It doesn’t really matter why the House of Representatives voted down the massive Farm Bill last week. It just matters that the House did, and now there’s opportunity for real reform.
But the House is under pressure to pass something quickly. Senate Majority Leader Harry Reid says the upper chamber won’t pass a temporary extension of the old Farm Bill, which expires in September.
“Doing nothing means no reform, no deficit reduction and no certainty for America’s 16 million farm-industry workers,” Reid said.
He’s right. But doing as he asks — passing the Senate version of the bill — means perpetuating harmful subsidies, tax breaks and insurance guarantees that all sides have pledged to fix.
“Both bills expand farm subsidies while saving money overall and making cuts to the almost $80 billion-a-year food stamp program, which has doubled in cost in the last five years,” the Associated Press reports. “The Senate bill cuts $400 million a year from food stamps, or half a percent, while the House bill cuts $2 billion annually, or about three percent.”
For House Republicans, that cut is both unwise and artless. Merely cutting food stamps without reforming the program leaves the superstructure in place for future administrations and Houses to build upon.
And focusing on food stamps, rather than the subsidies that corporate farmers don’t need, plays into Democrats’ claims that Republicans are heartless.
The subsidies are a better target for their efforts.
“Farmers are pulling in record-high levels of income and carrying record-low levels of debt,” says the Heritage Foundation. “Technology has eliminated many of the risks that once plagued farming, and the profitability of unsubsidized crops demonstrates that independent agriculture is viable.”
Farm incomes will hit a 40-year high this year.
“Nevertheless, Uncle Sam is standing by, cash in hand. Average Crop Revenue Election payments are made if revenues fall below certain levels,” writes Doug Bandow of the Cato Institute in Forbes magazine. “Counter-cyclical payments are due when actual prices fall below “target prices.” Crop insurance protects against falling prices and yields. Direct payments go to producers even if they do not produce. Loans and loan guarantees underwrite credit. Supplemental Revenue Assistance Payments go to farmers for weather-related issues. Other measures, such as restrictions on sugar imports and regulatory mandates on and tax preferences for ethanol also act as farm subsidies.”
The federal government acts as a “reverse Robin Hood,” he says, transferring wealth from taxpayers to big corporations that don’t need it.
Pretty much everyone agrees on that point. So the right course of action now should be clear.
“End direct payments. Don’t replace them with new subsidies,” Bandow says. “Means test subsidies, phasing them out as income rises. Make farmers pay full price for crop insurance. Kill indirect subsidies, such as trade restrictions and regulatory mandates.”
The House has a unique opportunity at this point. Republicans and Democrats defined both expectations and political self-interest by voting the Farm Bill down last week.
Now, they could exceed expectations and win respect by enacting real reform, rather than yielding to Reid’s demands.