So Congress Made A Farm Bill

Posted on May 23, 2013

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Arnold the Pig left the show in the last few seasons of the series and won a seat in Congress.

I actually was conflicted about what to name this post.  My decision narrowed down to ‘Green Acres – the Movie’ and the title you see.  Search Engine Optimization won out.

What actually is the Farm Bill, what’s in it and why do we need it, do we still need it and is there room for reform?  These are questions that most Americans have little specific knowledge of, but since it is your money being spent – maybe it’s time to look into it.

The Farm Bill is at this point in time, primarily a Food Stamp bill. 80% of the bill’s expenditures are dedicated to the Food Stamp program.  The remainder is broken up between Agricultural subsidies, Forestry and Conservation projects, energy development and rural development projects.  For some perspective on how this all got started, we go back to 1933 and FDR’s New Deal.  One of the pillars of the New Deal was the concept of the Federal government riding in on a White Horse and rescuing farmers from themselves. Simply – farmers were paid not to farm.

Intrinsic in the logic of this is that too much farming and production leads to depressed commodity prices which equals poor farmers. The solution?  Incentive farmers to cut back on certain crops or stop growing them altogether.  It sounded sensible at first blush to many folks.  The poverty imposed on this country by the manipulations of the money masters and the economic ruin they created, put Americans in a mood to accept Big Government schemes such as this.  Only one small problem – the Constitution.  It doesn’t permit a takeover of the markets by government.

Having said that, the Supreme Court has deferred to the legislative branch on matters having to do with commerce.  In one case, Wickard vs.Filburn (1942), the government’s power to regulate economic activity in the manner of the Agricultural Adjustment Act, was challenged by the defendant in the case.  A farmer, Roscoe Filburn, was growing wheat for strictly farm use in Ohio.  The U.S. government determined that Filburn was growing more than the limits permitted.  Filburn was ordered to destroy his crops and pay a fine, even though he was producing the excess wheat for his own use and had no intention of selling it.

The Supreme Court sided with the Secretary of Agriculture, Claude R. Wickard, saying that Congress was within its jurisdiction in dictating allotments of production.  You might have heard of this case more recently in relation to the ‘Individual Mandate’ clause of the Patient Protection and Affordable Care Act, affectionately known as ‘Obamacare’ – in which the authors of the law define your refraining to purchase a healthcare policy as engaging in commerce.  Lewis Carroll, creator of ‘Alice In Wonderland’ couldn’t have devised anything that preposterous.  Earl M. Maltz tallies the damages to the integrity of the Constitution; “In the wake of New Deal era Supreme Court jurisprudence it has become clear that Congress has acquired the authority to regulate private economic activity in a manner near limitless in its purview.”

At first this matter of paying for these subsidies (the ‘Carrot’ end of the stick), was deflected by sending the bill for the subsidies to the food processing industry.  This would be an early example of wealth redistribution Soviet style.  Eventually, a case, United States v. Butler, 297 U.S. 1 (1936), was brought before the Supreme Court and they struck down this provision of the ‘Agricultural Adjustment Act’.  No worries, Congress and the White House just made some changes that flipped the burden over to the taxpayer.

Since then, farmers have been paid not to produce crops and during the intervening years, farmers have become quite prosperous.  Am I alone in believing I see a parallel between the regulation of farm output and the warnings in Professor Von Hayek’s book, ‘The Road To Serfdom’, about the destruction and abuse resulting from centralized economic planning?

So here we are in 2013, and farmers have about as much need for these subsidies as I have for five more toes on my Left foot.  As Ms. Diane Katz, Reseach Fellow in Regulatory Policy at the Heritage Foundation sums things up:

Farmers are pulling in record-high levels of income and carrying record-low levels of debt. Technology has eliminated many of the risks that once plagued farming, and the profitability of unsubsidized crops demonstrates that independent agriculture is viable. So there is no way to justify continuing to give tens of billions of dollars to the farm industry.

