Head Faking The 2012 Farm Bill

Opinion

  on July 17 2012 3:43 PM

With last week's hubbub over Condoleezza Rice as possible veep, you may have missed how a House Republican group took legislative action to increase government subsidies to the one percent.  No, no ... not that one percent.  I'm talking about the one percent that's engaged in U.S. agriculture (although there is some overlap).  The good news is that Speaker John Boehner is blocking this legislation -- it's a tough-love intervention for those rural Republicans who can't say no to agriculture spending.

Specifically, the House Agriculture Committee agreed last week to send H.R. 6083 (their version of the farm bill) to the full House of Representatives for a vote.  Just one little problem:  Boehner doesn't like the bill and has indicated he doesn't want to bring it to the House floor.  The Speaker is doing his job -- looking past narrow interests for the good of the country.

For those who are a bit rusty on how Congress actually passes laws, be aware that a legislative committee's approval of a bill is not a guarantee that it will become law.  It's not even a guarantee that it will be voted on by the entire House or Senate.  This is an intentional process -- it's not supposed to be easy to pass a law.

From a strategic viewpoint, House Agriculture Committee Chairman Frank Lucas, R-Okla., should be embarrassed, but not surprised.  Boehner has not cast a yea vote for a farm bill since 1996. His no votes on the previous two farm bills (in 2002 and 2008) reflected his concerns about federal intervention in the ag sector.  When Boehner ascended to the Speakership last year, those concerns didn't evaporate.

Of course, the House Ag Committee's press release says the bill is reform-minded and fiscally responsible, but what it doesn't say is that its spending cuts are in food stamps while expanding government subsidies for crop insurance. The press release also neglects to mention that the $16 billion cut in food stamps is just a head-fake to fool us.

The head-fake was confirmed when the co-sponsor of the bill, Rep. Collin Peterson, D-Minn., admitted to agreeing to the food stamp cuts in order to get a bill passed, but was confident Senate Democrats would agree to restoring the funding. Interestingly, Peterson said this prior to the Agriculture Committee's vote on the bill.  Apparently, head fakes by important Democrats don't bother Chairman Lucas as much as they do Boehner. 

Thus, it seems the end game is to preserve food stamp funding while increasing crop insurance subsidies to farmers.  Expanding these subsidies might seem too obscure to care about, but it involves big bucks.

According to Rep. Jeff Flake, R-Az., taxpayers spent $7.4 billion last year on federal crop and revenue insurance premium subsidies for farmers, up from $1.3 billion in 2000.  He cites a Congressional Budget Office estimate that, under existing law, the federal crop insurance program will cost taxpayers roughly $90 billion over the next 10 years, with two-thirds of that being premium subsidies for farmers. 

Remember that $90 billion price tag assumes no change in the law; it's a baseline number.  If the House and Senate Agriculture Committees get their way, that $90 billion could explode into perhaps hundreds of billions of dollars.

On the opposite side, ag subsidy supporters will tell you the system really is being reformed, as direct payments -- cash to farmers who own certain acres are supposed to be eliminated.  But as Flake has recognized, swapping one subsidy (direct payments) for another (expanded crop insurance premium support) is no reform at all.

With deficits growing, and our AAA bond rating long gone, how can the ag sector plausibly justify its demands for yet more of our money?  There are two basic parts to their story.

The first part is cosmetic.  Expand the subsidy while giving it a name that's innocuously vague to the non-ag 99 percent (the other one percent knows exactly what it means).  This year's example is shallow loss crop insurance.  Sounds harmless, doesn't it?  We can guess what crop insurance is about while shallow loss means ... what?  Something to do with seeds?  Soil?

Translation: Shallow loss is about the government picking up the tab even if the farmer has a small (shallow) drop in revenue.  Think of it as a safety net with holes so tiny they're practically invisible.

Amazingly, the New York Times (not exactly a cheerleader for fiscal restraint) found a farmer who would go on the record to admit this. 

When you can remove nearly all the risk involved and guarantee yourself a profit, it's not a bad business decision ... I can farm on low-quality land that I know is not going to produce and still turn a profit Minnesota farmer Darwyn Bach told The Times.  The newspaper also reported that Bach admitted he's guaranteed about $1,000 an acre in revenue before he puts a single seed in the ground because of crop insurance.

It seems this shallow loss program needs Uncle Sam's deep pockets.

The second part of the story involves linking farming to national security to justify increased deficit spending.  As House Agriculture Chairman Frank Lucas put it, ensuring that our farmers and ranchers have the tools they need to produce an abundant and affordable food and fiber supply is as important to our country as national defense. [Emphasis added.]

Senator Chuck Grassley, R-Iowa, has defended subsidies by declaring we're only nine meals away from a revolution. Still others believe that if U.S. farmers stopped getting federal money, America would have to import food in the same way that we import oil.

These notions may be laughable, but it's what farm folks are telling each other in rural coffee shops and at their kitchen tables.  Listening to them, you might believe that ag programs were magically immune from increasing our deficits and indebtedness to China.  That's just not so.

There used to be a saying on Capitol Hill that there were three political parties:  Republicans, Democrats, and members of appropriations committees.  Today we can substitute agriculture for appropriations, as conservative Republicans are bringing fiscal discipline to the House Appropriations Committee -- but not to the Agriculture Committee. At least not yet.

There are positive signs on the horizon, however.  By stalling the farm bill, Boehner may have signaled that the time for tall tales and head fakes is over.  Let's hope so.

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.

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