Farm Forecast: Aid, with 32.3 Billion in Scattered Dollars

National Journal, June 24, 2000

"Hello, sports fans, and welcome to National Journal's 'SportsDesk Live.' I'm your host, Jarat N. Hanouch–"

"–and I'm your co-host, J.C. Chura–"

"–and today we'll be looking at one of everybody's favorite Washington games, farmball."

"That's right, Jarat. And what a game we've had lately! I've been watching reformers battle farmers for years, and I have to tell you, it's been one hot contest lately."

"J.C., how about that wool and mohair match?"

"Jarat, this match may be small, but if you want to understand farmball, this is where you want to be. Back in the early 1950s, the Pentagon worried about not having enough domestic wool for its uniforms. So in 1954, Congress created a wool subsidy, and mohair came along for the ride."

"J.C., I'd better mention that mohair is the fleece of the Angora goat. It's produced mainly in Texas–also our biggest wool state, by the way."

"Right, Jarat. And believe me, in farmball you don't want to cross a Texan. Right now, both the chairman and the ranking Democrat on the House Agriculture Committee are Texans, and Texas has just been a superpower in this game since the get-go."

"J.C., didn't the reform team score a big win on this one in '93?"

"They sure did. Though the Pentagon switched to synthetics in 1960, the program went on and on, spending almost $200 million in some years, until, in 1993, the reformers threw a 'Hail Mary' pass. Congress was passing a big anti-deficit package that year, and the Senate was determined to show it could eliminate at least one program. Well, the Senate killed the subsidy. House-Senate conferees restored it, but the Senate wouldn't back off, and the wool program was repealed."

"A little program, J.C., but still a big day. Government programs get killed about twice in a century. But farmball is never over till it's over, is it?"

"Right, Jarat. In the 1996 farm bill, the wool team made a fast side play and got Congress to create a National Sheep Industry Improvement Center. Then the mohair team got some interest-free loans. And then just last month, on May 25, Congress passed a farm-aid bill that tucked in about $11 million in direct subsidies for wool and mohair."

"Nice move there, J.C. They brought that sucker right back from the dead."

"Well, that's right, Jarat, but bear in mind that the reform team had already moved the whole game down field. This new subsidy is small compared with the old one, and it's authorized for just a year. The wool and mohair folks say it's one-time disaster relief that will just help them hang on by their fingernails. Wool and mohair prices are low, warehouses are overflowing, and out in Texas some counties are in their fifth or sixth year of drought. It's rough out there."

"So Congress figured it wouldn't be fair to ignore the sheep and goat people while everyone else and his brother got a big bailout?"

"Right. Those Texans weren't about to let that happen. If you wanted to be idealistic, you could say it would be wrong to let the little crops suffer while the big ones cashed their government checks. Or, if you were feeling cynical, you could call it pork barreling. Either way, in farmball, everybody's subsidy justifies everybody else's subsidy. Of course, the grocery or pizzeria or hardware store down the street doesn't get a federal disaster-relief bill when times are tough."

"Well, we have taxball for those folks. J.C., just to wrap up on wool and mohair, what happens next year, when this one-year program is set to expire? Isn't that when we'll see the real clinch plays?"

"Could be, Jarat. Or could be 2002, when the next farm bill is due. Jule Richmond, the first vice president of the Texas Sheep and Goat Raisers' Association, told me he hopes to put in a permanent program."

"Where's your money, J.C.? Is wool and mohair back for good?"

"You know the old saying: There's nothing more permanent in this town than a temporary program."

"Well, we'll be tuning in to that rematch later on. Meanwhile, let's talk about the main game. How about those farmers! What a play!"

"Jarat, I've got to tell you, the phone lines were just lighting up all over Washington on June 1 when word of that $32.3 billion score hit the streets."

"A little background here for our viewers. For decades, farm programs were entitlements that supported farmers' incomes by propping up commodity prices."

"That's right, Jarat. It was a good deal for farmers, but reformers and economists hated it. Farmers grew too much of what the government subsidized and not enough of everything else. Things got so messy that even the farmers started to have doubts."

"That was how the big reform play came about, wasn't it?"

"Yessir. In 1996, the reformist Republican Congress just grabbed the ball and ran it all the way down the field and smashed it home. That year's farm bill stopped supporting prices for the big grain crops and instead gave the farmers straight cash payments, which were set to decline over seven years. So there were really two goals: reducing Washington's interference in agricultural markets by getting rid of price controls, and ratcheting down the cost of the program."

"You know, J.C., the fun of farmball isn't just the big play, it's the recovery afterward. Did you expect the farmers to move back to offense so fast?"

"Honestly, Jarat, I don't think anyone did. By 1998, prices were down, and farmers were hollering. So they just started moving the ball back down to their end, one play at a time. In 1998, Congress passed a big farm-aid bill. In 1999, it passed another one. Just last month, it passed yet another."

"With a lot more in it than just wool and mohair payments."

"You bet. There was $47 million for peanuts–a 'temporary' program from the 1930s. Money for tobacco–$340 million. Billions for grains and soybeans. On and on. That's why on June 1 the Clinton Administration announced that farm-subsidy spending will total $32.3 billion this year. An all-time record."

"A lot of eyebrows shot up when that number came out, J.C. In 1986, during the biggest farm depression since the 1930s, a Democratic Congress racked up $25.8 billion, but these conservative Republicans have just left that record in the dust. And did you see those trend lines?"

"Jarat, the 1996 reform farm bill was supposed to spend $42 billion over seven years, with payments declining every year. Congress's numbers show that the actual spending will be more like $86 billion, with payments rising every year."

"You know, J.C., for all of the elegance of that reform play in '96, you just can't beat farmers when it comes to sheer relentlessness."

"Well, combine those big campaign contributions with some real economic distress out there on the farm, and there was just no way Congress was going to stick to its reform guns. You gotta say, though, the reformers aren't empty-handed. They did succeed in holding on to their economic reforms. We're still supporting farmers instead of prices; it just costs a lot more than anybody planned. Jarat, don't forget that a lot of Democrats and farmers wanted to go back to market controls. Reformers managed to hold them off by throwing money at them. They saved the economic reforms by sacrificing the fiscal reforms, but things are still better than in the bad old days."

"You know, J.C., the sugar program sort of confirms your point here. It's an old-fashioned market-control program. Earlier this month, the General Accounting Office announced that this baby cost American consumers $1.9 billion in 1998, of which only $1 billion flowed to American producers. Another $400 million spilled over as benefits to foreign producers–America's competitors–and $500 million was just wasted outright as what economists call 'deadweight loss,' or wealth destroyed by pure inefficiency."

"Just like old times, Jarat."

"Sure is. To keep this relic from collapsing under market pressures, the Administration has just had to rush in and spend $60 million to buy 150,000 tons of sugar. To keep prices up, the government will need to make sure all of that sugar goes to waste instead of being sold to someone who might actually need it."

"Gotta love it, Jarat."

"OK, J.C. What's your call? Four great years for reformers in 1993 through 1996, four great years for farmers after that. Who's the net winner as of now?"

"I'd have to say we are, Jarat: the chattering classes and the hard-working professionals of the lobbying and politicking communities who sell tickets to the game."

"Which is as it should be, J.C. See you next week. We'll be discussing prescription-drugball."