Republicans back agribusiness with the farm bill

By Reihan Salam
July 12, 2013

This week, House Republicans passed a farm bill that reauthorizes and expands a wide range of federal subsidies for the agricultural sector. The bill, which is expected to cost $195 billion over the next decade, is far smaller than an earlier $939 billion version that went down to defeat last month, in what was widely seen as yet another blow to House Speaker John Boehner. Conservatives and libertarians are outraged. Heritage Action for America, the advocacy wing of the Heritage Foundation, has issued a scathing denunciation, as has policy expert Sallie James of the Cato Institute, who warns that even the modest savings promised in the farm bill are likely to prove illusory.

And liberals are also furious, as the House GOP, in an effort to paper over internal disagreements, decided to separate out the nutrition programs that had been in an earlier version of the bill, to be dealt with at a later date. Under the earlier version of the farm bill, nutrition programs — which include SNAP, the food stamp program that currently enrolls 47.6 million people — were expected to cost $743 billion over the next decade, $20.5 billion less than under the status quo. Congressional Democrats opposed the cuts on the grounds that they were too steep, while conservative GOP rebels insisted that they were too small.

The expectation is that House Republicans will propose nutrition-only legislation that will be considerably less generous than what came before it, thus bringing the rebels back into the fold. The debate over nutrition programs is obviously crucially important. David Armour and Sonia Sousa, policy scholars at George Mason University, have documented the extraordinary growth of SNAP over the last decade, and there does appear to be room to curb its growth while protecting the interests of the very poor. Whether or not Republican lawmakers choose to take that path remains to be seen. One thing we do know, however, is that the farm bill that has passed represents a serious step backwards for a party that was once committed to rolling back the agricultural welfare state.

The new farm bill makes for a striking contrast with “Freedom to Farm,” the landmark agricultural reform passed by House Republicans in 1996, when the Gingrich-led party was still full of revolutionary zeal. Eric Patashnik, a University of Virginia political scientist, documents the rise and fall of Freedom to Farm in his 2008 book Reforms at Risk. Then as now, right-of-center intellectuals were convinced that farmers needed to be weaned off of federal subsidies while also being freed of market-distorting restrictions on planting decisions. Rather than simply extend existing farm subsidies, congressional Republicans devised a seven-year schedule during which payments would be steadily reduced. The GOP commitment to curb giveaways to agribusiness flowed in part from a recognition that if conservatives wanted to overhaul welfare, Medicaid and other programs aimed primarily at the poor, it had to ruffle the feathers of at least some Republican-aligned constituencies as well.

Freedom to Farm was far from perfect, as it left a number of politically popular price supports in place. The legislation shrewdly sought to buy off farmers by boosting farm payments in the short-term in exchange for eventually phasing them out. Yet it also failed to change the incentives facing legislators. Lawmakers still have much to gain from doling out favors to farmers, and there was nothing in Freedom to Farm to prevent or even discourage them from doing so. When agricultural commodity prices fell, Congress kept boosting payments to farmers to stave off a political backlash. As Patashnik observes, Republicans and Democrats entered into a series of bidding wars, in which the parties duked it out over which could promise a bigger “emergency” farm aid package. This isn’t to say that Freedom to Farm was a complete failure. While it failed to end subsidies, it did allow for much greater planting flexibility, which in turn freed farmers to make investment decisions with an eye towards the market.

Now, however, federal agricultural policy is careening in the other direction. In recent years, Congress has placed a much heavier emphasis on subsidizing crop insurance, which in turn has shielded agribusiness interests from the kind of foolhardy decisions that would get punished in a free market. As my colleague Andrew Moylan of the R Street Institute has observed, the beneficiaries of these subsidies tend to be large, lucrative agribusiness firms. During the debate over the farm bill, Reps. Jason Chaffetz (R-UT) and Earl Blumenauer (D-OR) proposed phasing out premium subsidies for crop insurance for farms earning $250,000 or more. Other proposals aimed at capping premium subsidies at $50,000 per beneficiary and ensuring greater transparency in the program. Yet these and other perfectly sensible amendments were ruled out of order by the House leadership, and so the House never had an opportunity to vote on them.

