Reform in the Age of Austerity: The Farm Bill

The new farm bill is making its way through the Senate and to the House. As it currently stands, it will cost some $950 billion over the next ten years. To be fair, much of that is for food stamps (or the Supplemental Nutrition Assistance Program). As you may know, rural legislators used the original Food Stamp Act (1964) as a means of getting legislators representing urban districts to back agricultural price supports. It might have been a small price to pay: it provided some $75 million to 350,000 people when first enacted. However, in 2012, it claimed $75 billion to support some 48 million people, and this has been at the center of the debate.

Our agricultural policy has long been an exercise in corporate welfare, perverse incentives, and unintended consequences (of course, at some point what are unintended consequences may be correctly viewed as intended consequences if we continue to enact the same policies with the same results). Advocates of the new farm bill make the claim that this time there will be genuine reform. The new farm bill, purportedly, will end direct most subsidies to farmers (we will file that under “believe it when you see it”). But as a piece in the new Economist notes, this is really a case of bait-and-switch insofar as two-thirds of the “savings” are simply redirected into other, less visible forms of support. For example, much will be diverted to federal crop insurance. Taxpayers cover two-thirds of the premiums and the claims. Last year’s bill: $7 billion in insurance subsidies with an additional $17 billion in payouts due to the drought.

Of course, the Senate has introduced some significant (ahem) reforms in the area of crop insurance. As the Economist explains:

On May 23rd an amendment sponsored by Mr Coburn, a Republican, and Richard Durbin, a Democrat, passed through the Senate. It reduces by 15% the subsidies for crop-insurance premiums if a farmer makes profits of more than $750,000 a year. Some farms currently receive more than $1m a year in subsidy. Mr Durbin says the amendment will save more than $1.1 billion over ten years—a whopping 1/875th of the total bill.

Such is reform in an age of austerity.

As the Washington Post Editorial Board notes, in the end, the fate of the farm bill may depend not on the vagaries of agricultural policy, but on differences in the support for food stamps. The Post is quite correct in making the argument that it is time to sever the connection between food stamps and the remainder of the farm bill:

Old Washington hands may take another farm bill failure as a sign of dysfunction, but what’s really dysfunctional is dealing with these issues through interest-group logrolling rather than on their merits. People can debate how much help the poor should get and whether it’s optimal to deliver aid in the form of food stamps. But it’s beyond debate — or should be — that government has a role to play in helping them. By contrast, U.S. farmers are wealthy enough to take care of themselves and have been for many years. There’s no argument — beyond the spurious specter of food shortages — for propping them up with taxpayer money. The sooner Congress starts making policy with those truths in mind, the better.

One wonders what arguments would be made—or could be made—for our existing farm policy if advocates were forced to defend it on its merits and in light of the long-term fiscal problems facing the nation.

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