Ryan Alexander is the president of Taxpayers for Common Sense.
About a year ago, the Senate Agriculture Committee passed a new, five-year farm bill, well in advance of the last bill's expiration date of September 30, 2012. The House Agriculture Committee passed a bill last year as well. But it's a year later and we're now back at square one.
It's not for lack of hard work that we don't have a new farm bill – the House and Senate agriculture committees, agricultural lobbyists and trade associations seeking to protect their status quo subsidies worked furiously last year to pass a bill through the Senate and the House.
However, passing a trillion dollar bill during an election year and a Congress consumed by the fiscal clif and other budget debates proved too difficult. Neither the House or Senate bill included the types of real and lasting reforms that taxpayers have awaited for decades – and no matter how hard they tried to dress up spending as savings, the agriculture committees couldn't get a bill to the president's desk. So a one-year extension of the 2008 farm bill was instead passed as part of the fiscal cliff deal.
So what has changed over the last year? Both House and Senate agriculture committees have proposed adding more outdated programs back into the bills proposed last year, essentially starting where we ended up. Over the next two weeks, the committees plan to take up cut-and-paste versions of their 2012 bills with a few additional special interest add-ons or red meat for their respective political bases. And just like every farm bill since the Great Depression, this one strives to favor not struggling family farmers but rather large agribusinesses and crop insurance companies coming off one of their best years of profits in a generation.
While the rest of the government is bracing for sequestration cuts, the agriculture sector is asking for more money to be plowed into commodity price supports and federal crop insurance, a program that subsidizes nearly every business risk an agribusiness may face. The crop insurance industry deserves special recognition for brazen behavior: its lobbyists are also pushing the inclusion of expanded crop insurance subsidies and new entitlement programs to further guarantee profit margins and income levels over the next five years (called "shallow loss" programs), something that no other industry would dare ask for in this fiscal environment.
The current crop insurance program subsidizes not only about 62 cents for every dollar to ensure business revenue, but also pays crop insurance companies $1.3 billion every year to administer the program. The federal government picks up a greater portion of losses in poor growing years such as last year's widespread drought. But even with an expected $14 billion cost for 2012, crop insurance programs aren't accountable or transparent to taxpayers.
To show just how paltry the savings proposed by the House and Senate agriculture committees are, take a lesson learned from last year. Underestimated costs in crop insurance and shallow loss programs resulted in higher savings estimates initially reported by the Congressional Budget Office. However, in March 2013, CBO alerted the agriculture committees that their 2012 farm bills save much less than previously expected.
Instead of the 2012 Senate-passed farm bill saving $23 billion from a $1 trillion bill baseline, the bill was expected to save only $13 billion. Similarly, in July 2012, the House Agriculture Committee advanced a bill spending $957.7 billion over the next decade – $35 billion less as compared to the status quo, but again, CBO ultimately slashed this savings estimate to just $26.6 billion.
Not much has changed since then. Next week, House Agriculture Committee Chairman Frank Lucas, R-Okla., is expected to propose a whopping $300 million per year increase in savings from last year – which is just six percent of the cost of the discredited and outdated direct payment program or the cost of wasteful trade promotion programs that benefit companies such as Mars, Nestle, and Hershey. Lucas told various farm media outlets that he'll take more money out of domestic nutrition programs this year – a total of $20 billion over ten years – which would likely be reduced greatly in conference committee negotiations.
This leaves just $18 billion to come from the rest of the farm bill, including areas ranging from broadband internet and commodity and crop insurance subsidies to bioenergy programs for agribusiness giants such as Louis Dreyfus, ADM, and Cargill. If Congress simply eliminated the outdated and once "temporary" direct payment program – something on which nearly everyone agrees – nearly $50 billion could be saved without even touching the rest of the bill.
Next week, the Senate will likely propose a timid, status quo level of savings. Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., expects about $4 billion to be cut from the Supplemental Nutrition Assistance Program (SNAP, or food stamps), $6 billion from soil and water conservation programs, and $16 billion from crop insurance and commodity crop programs, some of which were born during the Depression-era. But if last year taught us anything, once committee members fund all of their pet projects, this $26 billion in savings will likely be reduced.
So once again, the more things change the more they stay the same. While some small reforms were won during votes on the Senate floor in 2012, the 2013 farm bill has a long way to go save taxpayers at least $100 billion, reject spending on pet projects and finally eliminate ineffective programs that have been on the books for decades. With record farm income expected this year, agriculture should be asked to do more – not less – to help pay down our national debt and get our nation's finances in order.
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