Rich Pottorff, Doane chief economist & Washington analyst  |   December 18, 2012 resize text

“Congress should slash at least $100 billion in costs from the U.S. farm bill - three or four times more than cuts currently proposed,” a dozen anti-deficit and environmental groups said last week. At a news conference, they said the $5 billion-a-year "direct payment" subsidy to farmers should be eliminated as part of temporary legislation that would bridge the gap to a new five-year law in 2013. That would give lawmakers time for a clear-eyed overhaul of farm policy, they said. They warned by way of specifics, that “Milk prices at the grocery store could double next month under an outmoded statute that took effect with expiration of the 2008 farm law on Sept. 30.”

Agricultural leaders in Congress now hope to attach the farm bill to a deficit reduction package that is needed by year's end to avoid automatic tax increases and spending cuts in January. They say the $23 billion to $36 billion in proposed savings in the farm bill could help reduce the federal debt. But the critics at Monday's event said savings as currently envisaged are far too limited, and that it is too late in 2012 for lawmakers diligently to consider and debate a mammoth $500 billion bill covering everything from crop subsidies to food stamps.

Meanwhile the President is described as “playing both sides” to maintain a public pressure campaign depicting republicans as “obstructionists, holding 98% of Americans hostage to protect millionaires and billionaires from paying their fair share of taxes”.

Yet, he is also engaged in private negotiations with GOP leaders who have already submitted several compromise proposals, all snubbed publicly by the President or White House spokesman Jay Carney. Senate Minority Leader Mitch McConnell, R-Ky summed up the bitterness by telling the press Wednesday, “The President would rather campaign than cooperate."

“It would be “relatively easy to save $100 billion in farm spending” said Scott Faber, of the Environmental Working Group. Faber said "Congress should pass a fiscally responsible one-year extension of farm and food programs and allow the House of Representatives to debate the longer-term future of farm subsidies." He then asserted it would be "relatively easy" to save $100 billion over 10 years by ending direct payments to farmers and making two changes to the crop insurance program:

1. Lowering the premium subsidy to 30% from the current 62%, and
2. Ending a federal payment to insurers to cover part of their overhead expenses.

That will be a very tough sell. As we’ve reported numerous times in this column, the one thing nearly all farm groups agree upon is that Congress definitely should NOT weaken crop insurance in the new farm bill, but consider it a top priority to defend as the backbone of future farm policy. And so far, that is exactly what they’ve done.

Read on: Farm spending was likely to climb despite the savings trumpeted by the version of the bill already passed by the Senate or the one currently pending in the House according to Agricultural economist Vincent Smith, part of the farm policy team at the American Enterprise Institute. He notes both bills would expand the crop insurance system, the largest strand in the farm safety net.

But he warns “They create insurance-like programs tied to crop production that could be challenged globally as unfair subsidies, he said, adding, "We have expanded the risk of WTO (World Trade Organization) problems to 17 or 18 crops, from chickpeas to corn,” said Smith. “Blockbuster crops like corn and soybeans are not the only targets for cost cutting” says Tom Schatz of Citizens Against Government Waste. He says sugar subsidies should be a target for reform in a farm bill next year.

Brandon Arnold of the National Taxpayers Union said there would be a "much better opportunity to write good policy," if agricultural programs and public nutrition programs such as food stamps for the poor were split into separate bills. “It would end the often lengthy vote trading between urban and rural lawmakers,” he said.

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Comments (9) Leave a comment 

Ohio  |  December, 18, 2012 at 07:01 PM

Subsidize the producer's crop insurance policy premium at 62% but then argue over how Obama Care is socialist??????

South Dakota  |  December, 19, 2012 at 09:47 AM

How to save big bucks, close USDA down. Then let the public stand in food lines to go shopping for food. Time for the public to pay the true cost of food production.

iowa  |  December, 19, 2012 at 10:33 AM

Over 60%of USDA budget is for social programs. Cut USDA benefit programs across board not just producer
programs.

Madera, CA  |  December, 19, 2012 at 11:12 AM

Eliminate ALL AG subsidy's PERIOD!!! Let the free market and supply and demand dictate prices(aka Earl Butz!!!) then TAKE OUT FOOD STAMPS from USDA...put it in some other Social Program. And when U move Food Stamps, CUT it by 50%!!!!!!!! GET THE US GOVERNMENT OUT OF AGRICULTURE NOW!!!!! Stop and eliminate ALL SUBSIDY'S, air, rail, hiway, etc etc etc. Cut ALL Fed(non Military) employees by 50%!!!!!!!!!!!! Those who remain cut their salaries, benefits by 30%!!!! Stop ALL Fed RETIREMENT Programs, and put everyone on Social Security...including the WH and Congress.

Illinois  |  December, 19, 2012 at 01:06 PM

Actually the senate's version of the so-called "Farm Bill" had 78.9% of its money going to Foods and Nutrition programs - Food Stamps.

Oklahoma  |  December, 19, 2012 at 04:29 PM

Unemployment is high already,Bob.If you cut 50%of federal employees where will they work?Reducing our military will cut more jobs.Can't just shut down.Looks like our elected congress and president would do what the rest of us have to do-GO TO WORK AND GET ALONG.

Ohio  |  December, 19, 2012 at 09:03 PM

The folks receiving that 78.9% would qualify as needy as compared to the 100% who have been receiving FSA Direct Payment checks for the last 5 years . The folks receiving the FSA checks are wealthier than the ones they took the taxes from to start with. I don't know what ism system that is ?????? Peter Pan in reverse.

western Minn.  |  December, 20, 2012 at 11:43 AM

Great Idea-----then when we sell something, we may even be able to negotiate a price; rather than NOW asking "what will you give me for the product today???"