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The Public Policy
GOP Needs Street Cred on Farm Subsidies
Out-flanked on the right by Debbie Stabenow?
(Page 2 of 2)
Last year the new Republican ranking but long-time member on Stabenow’s committee, Thad Cochran (R-Miss.), voted against the Senate Farm Bill along with other Southern senators, including McConnell, on the grounds that its changes to the commodity subsidy title put major Southern crops at a disadvantage, says Peterka. The bill attempted to move away from subsidies to crop insurance, which is not without its own blemishes, i.e., subsidies for premiums. The House version also retained the price support program.
Again, the current crop insurance program leaves much to be desired as to efficiency and equity. According to the Washington Post’s editorial page, “Washington pays 62 percent of farmers’ premiums — at a cost of $7 billion for the 2012 crop year.” Moreover, “It reimburses administrative costs for the 15 insurance companies that sell the policies, to the tune of $1.4 billion in 2012, and also protects the companies against financial loss.”
The paper’s editors also claim that U.S. Department of Agriculture paid $11.4 billion to cover 2012 farm losses, much of it due to drought. Thus, “U.S. farmers could end up claiming $3.85 for every dollar in premiums, according to Kansas State University economist Art Barnaby.” This was for a year in which “the value of farmland and farmers overall earned $114 billion in net income, the second highest total in the past three decades.” (Emphasis added.) The crop insurance subsidy program has, over the last decade, cost $59.5 billion. “The more crops you grow, the more premium support you get (up to a maximum subsidy rate of 80 percent),” editorialized the Washington Post.
This whole scheme promotes excessive risk-taking and “favors big corporate farms over small family farms.” From this writer’s perspective, it also increases environmental externalities and the farming of marginal lands.
The Post also noted that Chairwoman Stabenow’s 2012 Farm Bill “would have compounded the error by expanding crop insurance to cover almost all farmers’ losses from price fluctuations as well as natural disasters” What a deal! Let’s face it: the myth of the Jeffersonian yeoman farmer is just that, a myth.
The Republican Party, dependent as it is on so many rural voters and high-producing agricultural states, is mostly mute or in a bad place on the matter of agricultural subsidies whether they be direct payments, crop insurance premium support or, let us not forget, ethanol subsidies and sugar cane tariffs. They stand tall when it comes to cutting food stamps for poor people but not agricultural subsides for farmers who participate in an economic enterprise that Robert Samuelson, the respected economics journalist, describes as “capital-intensive, high-tech, efficient — and now immensely profitable.”
“Running $10 billion to $15 billion annually, they do not do much good,” says Samuelson.
“For starters, they haven’t saved small family farms,” argues Samuelson. “Since the 1930s, when subsidies began, the number of farms is down 70 percent.”
Robert Samuelson maintains that “Farm subsidies are a metaphor for our larger predicament.”
“We no longer have the luxury-as we did for decades-of carrying marginal, ineffectual or wasteful programs. We can no longer afford subsidies for those who don’t need them or, at least, don’t need so many of them (including affluent Social Security and Medicare recipients),” says Samuelson.
“If we can’t eliminate the least valuable spending, then we will be condemned to perpetually large deficits, huge tax increases or indiscriminate cuts in many federal programs, the good as well as the bad,” warns Samuelson.
The GOP needs to develop some street cred on ag subsidies and not let Senate Democrats get around its right flank on fiscal issues through a quick two-step between direct agricultural payments and subsidized crop insurance premiums. It is time to cut both programs along with ethanol subsidies and sugar tariffs, too.
Photo: Wikimedia Commons
About the Author
G. Tracy Mehan, III served at the U.S. Environmental Protection Agency in the administrations of both Presidents Bush. He is a consultant in Arlington, Virginia, and an adjunct professor at George Mason University School of Law.
Letter to the Editor View all comments (14) | Leave a comment
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MelvinNC| 2.12.13 @ 7:05AM
Republicans being upstaged by Democrats. Hmm imagine that. And that is when the Democrats are not even trying. I don't know how many times I have been derided that I'm being to hard on the Republican leadership, to critical, and should give em a break, because after-all they Republican Leadership has lost how many National and state and local elections.
The Elitist Republican Leadership could not wipe their own backsides, even if they had a U Tube video with instructions. They would still screw it up and end up with a messy and stinky affair.
The Democrats could send a trained monkey to take on the RNC and the monkey would win hands down.
But yet do we hear of any Republicans handing in their resignations with heads hanging low in abject failure No! the blame their failures on the Tea Party.
The Republican ideology is synonymous with one thing and that is, "Failure."
Pecos Pete| 2.12.13 @ 8:16AM
Farm subsidy programs are a two-edged sword. Congress should be very careful as they attempt to wrap their regulatory authority around this octopus.
Farmers and ranchers are being ingulfed by current regulations. If subsidies are reduced inappropriately, the only surviving providers of food will be very large corporations who have the staff to meet the regulatory burden and the financial foundation to invest in the land, equipment and energy necessary for production.
Imagine a KingOcare for agriculture. Makes one shudder at the thought.
JimH| 2.12.13 @ 9:24AM
Paul Harvey notwithstanding, I think most agricultural production these days comes from the likes of ADM. The GOP needs to be seen as pro market not pro business. Eliminate all subsidies.
Solo| 2.12.13 @ 11:54AM
I have a difficult time believing that the likes of Debbie Stabenow is the least bit concerned about our spending problem.
It is far, far more likely that she is interested only in ham-stringing a traditionally conservative voting block and turning them against their elected representatives among the republican party.
