United Liberty

Written by Chris Edwards, Director of Tax Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

It’s widely accepted that George W. Bush was a big-spending president. He was a social conservative, but not a fiscal one. To his credit, however, even Bush recognized how wasteful and unfair farm subsidies are, and he vetoed the last major farm bill in 2008.

That bill “would needlessly expand the size and scope of government,” he said in his veto message. Unfortunately, Congress overrode Bush’s veto and the 2008 farm bill became law at an estimated taxpayer cost of $640 billion over 10 years.

Congress is moving ahead on another farm bill this year, with the Senate recently passing its version and the House to take up a bill shortly. The Senate-passed bill would spend $955 billion over 10 years—49 percent more than the 2008 bill that was too expensive even for Bush.

Four-fifths of the spending in this year’s farm bill is for food stamps, yet 18 Republican senators still voted for it. Perhaps those members hadn’t noticed that the cost of food stamps has quadrupled over the last decade. Perhaps they hadn’t noticed that federal government debt has doubled since 2008. To members who see themselves as fiscal conservatives, it should be obvious that a less expensive bill this time around is appropriate, rather than one that is far more expensive.

Veronique de Rugy of the Mercatus Institute has a new analysis out on agricultural subsidies, with a title that could have come from my own heart — Farm Subsidies Must Die. I dig it.

In 2012, the Department of Agriculture (USDA) spent $22 billion on subsidy programs for farmers. Introduced in the 1930s to help struggling small family farms, the subsidies now routinely draw condemnation from both left and right as wasteful corporate welfare. While the number of farms is down 70 percent since the 1930s—only 2 percent of Americans are directly engaged in farming—farmers aren’t necessarily struggling anymore. In 2010, the average farm household earned $84,400, up 9.4 percent from 2009 and about 25 percent more than the average household income nationwide.

What’s more, a handful of farmers reap most of the benefits from the subsidies: Wheat, corn, soybeans, rice, and cotton have always taken the lion’s share of the feds’ largesse. The Environmental Working Group (EWG) reports that “since 1995, just 10 percent of subsidized farms—the largest and wealthiest operations—have raked in 74 percent of all subsidy payments. 62 percent of farms in the United States did not collect subsidy payments.”

That is completely wasteful spending right there, something we could drop immediately and wouldn’t be hurt for it. In fact, repealing agricultural subsidies would have a very beneficial effect on the poorest of Americans:

Sen. Saxby Chambliss (R-GA), facing heat for his less than fiscally conservative record, is trying his best to appease the Republican base. During a conference call with reporters last week, Chambliss echoed a familiar line that we’ve heard from Republicans since they rolled over during the “fiscal cliff” debate:

Obama has promised not to get entangled in protracted negotiations during March’s vote on raising the federal debt limit and the extension of the spending authorization like those that dragged on for weeks before the “fiscal cliff” of sweeping spending cuts and tax increases that triggered automatically at midnight Monday.

The Georgia Republican dismissed that promise.

“My message to you, Mr. President, is you’d better strap on your chin strap very tight because this junkyard dog is going to address spending cuts and entitlement reform in the debt-ceiling debate, and that’s going to be a line in the sand for us Republicans and conservatives,” Chambliss said.

LOL.

Every few years the Congress takes up the Farm Bill, a relic of the New Deal that subsidizes and other taxpayer-funded giveaways for agriculture industry. The most recent legislation — the $604 billion, Food, Conservation, and Energy Act — was passed in 2008, though it was rejected by then-President George W. Bush; though Congress subsequently overrode the veto. The problems with the bill was that it spent far too much, subsidized millionaires, and cost Americans, not just in taxes and wasteful spending, but also through higher grocery bills.

The time has come for Congress to once again shell out billions in taxpayer dollars, but the $969 billion — seriously, it’s that expensive now — legislation may be put at risk due to a disagreement between party leaders on amendments that can be offered:

Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) and ranking member Pat Roberts (R-Kan.) were scrambling Tuesday to save the $969 billion farm bill from failing on the Senate floor.

More than 100 amendments have been filed to the bill and more continue to pour in. Getting the farm bill to a final vote will require some agreement between Democrats and Republicans on a list of final amendments.

