Who Wants to Be a Millionaire?

The Wall Street Journal has an excellent editorial today on the farm bill. As usual, the bill is an unbelievable hog trough for agribusiness; what particularly irks me this time, though, is the lip service to “reform.” Bottom line: don’t believe it. Big Ag is no different from any other K-Street supplicant. My only question is how high food prices will have to climb before we see voters revolt and pressure their congressional representatives to vote against this nonsense.

Who Wants to Be a Millionaire? May 14, 2008; Page A20

We can’t wait to hear how Members of Congress explain their vote this week for the new $300 billion farm bill. At a time when Americans are squeezed at the grocery store, they will now see more of their taxes flow to the very farmers profiting from these high food prices.

This year farm income is expected to reach an all-time high of $92.3 billion, an increase of 56% in two years, making growers perhaps the most undeserving welfare recipients in American history. But that won’t stop this bill from passing the House and Senate by wide margins. Speaker Nancy Pelosi was once a farm subsidy skeptic, but she now has some 30 freshman Democrats from battleground rural districts to protect. So more than $10 billion a year in giveaways to agribusiness is a necessary taxpayer sacrifice to keep her majority.

Ms. Pelosi calls the bill “real reform,” which is like calling Lindsay Lohan born again. For example: The bill perpetuates the so-called Hurricane Katrina gambit that allows farmers to lock in price-support payments at the lowest possible market price, and then sell their crops later at the highest possible price, and then pocket the high price and a payment from the government for the difference between the two. They in effect get paid twice for the same bushel of wheat.

A bigger scam is the new income limit to qualify for subsidies. Mr. Bush sought a $200,000 annual income cap, but Congress can’t bring itself to go below $750,000. Even that is a farce, because it doesn’t include loan programs and disaster payments, and it allows spouses to qualify for payments too. The White House and liberal reformers calculate that farm owners with clever accountants can have incomes of up to $2.5 million and still get a taxpayer handout.

Several weeks ago, Senate Agriculture Chairman Tom Harkin was asked by the Des Moines Register how many farmers in Iowa would be excluded under the new income cap. His answer: “two or three.” On tax policy Mr. Harkin and his fellow Democrats talk endlessly about soaking the rich, but on farm policy they favor soaking the middle class to pay the rich.

Nearly every crop – corn, wheat, sugar – has won increases in subsidy payments even as farm commodity prices explode. (See nearby chart.) Of the 17 most subsidized commodities, only rice and cotton will get a slight reduction in payments, while the bill extends the farm welfare net to lentils, chick peas, fruits and vegetables, and even organic foods. There are new programs for Kentucky horse breeders and Pacific Coast salmon fishermen, and your tax dollars will help finance the dairy industry’s “Got Milk?” campaign. Oh, and you still don’t even have to farm to cash in. Hundreds of millions of dollars will go to landowners based on their “historical planting average” even if they haven’t planted a seed in years.

And once again the big sugar plantation owners in Florida walk away with the sweetest deal: Big Sugar bagged an increase in price supports and a guarantee of 85% of the domestic sugar market at these guaranteed prices. So taxpayers are on the hook for buying surplus domestically produced sugar at 23 cents a pound and selling it for ethanol for closer to three cents a pound.

If you wonder why urban Democrats would vote for this rural giveaway, the answer is they have been bought off with roughly $10 billion in extra funding for food stamps and nutrition welfare programs. Someone should tell them that their constituents might not need this cash if the farm bill didn’t help keep food prices high. And let’s not forget the Blue Dog Democrats who are supposed to be spending hawks. The farm bill busts the budget caps by at least $10 billion, but the Blue Dogs get $5.9 billion in handouts for their districts. So they will put their fiscal sermonizing on hold and vote “aye.”

Mr. Bush is promising a veto, to his credit, but the White House expects even many Republicans to vote to override. The House GOP swears it has learned its spending lesson after 2006. Yet House Minority Leader John Boehner, who opposes the bill himself, isn’t rallying GOP opposition. Perhaps there are too many Republicans who crave the handouts too.