I say the republicans should make her a deal:
Eliminate the federal tax deduction for state taxes paid in exchange for eliminating subsidy payments to farming operations which till more than 10,000 acres.
The federal tax deduction for state taxes paid is nothing more than a federal subsidy for high tax states like California and New York...in other words "Blue States". It's one of the few tax deductions that democrats truly support and it's easy to see why.
That'll send Ole Debbie screaming from the room.
JD| 2.12.13 @ 11:57AM
"It's one of the few tax deductions that democrats truly support " - hogwash. They support virtually all deductions. They're the authors of virtually all deductions! Deductions are social engineering through the tax code - the Left-wing alternative to rate cuts.
They do campaign from time to time on exempting the rich from deductions, but that's just more class warfare.
JD| 2.12.13 @ 11:55AM
Government shouldn't subsidize anything. That subsidies are "needed" to counter the perverse impacts of government micromanagement is a poor excuse.
This is how Democrats function: they impose burdens on you, then "counter" them with "tax credits", "subsidies", or "deductions." I put all of those terms in quotes because their names are more important to the Democrats than their substance. The names allow Democrats to claim that the recipients are benefiting from government and living off their fellow taxpayers, and thus they owe "society". It's "you didn't build that" built into the tax code.
That the sum of government's impacts on the person (taxes, regulations, and "subsidies") leaves the person profoundly worse off than he would be with none of the above does not matter. The existence of the nominal "subsidy" means that he owes "society" an open-ended, eternal debt, and Democrats are always justified in asking more from him. And woe unto anyone who dares ask how those members of "society" who receive the benefits of the Democrats' redistribution have come to be owed it!
A fine example of this perverse logic came from Jack London late last week, when he argued, on the thread about fracking that it wouldn't have been developed without "government investment". I googled Huffpo's lies to that effect, posted them, and thoroughly debunked them (summary: government investment was a drop in the bucket). What did Jack have to say?
Crickets.
RJ| 2.12.13 @ 12:05PM
Well, Debbie Stabenow, like a broken clock, can be right sometimes. Congratulations. Yes, we should get rid of the Stalinist agricultural command system put in place during the New Deal. Too much politics for special interest benefits have been inserted into the economy. Get taxpayer dollars out of the loan, subsidy and bailout business.
Ronsch| 2.12.13 @ 12:34PM
I dno't know...Maybe try letting the producers sell their surpluses at, oh, market rate as food, instead of to the BS ethanol producers at subsidized prices, and maybe they could all win...
Job| 2.12.13 @ 1:13PM
Are farm subsidies welfare? Where are they in the entitlement continuum?
GOP Needs Cred Period.
TLP| 2.12.13 @ 2:35PM
Farm Subsidies are part of the Problem.
Think: Ethanol.
Everything in the Grocery Store that has anything to do with Corn, is through the Roof.
Anybody who just landed in the United States, would think that we have a Shortage of Beef Cows.
Over $5 a lb. for Hamburger?
They want $10 for a Chuck Steak, that I paid $4 for, just a coupla years ago.
Anything made with Corn Syrup costs more than it used to.
We've seen Food Riots in Mexico, where Corn is a Mucho Staple.
The subsidies for Ethanol are Killing our Car Engines.
We have people Starving to Death, all over the World, yet we use FOOD for Gasoline, instead of the Oceans of Oil, that these same Politicians refuse to let us Harvest.
What has happened to Common Sense and Reason, in My Country?
RJ| 2.12.13 @ 3:10PM
And just think what our government could do with if it had more revenue.
N8tivTxn| 2.12.13 @ 10:58PM
Anybody who just landed in the United States, would think that we have a Shortage of Beef Cows.
www.gosanangelo.com/news/2012/.....artner=RSS
Bovine gestation is 9 mo
Porcine gestation is 3 mo, 3 wks & 3 da
Pork, the other white (flavorless) meat!
For when you can't afford BEEF.
Job| 2.13.13 @ 5:41PM
What has happened to Common Sense and Reason, in My Country?
Its the three day news cycle "on steriods and stilts" (fete Who Knows): the three day news cycle has been a problem since Moses ascended Sinai to get the ten Commandments and in this info age its even worse.
Benghazi is as far away as Saturn right now and OJ Simpson or some EX Cop cop Killer or some similar distraction is always on the ready for media fodder should the wrong news crop while the great Evil Power of the Air changes the channel to focus on some other fire the good ole USA has to run to in the world.
Mr. Dolphin| 2.13.13 @ 2:21PM
Solo is correct to be skeptical of Senate Ag Chair Stabenow, much more correct that Mr. Mehan. Both Sens. Stabenow and McCaskill want to eliminate the direct payment immediately on principle. Mr. Mehan seems to think it his same principle, but he is mistaken. Unlike Mr. Mehan, the good Senators have absolutely no intention of reducing spending, they wish to transfer part of the 16% of Farm Bill budget spent on farmers to increase the the 80% of the Farm Bill budget spend on food stamps. Mr. Mehan's principles have been hijacked by those sneaky Democrats. Instead of subsidizing Mr. Mehan's political and cultural allies, he has decided to fund his political and cultural foes.
In the specific matter of the Direct Payment itself, the new Farm Bill (Not really so new, both Senate and House Ag Committees reported out bills in 2011 but the Chambers could not act.) eliminates the Direct Payment completely. All the Houses of Congress must do is vote on the 2011 dated Bills to end the Direct Payments. The end of the Direct Payment will be little mourned on the farm since it has always been an embarrassment to many of us.
I would like to see the Direct Payment funds be spent on Crop Insurance or Conservation, both of which contribute to a sustainable safety net for farms.