Farmer Daschle
by Fred Barnes, for the Editors
01/28/2002, Volume 007, Issue 19
weeklystandard.com
FARM BILL. When those two words crop up, the normal reaction is to tune out. Don't this time. The farm bill that's working its way through Congress is a disaster. It costs too much. It enriches the well-to-do. And it's likely to cause an egregious case of role reversal. For years the United States criticized Europeans for lavishly subsidizing their farmers, giving European farm products an unfair advantage in world markets. But Europe is finally inching away from over-subsidizing farmers. Should the Senate pass Majority Leader Tom Daschle's bill, the United States will be on the verge of doing exactly what the Europeans used to.
The bad actors in this drama, going from bad to worse to worst, are President Bush, House Republicans, and Daschle. The three agree on one thing, and it's a bad thing: Farm subsidies should soar, not by $25 billion or so over 10 years as the Bush administration once proposed, but by more than $70 billion. Daschle is insistent about this. He tried to force a farm bill costing more than $80 billion through the Senate last December, though the current bill won't expire until September 30. Why the urgency? He wanted to lock in increased spending on farm subsidies before fresh budget projections show a swelling deficit.
Let's pause for a bit of farm bill history. In 1996, Congress approved the Freedom to Farm Act, designed to phase out payments to farmers over seven years. It marked a historic change from the previous six decades of Washington's setting a target price for crops and paying farmers the difference when the actual market price fell below the target. Washington also told farmers how much they could grow. Rather quickly a problem arose. When farm prices dipped, Congress and the White House didn't have the fortitude to stick with Freedom to Farm. Instead, for the last four years, they've provided "emergency" payments to farmers. One result: four years of record net farm income.
Of course, as the entire planet must know by now, farm subsidies go mainly to well-heeled farmers who don't need them. Two-thirds of the subsidies go to 10 percent of America's farmers. If the farm bill passed by the House in 2001 were to go into effect, eligible full-time farms would get an average of more than $1 million. All this seems to matter little in Washington. What does matter is that those farms are in key states--including Iowa, Texas, South Dakota--and critical congressional districts.
It was over Bush's objections that House Republicans cleared a bipartisan farm bill despite there being no urgent need to act. Like Daschle, they were eager to enact subsidies that might appear unaffordable this year. The Office of Management and Budget asked them to stop, pointing out their bill would encourage overproduction at a time of low prices, fail to help the farmers most in need, jeopardize overseas markets, and boost spending. The bill passed.
That brought Daschle to the fore. Last summer, he and Democrats tried to boost "emergency" farm spending from $5.5 billion to $7.5 billion. Bush and Republicans blocked that. The Bush administration also had kind words for the reform farm bill of Sen. Richard Lugar, Republican of Indiana. Lugar would provide a voucher for every farmer, not just those normally covered. With it, farmers could buy federally backed insurance guaranteeing them at least 80 percent of their average income over the previous five years. The price tag for the Lugar bill, including its hike in spending for food stamps, was about $25 billion. This wasn't enough for either Democrats, who voted in lockstep, or a good many Republicans. Lugar lost 70-30 in the Senate.
Daschle is plowing ahead. And he can only be encouraged by the White House's cave on farm spending. After Daschle's farm bill stalled in the Senate in December, a brigade of congressional Republicans from farm states visited the White House. They left with a letter promising Bush's support for $73.5 billion in increased farm spending. That amount was penciled in last spring in the 2002 budget resolution, based on now-irrelevant budget projections. At the time, whopping surpluses were assumed. Now deficits are foreseen for at least several years. The White House knew this--and capitulated anyway.
So the likelihood is a return to the bad old days of bloated subsidies, which will result, Lugar says, in "overproduction, low prices, great instability, and a built-in bubble in land values for which we shall pay at some point." Worse, the United States will catapult itself into the unenviable position once occupied by Europe: world farm-subsidizer-in-chief. A lawsuit against the United States in the World Trade Organization will follow. It's not too late to avert this. The White House could cite less rosy budget projections to reject costly farm subsidies. The administration could endorse the Lugar bill. Daschle could concede increased subsidies clash with his vow, in his ballyhooed economic speech on January 4, to battle for fiscal responsibility. Okay, okay, a Daschle reversal is a pipe dream. But Bush has the political capital to switch. And he should.
--Fred Barnes, for the Editors |
