Another atrocious farm bill
The Wall Street Journal looks at the proposed farm bill wending its way through Congress. Once again the federal government is throwing subsidies at wealthy farmers at the expense of consumers who will be forced to buy products with artificially high prices.
Perhaps it's beneath the dignity of Members of Congress to shop at a grocery store, but if they did they'd know that food prices are rising faster than at anytime in 17 years. Milk now costs $3 a gallon in many states. Eggs, oranges, peas, tomatoes and rice are selling at or near all-time highs. The biggest winners have been corn producers, as corn prices have doubled in two years -- thanks in part to new mandates for ethanol.
All of this is translating into the best gains in farm wealth in decades. Total farm income is expected to leap by 44% to $73 billion this year, according to the USDA. The average income of full-time farmers hit $81,420 last year, with large corporate farms earning in the millions of dollars. Meanwhile, farmland prices in the past five years have increased by $200 billion a year, or an average asset gain of $100,000 per year per full-time farmer.
And yet Congress is writing another five-year farm bill as if this were 1936 and the Okies roamed the plains. The House has already passed a $286 billion bill, and the $291 billion version now moving through the Senate may be the largest feast of subsidies ever served up by Congress. The bill's estimated $25 billion in direct crop payments, and another $10 billion in "emergency assistance" and insurance subsidies, are stacked as high as an Iowa silo.
In other industries, we celebrate the impact of trade and technology in reducing prices. But U.S. farm programs are expressly designed to make food prices higher for consumers. Economists estimate that Americans pay about $12 billion more a year for food as a consequence -- on top of the higher taxes to sustain the direct handouts.
Why should consumers be paying more so as to support one portion of the American economy?
And though this is a Democratic Congress that claims to care about "inequality," the USDA says about two-thirds of this farm aid goes to the wealthiest 10% of farms. It is a direct transfer from taxpayers and poor consumers to mostly rich corporate farmers. President Bush has requested that subsidies only go to farmers with incomes below $200,000, but the Senate bill has no income caps for full-time farmers. One proposed amendment (by Minnesota Democrat Amy Klobuchar) would establish a cap of $750,000 in income, but that's still about 14 times the average family income in America, and the farm lobby is fighting even that. The House subsidy ceiling is $1 million a year, which after fancy accounting would exclude no corporate farms at all. Yet all of this is defended as a "safety net."
The truth is that modern farm bills are really about buying votes in some of the most highly contested Congressional battlegrounds. North Dakota Democrat Kent Conrad recently gave this game away when he mocked Mr. Bush's veto threat: "If the President wants to turn states like mine into solid Democratic states," a farm veto "would be a good way to do it."
Mr. Conrad chairs the Senate Budget Committee and fancies himself a "deficit hawk." His farm bill nonetheless makes a mockery of his "pay as you go" budget rules by using bookkeeping gimmicks to create fictitious savings. Some $10 billion is "saved" by moving farm payments just outside the official five-year budget window.
In a rare moment of self-reflection, Iowa liberal and Senate Agriculture Chairman Tom Harkin recently admitted that farm subsidies are "very hard to justify when we're having record prices and incomes." No kidding.
Sadly, just as the GOP Congress passed their own shameful farm bill, the Democrats are set to go ahead and do it again. And probably it will pass because it will be stuffed with enough goodies to buy enough votes. Unfortunately, the concentrated voice of the agricultural lobbies outweighs the needs of the consumers, a group that well outnumbers those of farmers. But it is all too likely we'll see the same old, same old on this year's farm bill.
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