Meanwhile, John McCain says “I would veto that bill” and will vote against it in the Senate. Strangely silent is Barack Obama. A major theme of his campaign is to battle corporate special interests in Washington on behalf of the “middle class.” Here is one of his first tests, and it’ll be fascinating to see if he sides with the well-funded commodity lobby over consumers and taxpayers.

In this election year, both parties are fighting to win the farm vote. But even in Chicago and New Jersey, it doesn’t cost $300 billion to buy an election.

More on the Farm Bill

National Review has an excellent editorial today, blasting the new farm bill:

For a long time now, federal farm subsidies have rewarded farmers for producing far more than they can profitably sell. Removing the subsidies would precipitate a painful downward adjustment for the nine percent of farming operations that receive roughly 54 percent of the payments, but sustaining them year after year exacerbates the costs of overproduction: the gross inefficiencies, the environmental degradation, and, of course, the redistribution of billions of tax dollars to farm families whose incomes are well above the national average.

The piece goes on discuss some of the alternative and competing proposals that have been introduced in Congress, but my sense is that this train is unstoppable. Why? The editors nail it precisely, with this:

The benefits of farm subsidies are concentrated in the hands of just a few farmers, who accordingly have an incentive to organize and lobby Congress. The costs, by contrast, are widely distributed. This political calculus means that there are powerful forces behind the status quo. With the current farm bill set to expire, the farm lobby has already won over the House of Representatives, which passed a new farm bill back in July. Barring any surprises, the Senate Agriculture Committee will follow suit today.

My congressman, unfortunately, is one of the biggest cheerleaders for the new House bill. I tend to agree with his positions on nearly every other issue, but on this one we definitely part company.

Crop Subsidies

Readers of this blog probably don’t need much convincing as to the negative effects of crop subsidies, but I’ve rarely come across a newspaper article which gives so straightforward a look at how the system works. It’s not an opinion piece; it’s matter-of-fact reporting on what farmers today “must” do to be successful. Interesting (but not surprising) that “switching to sustainable agricultural practices” is not even mentioned as a possibility (let alone a “must”).

A sample of this world-view:

The modern farmer must pay as much attention to subsidy programs as the weather. There are programs that pay even if no crop is planted. Other programs also turn conventional farming on its head.

The government’s loan deficiency program, for instance, has farmers hoping for low prices at harvest, when they have the most grain to sell. It works like this: When the price of corn falls below what’s called the loan rate, usually about $2 a bushel, farmers are eligible for per-bushel subsidies, regardless of whether they borrowed money on their crop. If the loan rate is $2 and the market price is $1.50, a farmer can collect 50 cents for every bushel of harvested corn. Except he doesn’t have to sell when he gets the government money. Rather, farmers typically collect the subsidy, then store their crops for a few months until prices rise.

“That’s absolutely part of our strategy,” said Kendall Cole of Virden, former vice president of the Illinois Farm Bureau. “Most of us didn’t come into this game because it was low risk. You take the challenge out of it, you get lazy.”

Go read the whole article, if you can stomach it. But you might find yourself asking why, if “most” farmers don’t want the “challenge” taken out of agriculture, they don’t explore doing something other than raising all this (subsidized) surplus corn and soy that the government then needs to find and subsidize a use for (read: Ethanol and biodiesel).

I especially love some of the comments, including this one:

Farmers provide a safe stable food supply. I would say our nations food supply is worth tax dollars. A little more important than an auto shop. Did you also know you only spend about 10% of your income on food? The lowest percentage in history! Lets support our farmers who support local economies, and put food on our tables.

I’m left asking the question: why not support our farmers by paying MARKET PRICES for their produce? If prices rise, so will production. We don’t need subsidies to ensure a stable food supply. Market demand will do an excellent job all by itself.