Farm Bill's Defeat Gives Breathing Space For Reform

on June 25 2013 12:30 PM
Farm Bill's Defeat Gives Breathing Space For Reform

Last Thursday’s surprise defeat of the House farm bill resulted in a litany of finger-pointing from the lobbyists on K Street to the House Ag staffers in the Longworth Building. 

But they’re looking for blame in all the wrong places.  It really belongs to Mitt Romney and Paul Ryan -- and many other Republicans and conservatives -- who said so many times last year that America was going broke.  If we are really going broke, then why did the bill maintain generous subsidies for agriculture?

The Republican House members, including Ryan, who voted against the bill, took last year’s “broke” message to heart and should be congratulated for their fortitude.

Watchers of Hill farm policy got their warning signals early on from the agriculture lobbies.  As the 2013 farm bill was in its nascent stages, their message was: “We understand restraint is needed, but agriculture’s burden must be limited to its fair share.” In ag-speak, that translates into: Cuts for thee, but not for me.

In fact, one of the challenges in understanding farm policy is the use of code phrases to disguise expanded subsidies.  The “shallow loss” program is the best -- it’s so pleasingly vague.  We all know what a loss is, but a shallow one?  Is it like dieting and losing only five pounds when your goal was to lose ten?

In the agricultural sector, losses can occur due to bad weather and other acts of God, as well as movements in international markets (e.g., Russia having a good year in wheat, which increases supply of wheat worldwide, causing market prices to fall).

Plain vanilla regular crop insurance -- subsidized by the USDA/taxpayers -- usually covers 70 percent of what a farm owner had expected to receive in income.  Therefore, if the price of wheat falls by more than 30 percent, then crop insurance kicks in.

“Shallow loss” crop insurance is the whipped cream on top of the regular crop insurance.  It increases the range of coverage by reimbursing farm owners if prices fall by a mere 15 percent.

Meanwhile, in the dairy sector, there’s a debate between whether the government should control how much milk is produced in order to keep milk prices high -- the Senate farm bill -- or should farmers purchase subsidized revenue insurance -- the House farm bill. 

One dairy farmer in Ohio, let’s call him Comrade Bill, prefers the Senate version because it doesn’t penalize overproduction, as it artificially props up prices and keeps that “safety net” nice and tight.

Oh, and in case you wondered, the failed House farm bill continued the policy of making it illegal for a dairy producer to negotiate prices directly with a buyer.  (But Republicans are totally pro-free market, right?)

As for the House Republicans’ proposed cuts and modifications to the food stamp program, all I can say is the optics looked bad, really bad.  In the failed farm bill, certain House Republicans wanted to expand agribusiness subsidies, while shrinking the food stamp program.

Does the food stamp program need reform?  Yes.  Are more audits of the program needed?  Yes.  Should its relationship with USDA be terminated and the program merged with federal welfare programs?  Yes.  Can any of this be done while some Republicans press for more agribusiness welfare?  No.

If, as Romney and Ryan told us last year, America is going broke, then yesterday’s defeat is a good thing.  It sends House Republicans back to the drawing board.  Hopefully this time they’ll get serious and re-think the whole notion of maintaining safety nets while our nation is in fiscal distress.  To do anything else would be irresponsible.

Joanne Butler is a graduate of the Kennedy School of Government at Harvard University and a former professional Republican staff member at the U.S. House of Representatives Ways and Means Committee.

More News from IBT MEDIA