars for growing corn in your backyard? Or do they take your profit for the year and kick back an extra 1% in tax credits?

    For example, just saying $500,000 revenue is problematic as it doesn't say anything about net income. You can end up with a net loss for the year with a $500k revenue. Unless by $500k revenue they mean $500k profit.

  • ||

    Green Acres ruled.

  • Barry Loberfeld||

    From "What About the Poor?":


    ("Almost three-quarters of [agricultural] subsidies go to 20,000 multi-millionaire play farmers and blue chip corporations" -- Mark Steyn)

  • ||

    The BO plan for crypto-nationalizing the financing sector proceeds apace.

    (1) Force TARP money on banks that don't want or need it.

    (2) Force post-facto conditions and requirements on banks that have TARP money.

    (3) Prohibit banks from exiting TARP to get out from under federal control.

    I'm hoping some banker will call their bluff on step 3, and simply wire the money bank, make a press release announcing it, and pre-emptively state that any regulatory retaliation by the administration will also be publicized.

    Of course, banks being large complex businesses, the retaliation will consist of audits and examination that will be costly and will undoubtedly turn up a handful of minor violations that will be trumpeted by the administration. I doubt any banker wants to trigger that, so the socialists win on this one.

  • nike shox||

    is good

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