Fiscal Agreement Extends Farm Subsidies
Need more evidence that Congress ain't ready for fiscal reform? The legislation passed by the House and Senate to avoid the "fiscal cliff" perpetuates one of the nation's worst examples of corporate welfare.
The deal extends for nine months the $5-billion-a-year program of direct government payments to growers of grain, cotton and soybeans.
This is not money that's targeted to struggling family farms. This is money that mostly goes to large and highly profitable agricultural enterprises, regardless of need. Fat checks will continue to be cut for farmers and landowners who have enjoyed boom times even as most Americans have suffered through recession and a painfully slow recovery.
As Congress debated a five-year extension of a sweeping farm bill that expired at the end of September, one thing seemed clear: There was bipartisan agreement to scrap the unjustifiable direct payment program. It's a huge transfer of wealth from taxpayers to a small group of people whose financial resources far exceed those of the typical American.
No agreement has been reached on renewing the five-year farm legislation. But negotiators on fiscal cliff legislation managed to slip in an extension for farm direct payments.
The direct payment program has an ugly legislative history. It stems from a failed attempt to wean farmers from agricultural subsidies in the mid-1990s. It was supposed to help smooth over any financial hardship for the short period necessary to make farming more responsive to free markets for the first time since the Great Depression.
Instead, direct payments took on a life of their own. In a testament to the political clout of Big Agriculture, they became untouchable. Their main economic effect has been to propel farmland prices to dizzying heights. America's real-estate bubble popped five years ago, but not in the market for Midwest agricultural property. It kept rising and rising even as home prices collapsed. Direct payments continue to artificially prop up land prices.
Cliff negotiators weren't completely beyond showing restraint. Farm lobbyists tried to use the threat of consumer outrage over the prospect of soaring milk prices to goad Congress into passing a subsidy that would compensate producers when milk prices are low and feed costs high. The final measure fixed the dairy rules, and mercifully provided no great giveaway.
But not so with direct payments Big Ag keeps drawing government checks for grain and certain other commodities.
If Congress was intent on using the fiscal cliff bill to help farmers, it could have found some reasonable targets. Yet there is no money in the legislation for soil conservation, or for disaster payments for livestock producers who suffered during the summer drought.
Congress also failed to renew its modest investment in agricultural research. Of all the farm bill's spending provisions, this makes the most sense. The U.S. should invest in the science behind food. America leads in this area. Humble St. Louis has become a hotbed of innovation, thanks to the Monsanto Co. and a far-sighted civic strategy of developing research capabilities. The Research Triangle Park in North Carolina also has spawned a critical mass of world-class agricultural thinkers. The U.S. is blessed with a collection of universities, including the University of Illinois, that regularly bring forth fresh ideas in this neglected area of study. But spending on research has been left unresolved.
The fiscal cliff has been avoided. Democrats got their wish: tax increases for high earners.
The focus in Washington has to go to broad curbs on the growth in spending now.
And that has to be the target in the next round of negotiations on a farm bill. Congress has to dump direct payments. It has to stop pouring billions into crop insurance for a business sector that can well afford to handle its own risk management. It has to put tax money where it can do the most good.
This is a nation that grows the food that feeds the world. But in Washington, they're still most skilled at growing debt.