Economics

Super Committee should take a weed wacker to farm subsidies

Only in Congress could “cutting spending” actually mean “figuring out new ways to spend more.” Word on the street is that the Super Committee is close to reaching a deal with farm lobbyists to cut up to $33 billion over ten years from farm subsidy programs. Sounds good, but there’s a catch. To get the ag lobby’s support, the deal would include passing a new “improved” farm safety net that is a variant of a current ACRE program. This bait and switch will keep subsidies flowing to already wealthy farmers and could cost taxpayers billions more in the long run.

So what is the “improvement”? It is a modification of the ACRE program that pays farmers a subsidy when the revenue per acre for a particular crop falls below recent statewide historical averages. Since crop prices are at, or near, all-time record highs, that means taxpayers would pay already wealthy farmers to maintain record profits—at a time when millions of Americans are jobless and not making a profit at all.

That’s just not fair.

This deal could end up costing taxpayers more money in the long run, too. If prices go down, even partially, towards more typical levels, taxpayers may be on the hook for much more than $6 billion in some years and, depending on the final structure of the program, could average as much as $5 billion annually. Add it up—over ten years, there would be no cuts from ag subsidies at all, just a switch in how they are received.

The Super Committee should take the House and Senate agriculture committees’ recommendations, due to arrive on their desks on Friday evening, with a large grain of salt. In fact, the Super Committee members should consider much larger cuts than the agriculture committees want them to look at.

President Obama has recommended agriculture subsidy cuts in the order of $33 billion over the next ten years and House Budget Committee Chair Paul Ryan has advocated cuts in excess of $48 billion. However, the recent AEI 2012 farm bill project, involving more than 20 of the leading agricultural economists in the country, identified over $100 billion of agricultural subsidy cuts that could be made without adversely affecting the country’s food supply and distribution system.

The Super Committee should be bold, not timid, and take a weed wacker to farm subsidies that, for the most part, benefit less than 200,000 relatively wealthy farmers and landowners. A hundred billion dollars saved in wasteful agriculture subsidies is a hundred billion dollars that does not need to be cut from Social Security, Medicare, or defense.

 

One thought on “Super Committee should take a weed wacker to farm subsidies

  1. My family has been involved in farming for generations, successfully. The farm programs have been misused and abused, no matter what flavor. This abuse has occurred in my lifetime of over sixty years. I can give specific and verifiable cases, recent and from over 40 years in the past. The best program for ” the family farmer” would have a means testing. It should get out of directing types of crops raised, i.e. ethanol and biofuels mandates. More importantly keep it simple. All loans should be made through private sources without subsidies. Loans should not be used as a social tool, creating another program to reward lawyers and fraudulent claimants, for supposed bias. Also, the definition for what is a farmer must be better stated and understood by the USDA.

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