There is a discussion to be engaged on the scope of the Food Stamp program and whether the government should be involved in provisioning research and development of energy and rural improvement, but there is only one reason Congress has rolled all these together in one bill.  It is because of the radioactive nature of the major elements in the legislation.  This has become a trend with Congress.  Take any entitlement that has achieved sacred status in the eyes of a powerful group of special interests and mate it together with other provisions that have broad public support – in this case farm subsidies and ‘nutritional assistance’.  Then, voila –  you have normally separate policy advocacy groups joined together in a coalition against reform.

Similar effects are derived from such omnibus style appropriations bills covering the defense budget and transportation.   This is now a device in which dubious expenditures are sandwiched in between other expenditures of higher public visibility and perceived legitimacy.  It’s clever and it has worked up until now.  An effort is underway, among fiscal conservatives to bring these tactics to public scrutiny and thus to an end.  That is why my friends at the Heritage Foundation are proposing changes to the way Congress does business on the Farm Bill.   Here is a general outline of those recommendations:

  • Separate food stamps from agriculture programs. This reform is a matter of open and transparent government. Food stamps and farm policy are distinct issues. Each warrants thoughtful consideration from legislators in congressional committees with appropriate jurisdiction. Combining both into one massive bill undermines chances for accountability and meaningful reform.
  • Limit farm subsidies to farmers with adjusted gross incomes below $250,000. Until subsidies are eliminated, there should at least be a means test to restrict eligibility. Eligibility should be restricted across the board, and the income levels should be significantly reduced to less than the current thresholds. The existing loophole that allows multiple people working one farm to receive subsidies should be eliminated.
  • Eliminate the direct payments program. There is no justification for subsidizing farmers who do not grow crops, or to subsidize farmers regardless of their income. Both the House and Senate bills last year would have eliminated direct payments—evidence of broad recognition that these programs should be eliminated.
  • Cap the crop insurance program on insurance premium subsidies and reduce the percentage of total premiums that taxpayers must subsidize. Crop insurance subsidies have skyrocketed, and are expected to average $8.9 billion a year from 2013–2022, according to the Congressional Budget Office. The Government Accountability Office analyzed the impact of placing a $40,000 cap on premium subsidies received by farmers, if applied in 2011: a savings to taxpayers of $1 billion. This type of cap would only have affected 3.9 percent of participating farmers.[20] By lowering the cap, even greater savings could be achieved.
  • Taxpayers should bear a much smaller burden when it comes to subsidizing premiums. In 2011, taxpayers paid 62 percent of the premium subsidies for the crop insurance program. In 2000, taxpayers covered 37 percent. Simply reducing the 62 percent premium subsidy by 10 percentage points to 52 percent in 2011 would have saved $1.2 billion.
  • Do not replace one bad policy with another: Avoiding the “shallow loss” and “price loss coverage” problem. In 2012, the Senate approved repeal of direct payments and counter-cyclical payments. The House bill also would have done the same. But lawmakers negated that progress by replacing direct subsidies with programs that would likely cost taxpayers even more. This is unacceptable.

Listen, this isn’t about bashing our nation’s farmers.  I got just as choked up and teary eyed as you did, about that inspirational Super Bowl ad, ‘So God Made A Farmer’, where Dodge artfully pandered their Ram series of trucks with an eloquent narration from broadcasting icon Paul Harvey waxing prosaic.  I also am a fan of NPR’s  ‘A Prairie Home Companion’, O.K.?  I can still like, no – love farmers and yet make the argument that subsidies are bad policy.

There is much more to be learned about this topic and you can check out the details here, but as in many other areas of policy, Congress (and your local House member) need to have their feet held to the fire.  Just as one man’s ceiling is another man’s floor – there are many different styles of ‘welfare’ in our nation’s budget.  Corporate Welfare (Oil and Energy Industry subsidies, TARP bailouts, Federal Reserve Stimulus, Solyndra), Agricultural Welfare (as described above) and Welfare to individuals (the kind we conservatives pay most attention to).

All of them are of dubious constitutionality to one degree or another and all of them provide a Golden opportunity to reduce the size, complexity and corruption of American government.

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