Agriculture Update
October 17, 2008
by: John Frydenlund

Government WasteWatch, Fall/Winter 2008

Sobering lessons for the country from the 2008 Farm Bill

As fuel and food price increases eat into the profits of American businesses and the pocketbooks of U.S. consumers, calls for action from federal policy makers are growing. The recent performance of both Congress and the Bush Administration on the 2008 Farm Bill enacted this summer, however, offers an important but sobering lesson about prospects for reasonable action on the part of our nation’s political leaders. It strongly suggests that a titanic shift in business-as-usual politics will have to occur before this Congress or the White House will make a real difference in the lives of Americans on these critical issues.

Only a year ago, there was widespread optimism that all of the pieces were in place for a farm bill that would finally transform the wasteful farm subsidy programs that mostly benefit large, wealthy farms producing a handful of crops. Prices for subsidized crops were skyrocketing. Net farm income was at record levels. Federal ethanol subsidies were already underwriting farmers’ incomes. The budget was hemorrhaging red ink. And the broadest reform coalition in the history of the farm bill was advocating intensely for change.

While the stage was set in 2007, the recently enacted 2008 Farm Bill represents regression, not reform. Not only did it increase subsidies for most commodities and add new commodities to the subsidy list, it provides nearly $40 billion in subsidy payments whether recipients need the help or not. Under the new law, married couples receiving subsidy payments can have up to $2.5 million in income after expenses have been deducted. According to the Center for Rural Affairs, few farmers will be affected. In addition, it created a new “disaster aid” slush fund, estimated to cost another $3.8 billion, for farmers already receiving crop subsidies and federally subsidized crop insurance.

How could such a law have been enacted overwhelmingly by a Congress in which both
the Republicans and Democrats, since the 2006 elections, have waged public relations wars over who can claim to be the real party of fiscal responsibility?

First, the role of the Bush Administration as a reform agent was grossly overestimated. Although the Administration talked the talk about freer markets and subsidy reform, it failed to walk the walk. Initially, it did help improve the climate for reform by pushing for somewhat tougher subsidy eligibility requirements. However, its proposals were modest at best and would not have led to significant cuts in subsidies. To make matters worse, the Administration defended the trade-distorting U.S. cotton subsidy program when it was ruled illegal by the World Trade Organization, sending a message that it wasn’t very serious about subsidy reform. Even though the President ultimately vetoed the bill sent by Congress, the White House turned that into a largely symbolic gesture when it gave House Republicans a pass to “vote their districts” and ensured that its veto would be overridden.

Second, instead of standing behind their promises of greater fiscal responsibility, both Democrats and Republicans on the agriculture committees, with the help of congressional leaders, used marginal increases in funding for other farm bill programs, such as Food Stamps and conservation programs, to buy support for the status quo from urban and suburban members of Congress. To sweeten the pie, this farm bill, unlike any in history, was loaded with earmarks, including one to benefit race horse owners, which was added to gain the support of Senate Minority Leader Mitch McConnell of Kentucky.

In the end, members of Congress were never really free to engage in a long-overdue straight-up congressional referendum on the farm subsidy programs. To get their pet programs funded, they chose the easy road of holding their noses and going along with the status quo on farm subsidies. To be sure, that was a very clever and potent legislative strategy. But whether it was in the best interests of the nation as a whole is another matter altogether.

Third, electoral politics won out over good policy making. The one-time farm subsidy reformer, House Speaker Nancy Pelosi (D-Calif.), in order to consolidate Democratic gains in rural districts in the last election, pressured House Democrats not to support subsidy reforms. On the other side of the aisle, the Republican Leadership, fearing further losses in rural districts in 2008, failed to mobilize House Republicans to vote for subsidy reform amendments on the House floor or to sustain the President’s veto.

Despite the outcome, Congress arguably paid a price for bending to the will of the farm subsidy lobby. Since January 2007, more than 400 editorials were published by newspapers all over the country, calling for real farm subsidy reform and lambasting business as usual in Congress. It is a remarkable outcome for a second-tier national news story and will do little to help Congress’ already abysmal approval ratings.

In the final analysis, the energy of last year’s perfect storm for farm subsidy reform was depleted by a lack of political will, clever but cynical vote trading, and the dominance of election-centered politics in Congress. That is a potent recipe for federal policy that caters to the special interests rather than the national interest. It does not bode well for real long-term solutions to the costly farm subsidies that most concern the majority of Americans.