Will Congress Prune Back Farm Subsidies?

by John Lawrence

For much of our history, no group of Americans enjoyed a more revered status than the farmer, and especially, the farm family.   And justifiably so.  Enduring back-breaking work, enduring the uncontrollable uncertainties of weather, blight, infestation and markets, farmers borrow vast amounts of money to put seed in the ground with little assurance their financial risk and hard labor will produce a livable income at the end of the year.  And then they get to do it all over again the following year, and the year after that, continually.

Little wonder that farm families have been fleeing the farm.  In an age of jet transport and duty-free international trade agreements, the risks to farmers have been compounded rather than eased, even as consumers enjoy bountiful, and affordable, food and fiber year-round.  Little more than a century ago, 70 to 80 percent of Americans lived and worked on farms and in rural areas; today, about 2-3 percent of Americans claims to earn their income from farming.

The combination of respect for hard and precarious labor, together with the nostalgia of farming (and the foresight of the Founders in assuring that the least populated farm state would also have two senators) has yielded federal policies that provide agriculture with a unique insulation from the budgetary scrutiny and scalpels applied to most federal spending.  But tough re-examination of all farm programs is long overdue.  Many agriculture support programs have grown exponentially in costs while some of the beneficiaries do not even remotely resemble the hard-working family farmers for whom the programs were intended. As critics have said for years, a small number of farmers (or more accurately, agribusinesses and those posing as “family farmers”) have grown more adept at farming the U.S. taxpayer than their own land, if they even own land.

Few issues expose the duplicity of deficit-conscious conservatives more graphically (or expensively) than this taxpayer subsidization of the farm economy.  Like the 17-year locusts beginning to descend on the East Coast, farm legislation regularly appears every few years (usually 5), always accompanied by promises of  “reform” – if not this round, then surely in time for the next gargantuan farm bill.

What makes farm policy so stunningly hypocritical is not the ability of the agricultural industry to vacuum in tens of billions of public dollars for private profiteering, but the fact that many of those who benefit from this taxpayer largesse – in and outside Congress — are the loudest critics of government spending.  Their cause, we are told, is different because farming is an uncertain occupation susceptible to the unpredictabilities of weather, the economy, international supply, and the willingness of bankers to make loans.  All genuine risks, but hardly unique to agriculture. 

Reforming the agriculture subsidy programs has always been a challenge because farmers enjoy the protection of their senators (and representatives) who position themselves strategically on the respective Agriculture Committees and spend a career guarding the subsidies that flow to milk, cotton, sugar and other crops.  States with small populations long ago learned how to utilize their two senators and the congressional rules that protect entrenched minorities; and the various components of the agriculture community display an impressive sense of solidarity, defending benefits for each commodity because they know that an attack on one opens the barn door to a broader assault.  Western farmers not only enjoy crop insurance, commodity supports, income stabilization and other federal farm benefits, but also receive hundreds of millions (if not billions) of dollars a year in heavily subsidized irrigation water and power (used for pumping) from the government courtesy of the federal Reclamation program, often to grow crops that qualify for additional public subsidies and insurance protections.

Surely the gods of irony are having a great time listening to conservatives defend the multi-billion dollar subsidies to farmers while denouncing subsidies to help working people afford health insurance premiums.  That dichotomy adds a timely and entertaining feature to the cyclical debate over the wisdom of perpetuating the farm support programs which have cost taxpayers nearly $300 billion since 1995.  Uncle Sam supports farm income, support farm prices, support farmers when disaster hits, support farmers when they produce too much, supports farm loans – all with taxpayer money.

This year, it is possible the federal government will make record payments to farmers.  According to some reports, 2013’s payments may be the highest in 50 years, driven up because we now support not only commodity prices, but farmers’ income as well.  Taxpayers, who supposedly benefit by keeping food and fiber prices low, now pay an average of more than 60 percent to subsidize the purchase of crop insurance.  Cotton farmers, who in the West also enjoy that irrigation and power subsidy through the 1902 Reclamation Act, will soon enjoy an 80 percent subsidy.  Last year, the crop insurance program paid out more than $12 billion, all of it heavily subsidized by taxpayers.

Farm subsidies, like the federal Reclamation program in the West, are always justified by the need to protect the struggling family farmer.  But the Environmental Working Group, among the most knowledgeable critics of farm subsides, recently reported that just 10 percent of subsidized farms (not surprisingly the largest and richest operations) have received three-quarters of all subsidy payments since 1995, while over 60 percent received nothing at all.   Corporate farmers in California, in particular, long ago figured out how to circumvent the 160-acre per farm cap on operations eligible for generous water subsidies, allowing operations of tens of thousands of acres to receive heavily subsidized water under the guise of being “family farms.”  Sure, they are challenged in court, but the money and water keep flowing during the litigation, which costs a fraction of the benefits the subsidies provide. 

Fight over the cost of farm subsidies may be the latest chasm opening up within the ranks of conservatives.  Just as some deficit hawks were willing to allow sequestration to slice into Pentagon spending, some now are embracing efforts to carve up farm subsidies.  An amendment just adopted in the Senate would get tough and cut subsidies for those with an adjusted gross income over $750,000, though the super-farmers would still receive a subsidy of nearly 47 percent!  Talk about government helping the 1 percent!  (Of course, Mitt Romney, desperate to maintain support in the farm states, termed farm supports a national security program.) 

