farm

Farm Bill’s Bogus “Savings”

Don’t be fooled by suggestions that the House and Senate farm bills contain any real savings.  They don’t.  Reuters, for example, reports that the House bill aimed to cut spending by roughly $32 billion to $35 billion.  To be clear, those areWashington “cuts,” not real cuts.  Nonetheless, there are reports these so-called savings may become part of a grand Christmas bargain.

The estimates are loosely based in reality only before new spending is added; that’s right, new spending is included in this bill.  It just takes a new form.  Why would a bill that contains new spending be included as part of a deficit reduction deal?  That would be entirely counterproductive.  Only in Washington could a nearly $1 trillion be added to a deficit reduction package!

The last long term farm bill was passed in 2008 after President Bush’s veto was overturned. That bill was estimated to cost $604 billion over ten years and expired on September 30 of this year.  At the time, Heritage said, “President [George W. Bush] should veto this farm bill for its backwards steps on reforms.”

The Senate- and House-passed versions of the new farm bill would cost $969 billion and $957 billion over ten years respectively.  This is about a 60 percent increase in spending.  Again, it has no place in a so-called deficit reduction package.

A brief aside, there are two major components of the farm bill: 1) a commodity section that contains things such as crop insurance subsidies; and, 2) the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps.  As Heritage has explained, it “is the fastest growing government welfare program, and today, about one in seven Americans participates in” the program.

Heritage’s Emily Goff explains that the “wasteful and antiquated” commodity programs, such as direct and counter-cyclical payments, are replaced by a “costly new subsidy” known as “shallow loss.”

The shallow loss program is essentially another layer of subsidized crop insurance for farmers that is sure to “drain the pockets of taxpayers and consumers.”  It would provide farmers with income guarantees enjoyed by no other industry.  Moreover, the trigger for receiving benefits is incredibly easy to pull: a farmer becomes eligible as soon as they see their crop revenue fall below 90 percent of the previous five-year average.  This problem is even worse since the average is “artificially high” due to recent record-high crop prices.

Because of the drought, including this year’s prices has very big implications.  If crop prices remain at their current historic highs, then taxpayers are on the hook for a much smaller amount, to the tune of about $3.2 billion per year.  However, if prices should fall back down to their 1996-2011 average, we’re on the hook to reimburse farmers for a much bigger revenue gap of $5 billion to $7.5 billion per year!

The fake savings don’t end with shallow loss insurance.  Remember, food stamp spending comprises 80 percent of the spending in the bill.  The suggested cuts to the food stamp program are — brace yourself — a whole two percent.   After food stamp spending doubled under both President Bush and Obama, it has reached the unthinkable heights of $85 billion per year.  A two percent savings is like bailing out the ocean with a contact lens, or a thimble if you’re lucky.

We have argued before that farm policy and food stamp policy should be considered separately, but lawmakers manipulatively include food stamps in the bill as means of getting it passed.  It’s an unholy alliance that has allowed farm subsidies to expand and resulted in 47 million people being on food stamps, many of whom are on food stamps for longer and longer.

The farm and food stamp bill must be reformed, not used as Washington budget gimmick.  Heritage explains Congress should “now turn to ending decades of market distortions and artificially inflated food prices by abolishing the tangle of corporate welfare, price controls, and import restrictions that comprise current agriculture policy and burden family budgets.”

The bottom line when talking about the new farm bill is that the so called “savings” in the bill are about as real as unicorns and fairies.  They exist only in the imagination, or in the case of the “savings,” in the political rhetoric of the left.  A look at the actual policies proposed and the numbers they yield suggests one thing: more spending.

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