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Failing to reform the farm bill left taxpayers out in the cold

Duane Keys / cc

Shortly after Congress passed the farm bill late last month, the Atlantic published a piece touting this example of Washington “getting better.” According to Molly Ball, the House’s ability to jam through the monstrous, heavily amended package with bipartisan support was just “the latest sign that Congress has rediscovered its ability to get things done.”

It’s undeniable that Americans wish Congress would rediscover its ability to “get things done.” Unfortunately, passage of something like the farm bill isn’t what most Americans have in mind. Congressional dysfunction may not have been the goal of the millions of Americans who ushered in 2010′s tea party wave, but even after four years of partisan rancor, Americans don’t want to return to the old ways of doing business, either.

For those hoping for something different, the farm bill bodes ill. Produced every five years or so by House and Senate agriculture committees devoted almost solely to this bill and its programs, the farm bill has always represented the worst of American politics. The legislation is the product of an unholy alliance between Democrats seeking food assistance for the poor and Republicans looking after their district’s big agricultural producers, with very well-funded lobbyists on the sidelines, ready to knock any representative who might step out of line.

Early in the process this time around, there were glimmers of hope this bill would be different. The timing has never been better for reform. America’s farms have enjoyed record profits in recent years, even with significant weather events reducing crop yields, and farm households now enjoy a median income that is roughly $17,000 higher than the average American. Additionally, farm programs continually cost more than anticipated, with the 2008 farm bill coming in $110 billion over estimates just in the first five years. In 2012 alone, the federal government spent $12 billion just on crop insurance supports.

Yet despite an alleged appetite in Congress for belt-tightening, the 2014 farm bill comes in at 959 pages and costs $956 billion over ten years, or almost $1 billion per page.  And the problem goes deeper than just the top-line budget figure for supporting the nation’s agriculture industry. The true issue with farm supports is the disproportionate amount that goes into the pockets of the richest agribusinesses.

Take crop insurance, the largest support program. In 2012, 54 percent of subsidies went to 10 percent of farms, all large businesses. Currently, the federal government pays, on average, 63 percent of producers’ crop insurance premiums, regardless of whether it is a small family farm or a large, multi-million dollar business. Twenty-six farms receive more than $1 million in premium support, while 80 percent of farms receive $5,000 or less.

With no means test and no payment limit, the subsidy encourages farmers to over-insure and lock in a profit. Additionally, unlike other farm subsidies that require USDA to publish the names of recipients, crop insurance subsidies aren’t transparent. While taxpayers who are so motivated could discover that a business that farms in 19 Florida counties received more than $1 million in premium support, it’s impossible to learn which farm received the cash.

Other farm programs serve the same basic purpose of keeping the American farmer (read: large agribusiness) afloat. Despite the ridiculous nature of the Soviet-style sugar program, the entire candy industry has proven incapable of taking down the sugar lobby. Americans will once again overpay for any product containing sugar, as imports are limited and excess sugar is poured into ethanol to keep prices high. Dairy farmers continue to receive a price guarantee, now offered through a margin protection program. Despite a concerted effort on the part of several small farm groups to reduce the subsidies that skew the market toward the big guys, this bill is almost identical to the last.

In fact, the one important market-oriented change turns out to be just a bait and switch. The oft-maligned direct payments program finally ended, and the savings were allocated toward an expanded crop insurance program. In theory, crop insurance is more market-oriented than direct payments, which paid farmers a fixed amount annually based on historical yields. The payment, therefore, was completely unrelated to what a farmer chose to do in the current crop year. Moving farmers into a program based on their annual yield and revenue projections seemed like an improvement.

But despite its many faults, the direct payments program had a few saving graces, including means testing and payment limits, which kept the program’s costs under control. Without these provisions, USDA’s crop insurance bill will continue to rise, with the tax dollars flowing most heavily to the largest farms.

For a brief period during this summer’s haggling, it seemed that things would get better. Reps. Ron Kind, D-Wis., and Tom Petri, R-Wis., introduced a measure to move apply common-sense restrictions on the expanded crop insurance program. Premium support would be means-tested so that farms netting more than $250,000 received no subsidy, and payments would be capped at $50,000. The provisions would have saved $11 billion. In the end, this proved too much. The amendment narrowly failed, as only a selection of Democrats and a minority of tea party Republicans supported it.

Hope sprung up again when the first farm bill failed in the House. The second bill avoided any substantial reform to agriculture programs, but for the first time in decades, it put farm programs and nutrition programs on different timelines. The long-term ramifications of this change cannot be overstated. By breaking the alliance between those who vote for nutrition programs and those who support agriculture programs, Congress was setting itself up to drastically alter these support systems down the road. Farm state Republicans cannot prop up these exorbitant programs on their own, and neither can Democrats muster the support for their favorite nutrition programs.

This second bill passed the House, but again the hope for reform was short-lived. The separate timeline was one of the first provisions to be scrapped in conference. Despite a watered down means-testing provision for crop insurance in the Senate bill and a Sense of the House resolution authorizing the conference committee to keep the provision in, means-testing also was out.

In the end, nutrition programs were cut by $8 billion, and Republicans claimed some savings from the agriculture side, none of which are likely to be realized. In fact, Republicans themselves encouraged the Congressional Budget Office to score the bill using last year’s high commodity prices for fear that the supposed “savings” have already evaporated.

Obviously the list of alternate uses for this funding is endless, but it’s particularly worth pointing out that the same week the Senate once again approved massive subsidies for millionaires, an effort to extend long-term unemployment benefits failed by one vote. It shouldn’t be this way. Millions of Americans are unemployed or underemployed, and millions more are experiencing a strong squeeze on their pocketbooks. All the while, farms enjoy price guarantees, protectionist supports and countless other subsidies. Hopefully Americans like farm work, because unless Congress actually get its act together, these jobs may be the only ones left.

Lori Sanders is the outreach manager and a policy analyst at the R Street Institute.