Senate Majority Leader Harry Reid (D-Nev.) wants to eliminate “non-germane” amendments but his Republican counterpart, Sen. Mitch McConnell (R-Ky.), is arguing that the must-pass legislation is a prime opportunity to enact a GOP priority wish list of anti-regulation legislation.

All over the nation, people are “occupying” various cities and destinations. They’re angry over a lot of things, but one thing that I agree with them on is bailouts of banks. Many in the occupy movement argue correctly that taxpayer dollars shouldn’t be used to make the wealthy even wealthier.

Of course, I would love to get their take on this tidbit:

Wealthy celebrities including Bruce Springsteen, Jon Bon Jovi, Quincy Jones and Ted Turner have received federal subsidies, according to “Subsidies of the Rich and Famous,” a new report from the office of Oklahoma Republican Senator Tom Coburn.

The Government Accountability Office (GAO) identified several individuals receiving farm payments “whose professions had nothing to do with farming or agricultur[e],” says the report. These individuals include real-estate developer Maurice Wilder, a “part-owner of a professional sports franchise [who] received total of more than $200,000 in farm program payments in 2003, 2004, 2005, and 2006.”

The report also says millionaires Jon Bon Jovi, Bruce Springsteen and Ted Turner have collected farm subsidies.

“These individuals include Scottie Pippen and Ted Turner, respectively. Millionaires also receive state tax breaks on farm land. For example, Jon Bon Jovi paid property taxes of only $100 last year on his extensive real estate holdings in New Jersey that he uses to raise bees. At the same time, Bruce Springsteen received farm subsidies because he leases his property to an organic farmer,” the report explains.

With the federal budget an absolute wreck, maybe it’s time for the government to ignore Harry Truman for a moment and pass the buck. Almost literally.

The left typically argues that an act is moral. The right often argues that the same act is unconstitutional. However, we can’t pay for it regardless. So why not pass these programs back to the states to handle. Let individual states determine of they want to pay for farm subsidies that pay up to $40,000 per year whether a farmer grows a crop or not. Let the states determine if they want to pay for someone to sit and home and crank out kids. Let the states make that determination.

If these programs are so morally right, they will continue on. Some states won’t, but then we’ll have comparisons as to whether they work or not. The answers will finally be clear and the nation can move on. Yes, proponents of various measures will have to battle in 50 assemblies, rather than just one, but grass roots organizations don’t seem to have a problem with that to much.

The constitutional argument becomes null and void since state constitutions are generally easy to amend. A simple vote and POOF! New amendment. Will there be battles over that? Absolutely. However, things shouldn’t change without a fight. All sides need to be discussed ad naseum so that people have an idea what they’re in for.

By moving much of this to the state level, states can determine if they need a given program and, if so, perhaps target it better. Not only that, but people who disagree with a programs vehemently enough can always relocate to another state. It’s not easy to find another country. However, those who leave a state will also make it clear how they feel about the results of those programs and the taxes that accompany them.

Personally, I think it’s worth a try.

Here is a great editorial out of the St. Paul Pioneer Press on why the tea party movement should turn its it attention toward farm subsidies:

The stakes really are not very large, about $15 billion to $20 billion per year for the U.S. as a whole. Some $10 billion to $15 billion is in cash payments to farmers, including land rental under the Conservation Reserve Program. Another $5 billion or more goes into subsidized crop insurance.

For Minnesota, direct payments in 2009 came to $852 million, of which $114 million was for CRP acres. Overall, our state came fifth in national rankings. Neighboring states also placed high, with Iowa second, North Dakota sixth, South Dakota ninth and Wisconsin 11th.

Murray County in southwest Minnesota, where I grew up and own farmland, got $15 million, a typical amount for the uniform rectangular counties across the southern part of the state.

These sound like big sums, but relative to total cash flows in farming, especially with growth in Asia propelling crop prices higher, they no longer are that important. The tragedy is that relative to the cost to the Treasury, they do little good for anyone.

Compared with an annual budget deficit of $1 trillion, $15 billion or $20 billion saved by complete elimination of farm payments is a drop in the bucket. But so are many other programs dear to the heart of one interest group or another.

That is the point. If the tea party adherents in the new Congress are not able to completely chop out entire programs like this, their movement will quickly become a debacle, economically and politically. Committed tea party members will be bitterly disappointed by the realities of Washington, just as true believers in Supply Side economics like Reagan Budget Director David Stockman were back in 1982.