One gets the impression that a majority of Republican lawmakers are utterly unperturbed by the fact that the farm bill represents corporate welfare at its worst. A cynic might suggest that for all its vaunted ideological purity, the House GOP caucus is simply looking out for its core constituents, namely the agribusiness interests that play an outsized role in the economic and political life of Rural America. And in a democracy, it is perfectly fair that a party will be responsive to the interests of its members. But why, you have to wonder, would the party devote so much effort to giving agribusiness interests such a big leg up while neglecting the middle-income parents and retirees who represent the bulk of the Republican rank-and-file? If ideological purity is why some conservatives oppose GOP efforts to craft a substantive, coverage-expanding alternative to President Obama’s Affordable Care Act, why wouldn’t this farm bill also be a bridge too far?

 

PHOTO: Cory Brown, a son of Sunburst Dairy owner Brian Brown, drives a feeder tractor past some corn at their dairy farm near Belleville, Wisconsin September 6, 2012. REUTERS/Darren Hauck 

5 comments

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You realize that much of this money goes to Monsanto Corporation. The very one that is poisoning the world and all the animals and people who eat their GMO crap. The same Corporation who just became immune from the Law. When people find out what they have been eating from this evil act of genetic manipulation, they will be furious. The harm is almost indescribable.

Posted by 2Borknot2B | Report as abusive

If average American is over weight and the farmers are exporting. Why the subsidy?

Why cut the poor? But religion aside in most cities housing not food is the big expense for the poor. They can run up a big food bill course if they ready made junk food at high prices and too much meat. But is had to match the rent bill.

Posted by Samrch | Report as abusive

The big moneyed interests are always well taken care of by the corporate prostitutes in the U.S. Congress while the people who are paying for all of this largess get nothing except the bill. The Senate voted 27-71 to reject an amendment to allow states to require genetically modified foods to be labeled as such. We are not even allowed to control what goes into our own bodies. The Senate voted for Monsanto to use us all as guinea pigs for their biotech experiments and Monsanto will certainly show their appreciation by filling the appropriate campaign war chests.

Posted by Des3Maisons | Report as abusive

It should be obvious to any moderately intelligent observer that the Plutocracy now runs Congress. Nothing is passed that doesn’t benefit them.
The One Percenters Rule!

Posted by ptiffany | Report as abusive

A couple of things to clarify as the author’s remarks are not totally accurate.

Crop insurance typically offers protections for things beyond the farmers control–e.g. hail damage in Colorado. It may insure against drought, but the farmer has to make a reasonable effort to grow the crop–i.e. he has to plant and use the water available to start the crop, (i.e. he must spend the money to secure the coverage). The insurance payments effectively cover the cost of the crop in the ground. And the coverage is based on the average yield over five years.

The USDA subsidies do very little for the independent farm operator. Most subsidies cover a very small portion of the costs of production. In Colorado, the typical farmer files a claim about every eight years. So the cost of the insurance subsidy is more often recovered than not. It’s not an easy decision, due to the cost of the insurance (very dissimilar to that of homeowners or vehicle insurance).

As a farm operator I can state that the USDA is a financial disaster. At a time when farm revenues and profits are at record highs, there is not any need for subsidies. Corn and wheat are double what they were five years ago, and although the costs of fertilizer and seed are up as well, profits are unprecedented in the industry. As stated, much of the subsidies are politically motivated (see Grassely in Iowa, or the Florida senators supporting sugar subsidies). We can buy sugar at lower cost internationally than the prices we subsidize. We also subsidize corporate farms and ethanol from corn–which was not what the original programs were intended to do. This is pure politics and totally disassociated from economics.

For one reason or another farmers are considered a protected vocation, and many farmers are just poor businessmen. The good farmers know how to run a business, and they run it well. But with land prices where they are, as a result of QE, a good farmer cannot afford to buy out poor farmer, as the economics of $6000/acre land cannot work.

If government got out of the ag business, other than to promote exports, all farmers would be better off.

Posted by COindependent | Report as abusive