The Farm Bill’s Seven Deadly Sins

Conn Carroll / May 13, 2008

The House and Senate are set to pass a farm bill either Wednesday or Thursday that will cost Americans billions in higher taxes and food costs every year.

Farm subsidies supposedly exist to keep farmers afloat yet 90% of all payments go to just five crops (wheat, cotton, corn, soybeans and rice). Everything else you eat (fruits, vegetables, beef, poultry, etc.) is produced by farms that somehow manage to survive without government help.

As if that weren’t bad enough, Heritage scholar Brian Riedl has identified seven other reasons why President Bush should follow through on his threat to veto the farm bill as written:

• 1. Continues to subsidize millionaires: Under the bill, farmers with incomes in the millions of dollars would still be eligible for permanent subsidies, and farm subsidies would remain America’s largest corporate welfare pro­gram. Most subsidies would continue to go to large agribusinesses. and the majority of payments would go to farmers with a net worth of $2 million.
• 2. Eliminates key payment limits: Currently, farmers face limits of $180,000 apiece in annual commodity payments. This created an industry of lawyers who exploit large loopholes. Rather than close the loopholes, the conference agreement reportedly eliminates the payment limits.
• 3. Increases spending, adds gimmicks: The bill hikes spending $10 bil­lion higher over the next decade–plus as much as $10 billion more in gimmicks. Every dollar of increased farm subsidies must come from (1) other programs such as Social Security, defense or education; (2) higher taxes; and/or (3) increased debt for future generations.
• 4. Increases subsidy rates: Despite sky-high crop prices, the bill raises subsidy rates for more than a dozen crops under the countercyclical and/or marketing loan programs.
• 5. Continues direct payments despite prices: No matter how high corn prices soar, the direct payment program would force taxpayers to send $2 billion to corn farmers every year. These payments are not based on farmer incomes, crop prices or any standard of need.
• 6. Creates permanent disaster aid: The conference agreement reportedly spends an additional $3.8 billion over five years to create a permanent program to provide disaster aid to farmers.  Under this proposal, many farmers who suffer crop losses automatically would collect insurance payments and disaster payments — essentially double-dipping. This new pot of money would encourage Congress to declare “emergencies” regularly to release these funds.
• 7. Fails to modernize farm policy: In the 21st century, the challenge for farmers is not persistent poverty, but year-to-year income fluctuations brought on by weather- and pest-induced crop unpredictability. The proper response to is not a permanent, massive program of subsidies that farmers receive even in good years. Crop insur­ance and farmer savings accounts can smooth out the boom and bust years in ways that keep farmers closer to their healthy annual average incomes, all at minimal taxpayer cost. Canada and Australia have implemented these types of programs.