A second chance for Republicans to reform farm handouts

A second chance for Republicans to reform farm handouts
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Last week, House Republican leaders tried to get a farm bill passed by making changes to the food stamps program. That, they hoped, would give their members enough to justify supporting the terrible farm policy in the rest of the bill.

The House, though, rejected the bill. Now, legislators who voted for the failed bill get a second chance to do the right thing: Stop ignoring the need for reforming out-of-control farm handouts.

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Reforming the food-stamp safety net is the right thing to do, but not touching the farm-handout safety net is inexcusable. Legislators should seek to reduce dependence on government. But the farm subsidies provided in the failed bill would have increased dependence on government for many people who, by most measures, would be considered rich.

 

The current farm handout system benefits a small subset of farmers growing a small number of commodities. Generally, they are the largest and wealthiest farm businesses.

Most farmers don't even receive subsidies. Only about 16 percent of farms participate in the crop insurance program. The Congressional Research Service reports that 94 percent of farm program support goes to just six commodities: corn, cotton, peanuts, rice, soybeans, and wheat.

Proponents of the subsidy programs insist that “Congress must stand with the farmers.” But, clearly, for almost all farmers, standing with them doesn’t mean providing them subsidies. The question that needs to be asked is: Who is standing with taxpayers and consumers? 

The notion that the farm safety net exists to help struggling farmers is a fallacy. It has become the justification for egregious cronyism and waste to help large and prosperous agricultural businesses.

Rather than help struggling farmers survive unforeseen disasters, the current system helps ensure that wealthy agricultural businesses, in general, don’t have to worry about virtually any of the downside risk of operating in the marketplace.

Conservative lawmakers can support this kind of system only by abandoning conservative principles. Support, after all, would affirm that cronyism is fine, central planning is better than free markets, and faith in individuals doesn't extend to placing faith in farmers. Small wonder that so many of the most prominent conservative organizations have strongly condemned the farm subsidy provisions in the House bill and its lack of reform.

So what should the House do when it comes to farm subsidies?

1) Allow for an open debate on subsidy reform. The last time round, the House Rules Committee blocked consideration of almost all subsidy reform amendments. This closed process suggested that farm subsidy reformers are winning the policy debate; the only way for proponents of handouts to win was to avoid a debate.

2) Make sure that subsidies go to actual farmers. As Sen. Chuck GrassleyCharles (Chuck) Ernest GrassleyScandal in Puerto Rico threatens chance at statehood Poll: McConnell is most unpopular senator Democrat: Treasury 'acknowledged the unprecedented process' in Trump tax return rejection MORE (R-Iowa) recently noted, "It simply is not smart to make it easier for people who do not work on farms to get $125,000, or if they are married $250,000, free from the taxpayers with no enforceable requirements." 

Yet, the House bill would have only exacerbated the non-farmer problem by making it possible for cousins, nephews, and nieces of family farmers to receive subsidies, even if they are not farming.

3) Adopt common-sense reforms to the farm handout system. The Trump administration, the Obama administration, the Government Accountability Office, and the Congressional Budget Office (CBO) have identified several much-needed reforms, including making improvements to the crop insurance program. One important crop insurance reform would require farmers to pay around half (47 percent) of their premiums for their crop insurance policies.

Currently, farmers pay only 38 percent of their premiums, while taxpayers pay the rest. The CBO estimates this no-brainer reform would save $8.1 billion over 10 years while reducing the number of insured acres by a grand total of half of one percent.

The failure of the House farm bill was a blessing for many legislators. Now they can show that fighting cronyism is a priority, not an empty talking point. 

Daren Bakst is the senior research fellow for agricultural policy for The Heritage Foundation’s Roe Institute for Economic Policy Studies.