Farm Subsidies

Congress Guarantees a Bumper Crop

The fight to end farm subsidies lingers on.

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Last week, the House of Representatives passed the 2007 Farm Bill, a five-year "overhaul" of agricultural policy that House Speaker Nancy Pelosi (D-Calif.) lauded as representing "a new direction." But as much as Democrats have heralded the bill's supposed reforms, even the lightest reading shows that it represents more of the same—a flawed, wasteful approach to agricultural policy.

The House Farm Bill allocates $286 billion over five years to agricultural programs—that's an even bigger price tag than the one attached to the bloated 2002 Farm Bill, which increased agriculture spending by 80 percent over 1996's Freedom to Farm Act, itself a huge bill.

It continues the tradition of giving huge subsidies to wealthier farmers, though on a more limited basis than the 2002 Bill. Where the 2002 Bill dished out subsidies to farmers earning up to $2.5 million annually, this bill establishes an annual income threshold of $1 million, or $2 million if a husband and wife each claims subsidies. A slight improvement, at best.

President Bush, who signed the handout-happy 2002 bill that paved the way for this year's extravagant spending, to his credit, asked for subsidies to be withheld from farmers earning more than $200,000 per year. That request was disregarded, apparently because the Democratic leadership wants to protect agriculture-heavy districts the party picked up in the 2006 election—those of Rep. Nancy Boyda (D-Kansas) and Rep. Zack Space (D-Ohio), for example.

The last thing taxpayers need is this type of wasteful, extravagant spending while already saddled with a massive budget deficit and enormous entitlement liabilities. Nor do we need tax increases—which reduce revenue flows in the long term—like those targeting multinationals with U.S. subsidiaries, also included in the bill.

Then there's the vast market interference that comes with enormous government subsidies and expansive farm programs. Sugar, the subject of a major subsidy program maintained under the 2007 House bill, costs twice as much in the U.S. as it does in the rest of the world.

Nor is it beneficial to perpetuate a system of reverse wealth distribution, by which those earning up to $2 million a year are the beneficiaries of de facto welfare payments, often funded by those earning a mere 5 percent of their annual income. The Environmental Working Group finds that the largest 10 percent of farm businesses have received 72 percent of farm subsidies in recent years. If this is a good idea, perhaps we should start cutting welfare checks to partners in big-time corporate law firms and millionaire plastic surgeons in Los Angeles, too.

Of course, agricultural subsidies also represent a constant sticking point when negotiating free trade agreements, and they tend to make the U.S. vulnerable to trade sanctions. That's bad news for consumers, who benefit from the reduction and elimination of tariffs on imported goods, and suffer from the continuing retaliation and re-retaliation when countries slap sanctions on other countries for rigging their markets. Subsidies also hurt farmers in the developing world looking to export goods to U.S. markets, where they could make decent money if only the system weren't artificially rigged to benefit wealthy U.S. producers.

The real tragedy of the House version of the 2007 Farm Bill is that some legislators wanted to do more than pay lip service to a system that deals with farming as if we're still stuck in the Great Depression. Rep. Ron Kind (D-Wis.) and Rep. Jeff Flake (R-Ariz.) pushed a plan to cut farm subsidies and introduce farm savings accounts, which farmers could use to cover losses when crop prices are low or yields are poor—a potential sea-change in agricultural policy.

Not only would their plan have dealt with the issue of farmers getting hammered should they be unable to harvest a healthy crop or should prices fall, but it would also have avoided the negative side effects that come with farm subsidies, not to mention have saved up to $55 billion over the next ten years. Yet despite all the positive and truly reformist aspects of this plan, it gained little traction in the House.

The Farm Bill next moves through the Senate, likely just after the August recess. Perhaps a vacation and some rest will help the upper chamber move U.S. farm policy out of the 1930s.

Liz Mair is a political columnist, commentator and consultant living in Arlington, VA. She writes daily at www.lizmair.com, and regularly for The New York Sun.


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  1. “Perhaps a vacation and some rest will help the upper chamber move U.S. farm policy out of the 1930s.”

    And perhaps I’ll get to bang Elisha Cuthbert. Both would be very good things; the odds of either happening are close to nil.

  2. Adam W.,

    You claim banging Elisha Cuthbert would be a very good thing. I have never banged Elisha Cuthbert, so I don’t feel qualified to pass judgement on that. I think it’s time for me to do a little research.

  3. And perhaps I’ll get to bang Elisha Cuthbert.

    It’s all fun and games until she’s suddenly attacked by a mountain lion while you’re doing her.

  4. scandalrag: you at least know who she is, right? And CMS, if that’s how I die, that’s the way to go.

  5. Talk about sloppy seconds…

  6. I live in iowa and the farmers are laughing all the way to the bank. The price of corn has doubled recently (mainly due to ethanol)and they are doing quite well and I don’t think they need subsidies, in fact, most of them even think subsidies are a joke.

  7. javier — Didn’t you know this is an Elisha Cuthbert thread, not a farm bill thread? RTFA already!

    Adam W. — E. Cuthbert might disagree about you banging her being a very good thing.

  8. Just how many votes could a legislator lose by providing a sensible plan to provide FAMILY farmers with some real insurance against crop failures and sudden drops in price? I don’t get it. What is the hold that the huge farm conglomerates have on these people?

    There has to be some way to cut farm subsidies down to size. But, we may go through a lot of elections to get there.

  9. I’ve said it before, I’ll say it again. If Satan really does exist and he has a bastard child, its our agricultural policy.

  10. From Schmitz Blitz: schmitzblitz.blogspot.com

    a slightly old post

    http://schmitzblitz.blogspot.com/2007/07/government-gives-11-billion-to-dead.html

    From today’s Washington Post:

    The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.

    In a selection of 181 cases from 1999 to 2005, the Government Accountability Office found that officials approved payments without any review 40 percent of the time.

    Last year, a Washington Post investigation of farm subsidies found more than $15 billion in wasteful or redundant spending in other farm payments, including $1.3 billion to people who do not farm and $817 million to farms that use loopholes to exceed limits.

    The $1.1 billion the US government paid dead farmers is more than the 2006 budget allotted for:

    -The Nuclear Facilities Safety Board ($22 million)

    -Refugee programs ($889 million)

    -International disaster and famine assistance ($579 million)

    -Iraq relief and reconstruction fund ($10 million)

    -USAID operations ($794 million)

    -Nonproliferation, antiterrorism, demining, and related programs ($396 million)

    -Naval petroleum reserves operations ($22 million)

    -Uranium enrichment decontamination ($110 million)

    -Nuclear waste program ($148 million)

    -Emergency energy preparedness ($164 million)

    -Food safety and inspection ($830 million)

    -Consumer product safety commission ($62 million)

    -Medicare prescription drug administrative expenses ($770 million)

    -Armed forces retirement homes ($300 million)

    -Affordable housing program ($307 million)

    -High-intensity drug trafficking areas program ($200 million)

    Senator Chuck Grassley (R-IA), ranking member of the Senate Finance Committee and a critic of farm subsidies to wealthy farms requested the GAO report. Ahead of the report’s release, Grassley remarked, “Farm payments are meant for those who need some help getting through the tough times…clearly there are loopholes that should be closed and laws that need to be followed.”

    Too bad the Senator doesn’t practice what he preaches.

    According the Environmental Working Group’s Farm Subsidy Database, Grassley received over $225,041 in USDA subsidies between the years of 1995 and 2005. Grassley’s son Robin has received $653,833 over the same period.

    Oh the irony.

  11. What the heck happened to that dusty old veto pen Bush loose it again?

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