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The Conservative Curmudgeon
August 14, 2012

Depression-Era Farm Subsidies Should Be Terminated
by Allan C. Brownfeld

ALEXANDRIA, VA — Government spending, everyone realizes, is out of control. During President George W. Bush’s tenure from 2001 through 2009, the national debt doubled. According to Bruce Riedl of the Heritage Foundation, the prescription drug bill alone is projected to add nearly $400 billion in its first decade.

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Both parties are clearly in this together. According to Factcheck, “Spending under President Obama remains at a level that is quite high by historical standards. Measured as a percentage of the nation’s economic production, it reached the highest level since World War II in fiscal 2009....”

Since 2009, the Obama administration has maintained trillion dollar deficits. Writing in Roll Call, Dustin Siggins and David Weinberger report, “If we average spending as a percentage of GDP under Bush from 2001 to 2009, it comes to just over 20 percent.... If we do the same for Obama from 2010 to 2012, we get about 24 percent, quite a bit higher than the historical average.”

One place to cut spending is to eliminate depression-era farm subsidies. But since each farm state has two senators — some Democrats, some Republicans — this has been difficult to do. Now, in our era of economic decline and skyrocketing government debt, it is time to take a serious look at this wasteful program.

In 2012, the Department of Agriculture is projected to spend $22 billion on subsidy programs for farmers. Veronique de Rugy of the Mercatus Center at George Mason University notes that this program was introduced in the 1930s to help struggling small family farms. However, “the subsidies have become the poster child for government welfare for the affluent. Farm households have higher incomes, on average, than do non-farm U.S. households. Figures from the U.S.D.A. show that in 2010 the mean farm household income was $84,400, up 9.4 percent from 2009. This is 25 percent higher than the average U.S. household income of $67,350 as reported by the U.S. Census Bureau for 2010.”

Beyond this, farm subsidies tend to flow to the largest and wealthiest farm businesses. According to the Environmental Working Group database, in 2010, 10 percent of farms received 74 percent of all subsidies. These recipients are large commercial farms with more than $250,000 in sales, and they disproportionately produced crops tied to political interests. The Cato Institute’s Tad DeHaven and Chris Edwards calculate that more than 90 percent of all farm subsidies go to farmers of just five crops — corn, wheat, soybeans, rice, and cotton. For every federal dollar spent on farm subsidies, 19 cents goes to small farms, 19 cents goes to intermediate (middle income) farms, and 62 cents to the largest commercial farms.

In De Rugy’s view, “The tragedy is that while cronyism benefits the haves, all other Americans — especially those with lower incomes — suffer from the resulting distortions. Take the domestic sugar industry as an example. The government protects its producers against foreign competitors by imposing U.S. import quotas, and against low prices generally with a no-recourse loan program that serves as an effective price floor. As a result... U.S. consumers and businesses had to pay twice the world price of sugar on average since 1982....”

According to the Center for Responsive Politics, the U.S. farm lobby contributes millions of dollars to political campaigns to maintain federal support for the subsidies. The agribusiness sector as a whole spent $124 million on lobbying in 2011. For the past decade, the amount of money this sector has spent on lobbying has grown more than 60 percent. Between 1995 and 2009, 23 farmers currently serving in Congress have signed up for farm subsidies.

The fact is that the U.S. has the richest, most productive agricultural sector, and the best fed population, in the world. Boosted by $136.3 billion in gross sales to other countries, U.S. net farm income hit a record $98.1 billion in 2011. A new Economist Intelligence Unit report ranks the U.S. as the most “food secure” nation in the world, based on the affordability and quality of its food supply. The U.S. provides the equivalent of 3,748 calories per day for each of its roughly 314 million people. That is nearly 1,500 calories more than the minimum necessary for a healthy life.

Still, every five years, Congress drafts a farm bill as if U.S. agriculture cannot possibly exist in a real free market economy. At this very moment, farm-state lawmakers and the lobbyists who swarm around them are preparing to extend this program of subsidies. The Senate has already passed a measure priced at $969 billion over the next decade. The House has gone on summer vacation without acting as Republicans weigh the election-year political risks of proceeding with that chamber’s own near-trillion dollar measure.

Editorially, The Washington Times points out, “Like the bank bailouts and TARP, the farm bill illustrates the capture of the legislative process by special interests. The last farm bill in 2008 was the focus of $173.5 million in lobbying expenditure.... This is all money spent on what the Mercatus Center’s Matthew Mitchell calls ‘unproductive entrepreneurship’ where people are organizing and expending their talent to become rent seekers, and the end result is wealth redistribution, not wealth creation. Real entrepreneurship innovates in ways that are socially useful. Cronyism diverts resources... into a system that rewards privileges to favored groups. In the case of the 2008 farm bill, recipients of subsidies of $30,000 or more had an average household income of $210,000.”

Many in Congress who proclaim their belief in the free market and decry huge government deficits nevertheless seem ready to extend farm subsidies. This tells us, unfortunately, that what we are witnessing is politics as usual. And both parties are in it together. No one needs to wonder why we can’t bring government spending under control. This example demonstrates why.

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The Conservative Curmudgeon is copyright © 2012 by Allan C. Brownfeld and the Fitzgerald Griffin Foundation. All rights reserved. Editors may use this column if this copyright information is included.

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. Vice President, Members of Congress, and the U.S. Senate Internal Subcommittee.

He is associate editor of The Lincoln Reveiw and a contributing editor to such publications as Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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© 2012 Fitzgerald Griffin Foundation