The Farm Bill Would Make a Soviet Central Planner Blush
Every five years, Congress takes a holiday from the principles that made this country great and turn to central planning policies that were in vogue in 1933. This nightmare holiday is the farm bill.
Right on cue, the current House passed a nearly $1 trillion farm bill Wednesday that puts faith in Washington, DC and disrespects the farmers and ranchers who actually make agriculture the booming industry that it is today. The policies put forward are just a continuation of the status quo, or worse, and an important procedural step to separate food stamps from farm programs inexcusably may not happen.
Real reforms in any negotiated bill are unlikely because of the substance of both the House and Senate bills. These bills maintain the central planning policies and government handouts that have characterized agricultural policy for too long now.
No program captures the farm bill's central planning better than the sugar program. The program controls supplies by limiting how much sugar that processors can sell each year and by import restrictions that reduce the amount of imports. This has led to domestic sugar prices that have generally been at least double world prices for decades.
In any other context, most legislators would find such government interference in the marketplace to be shocking. If there were a proposal for the government to control the candy supply to help candy companies, such a proposal would rightfully be mocked. Yet, even some legislators who claim to be in favor of free markets have turned a blind eye to the centrally planned programs in the farm bills.
The government handouts remain as generous as ever in the House and Senate farm bills. Even modest reforms have been completely ignored. For example, many farm programs have a cap on the amount of subsidies that can be received.
However, the largest farm program, crop insurance, has no such cap. Taxpayers subsidize about 62 percent of the premiums for farmers. According to the Government Accountability Office, a modest $40,000 cap on premium subsidies in 2011 would have saved taxpayers $1 billion and had no effect on the amount of subsidies received for 96 percent of participating farmers.
The negotiated farm bill may be worse than even feared. The very reason why such extremist central planning policies remain intact and reform never happens is because of farm bill politics. Ranking Member of the Senate Agriculture, Nutrition, and Forestry Committee, Senator Thad Cochran (R-MS), has argued that the farm bill should include food stamps "purely from a political perspective. It helps get the farm bill passed." Many legislators, who otherwise would seek reform, vote for the farm bill because they want to get food stamps passed, and vice versa.
Food stamps account for about 80 percent of the farm bill spending. The House bill took a critical step by reauthorizing food stamps and farm programs for different periods of time. The purpose was to ensure that in the future that these two distinct programs would be considered on their own merits in different bills. This separation would at least make it more likely that there would be reform in the future. Certainly, there needs to be substantive reform, but separation was an important step to achieving that goal.
The public overwhelmingly supports separation, and there's diverse support for separation in the media, from The Washington Post to The Wall Street Journal. Representative Marlin Stutzman (R-IN) led a group of 27 House members who sent a letter to the farm bill conferees expressing strong support for separation.
This current farm bill debate is the time for legislators to remember that centrally planned policies and massive handouts are bad policy for agriculture just as it is for any other sector of the economy. The government can no more properly plan the sugar market than it can plan the computer market. This free market principle doesn't change simply because agriculture is involved.
Daren Bakst is a Research Fellow in Agricultural Policy in the Roe Institute for Economic Policy Studies at The Heritage Foundation (heritage.org).