Sen. Pat Toomey (R-PA) has joined New Hampshire Democrat Jeanne Shaheen in proposing that no farmer receive more than $50,000 in premium support.  Toomey notes, “You can be among the wealthiest people in the world and you quality for a taxpayer subsidy of your crop insurance…I don’t know how that is defensible.”  Who said it is defensible, or has to be, in order to be protected in Congress?

After all, if Congress decided to support programs that actually enjoy beneficial cost ratios, we certainly wouldn’t be cutting food stamps, early education, WIC or child care, would we?  But farmers, and the businesses that support them, are politically savvy; their elected representatives sit on the right committees and defend their parochial interests to the death.  And it isn’t just farmers: agribusiness beneficiaries of federal largesse include the 15 insurance companies who sell crop insurance, receiving not only $1.3 billion a year in federal payments, but enjoying federal support if the program goes bad.   In fact the subsidies are so generous that farmers tend to over-purchase insurance, raising the cost to taxpayers to about $100 billion over the next decade.

To be fair, this is not a problem of an exclusively Republican making.  Farm subsidy programs are also vigorously defended by some Democrats from farm states, though there are a lot fewer of them.   As a party, however, Democrats have regularly put substantial changes in farm subsidies on the table as one substantial source of deficit reduction.  All of the deficit packages proffered by Rep. Chris Van Hollen (D-MD), the Democratic House leader on budget and deficit negotiations, have included serious reforms, and President Obama has similarly called for billions in savings.   Even Democrats from big farm states, like Sen. Dick Durbin (D-IL), have proposed substantial changes that reduce subsidies for the wealthiest farmers.

What is different about Republicans, and conservatives in particular, is that they are so untroubled by their hypocrisy in demanding massive cuts in key domestic policies while defending (or expanding) benefits for a small segment of the economy.  For a party that can detect the tiniest scintilla of “socialism” in any policy proposed or defended by President Obama or congressional Democrats, the shameless enthusiasm of fiscal conservatives for government to intervene directly in the farm economy in order to manipulate prices and stabilize incomes is breathtaking.

Now, I am prepared to be proven wrong, but I am pretty confident that when the dust settles, farmers will have made out just fine.  At least the big farmers.  I remember during one of the more recent farm bill “reform” efforts, Congress adopted a new program designed to provide money to farmers up front as a way of ending the need for massive emergency farm disaster appropriations.  I advised a staff colleague not to spend the “savings” because the farm interests would surely appear yet again for more emergency money when the next disaster struck.  They did. 

In fact, cutting deals with the farm community has proven to be a daunting proposition.  Years ago, liberal San Francisco Congressman Phil Burton, one of the shrewdest of all congressional dealmakers, secured support from reluctant Democratic colleagues for tobacco subsidies, but only after tobacco state Members pledged support for expansion of the nutritional assistance programs which are included in the farm legislation (and which benefit farmers by purchasing vast quantities of their production). We are still providing insurance subsidies to tobacco growers, but needless to say, those representing tobacco growers are in general not helpful on preserving the nutrition programs.  How many conservatives who line up behind their farm safety net programs never blinked when voting to slash unemployment benefits or food stamps at the depths of the recession?

A substantial responsibility for cleaning up this mess falls to the House Speaker, John A. Boehner (R-OH).  Assuming the Senate will pass a farm bill, as it did in the previous Congress, Boehner will have to exercise leadership to bring a House companion bill to the floor, pass it, and go to conference.  Boehner has been a longtime critic of farm subsidies, and, if memory serves me right, has never voted for a farm bill in nearly a quarter century in the House.  In the 112th Congress, the House couldn’t even bring its committee-passed bill to the floor, let alone go to conference with the Senate bill, because Boehner knew enough Republican Tea Party conservatives would join most Democrats in supporting cost-cutting reform amendments that the farm community would oppose.  Denied the opportunity to offer those amendments by a restrictive rule, conservative Republicans would join Democrats in defeating the rule to bring the bill to the floor.

For Boehner, the problem is that he again risks looking like he cannot persuade members of the conference to come his way on a major issue with significant budget and deficit implications.  Paring back farm programs offers conservatives an alternative to raising taxes, which Boehner is loath to do, but the Speaker seems unwilling or unable, at least up to this point, to exert the kind of influence a Speaker must in order to persuade a recalcitrant caucus to follow his lead.  Pushing recalcitrant colleagues to make tough but necessary decisions, as Nancy Pelosi had to do throughout her four years as Speaker (including George Bush’s TARP legislation) doesn’t appear to be part of Boehner’s managerial style.  As he recently told Politico, “I don’t need to be out there beating the drum every day… It doesn’t need the heavy hand of the speaker all over everything.”  Actually, as one who was there in the Speaker’s office for 4 years, yes, it does. 

If Boehner fails again, and substantial farm reforms are not achieved, we will likely witness continued costly subsidization of counterproductive behavior on behalf of wealthy individuals who do not deserve taxpayer subsidies.  In fact, farmers’ net income last year was the second highest in three decades, over $80,000 a year, more than 25 percent above the average non-farm income.   Sure, that is an average, and many farmers are barely scraping by.  Fine.  Let’s help those rural families stay on the land and in business, and if it means a little socialization of the rural economy, no real damage is done to the sacredness of private enterprise. 

But maybe agribusiness and its congressional defenders can also help out single working mothers, low-income employees needing health insurance, and those needing extended unemployment compensation when they look to Congress for a little compassion and instead get lectures about self-sufficiency and the sacredness of the private sector.