Pete Sepp is Executive Vice President for the 362,000-member National Taxpayers Union (ntu.org), a nonpartisan citizen group founded in 1969 to work for lower taxes and limited government at all levels.
Sooey! That old-fashioned farmer's call, meant to summon hogs to the trough, is also an appropriate warning signal for taxpayers and consumers, as Washington returns with a vengeance to its fiscally woeful work on a Farm Bill. This legislation, formally called the "Agriculture Reform, Food, and Jobs Act of 2013" in the U.S. Senate, is actually about much more than farming. In addition to traditional crop-related policies, incarnations of the bill have also contained a mishmash of subsidies for agribusinesses' advertising, payouts for nutrition programs and even costly alternative energy schemes.
Throughout the last Congress, lawmakers in both chambers wrangled over farm legislation that officially came in at slightly less than $1 trillion in spending over a decade – an unrealistic and unsustainable amount, given the perilous condition of the nation's finances. Will this Congress do better than its predecessor? Americans are about to find out, as a version of the Farm Bill hits the Senate floor this week. But initial signs are not encouraging. Here are just a few of the issues taxpayers and consumers should beware of in the upcoming debate.
Overblown "Savings": Last year, proponents of the Farm Bill crowed that over its multi-year lifespan the legislation would save tens of billions of dollars compared to the predicted trajectory of spending. But their official price tag tended to advertise the bill's effect on the category of "direct" spending, while under-emphasizing an additional funding burden – "appropriated" spending on items like "market promotion." Furthermore, as Taxpayers for Common Sense calculated last year, the 2002 Farm Bill exceeded its initially estimated cost by 42 percent, while the 2008 legislation was expected to run at least 50 percent over budget.
The Senate Farm Bill's current cost projection of $955 billion is therefore likely to pass $1 trillion, despite all the rhetoric about belt-tightening.
Market Manipulation: Many parts of the Farm Bill attempt to game the forces of supply and demand, but none more egregiously than the Dairy Market Stabilization Program. It's billed as a "reform," but the program is effectively a new set of rules to give the federal government more ways to interfere with the production of milk. Congress's own research service has reported that the program's effects are "expected to result in a higher future farm price for milk."
Translation: Americans pay more at the cash register for many kinds of products, while food manufacturers pay more for their raw material and are less able to create jobs. Government nutrition programs will face bigger financial burdens as well.
My organization, National Taxpayers Union, has teamed up with the Council for Citizens Against Government Waste to produce a video warning of the Dairy Market Stabilization Program's dangers. This policy does not belong in a free-market Farm Bill.
Crop Insurance, a Bad Bet for Taxpayers: Though recent Farm Bill proposals have sought to limit or phase out direct payments to farmers, will lawmakers also put sensible restraints on taxpayer-backed crop insurance? Senator Jeff Flake's, R-Ariz., legislation would reinstate caps on eligibility for subsidized insurance premiums to the parameters of the Agriculture Risk Protection Act of 2000, for potential savings of $40 billion. More modest reductions are possible by reviving proposals that earned bipartisan support last year, among them a plan from Senators Richard Durbin, D-Ill., and Tom Coburn, R-Okla., to trim premium subsidies for agribusinesses with adjusted gross incomes above $750,000 and an amendment from Senator Saxby Chambliss, R-Ga., that would reduce the incentive that insurance provides to farm on environmentally sensitive lands. A Farm Bill that doesn't have stricter curbs like these will impose unacceptable costs on taxpayers.
A SNAP Judgment: One reason the Farm Bill includes money for the massive Supplemental Nutrition Assistance Program (food stamps) and other nutrition programs is to attract support from lawmakers who would normally balk at voting for giveaways to agribusinesses. If Congress won't stop playing political games like these, it should insist on food stamp reforms as part of any Farm Bill package, such as:
- Merging various nutrition benefit funding mechanisms into a single block grant whose costs are less difficult to contain;
- Tightening eligibility (based on income and assets) for the program when states try to expand benefits "categorically" (i.e., automatically qualifying people simply because they happen to qualify for some other entitlement); and
- Capping expenditures at a more sustainable level. While the Senate's Farm Bill pares back food stamp funding by $4.1 billion, this is a pittance. Between 2008 and 2013, federal nutrition program outlays zoomed from $37.6 billion to $82.0 billion.
Energy Drain: Because of the federal Renewable Fuels Standard, roughly 40 percent of the nation's corn crop is converted to ethanol and blended into gasoline. The result is less energy generated per gallon of motor fuel, but worse is the pressure this diversion of resources puts on other needs for corn – which in turn drive up prices of food for human and animal consumption. Despite intense pleas from anti-hunger groups, livestock producers and citizen groups, the Environmental Protection Agency has refused to suspend the standard.
With other biofuel technologies still not sufficiently advanced (even though government policies have pretended they are), it's time to work more aggressively on other sources of energy. New technologies such as horizontal drilling and hydraulic fracturing are capable of safely unlocking tremendous oil and gas reserves that could make the U.S. almost energy self-sufficient in less than 25 years. That is, if the president and his allies in Congress lay off counterproductive, discriminatory tax proposals aimed at the oil and gas industry.
There are many more fiscal traps in the current Farm Bill debate, from a "Feedstock Flexibility" program that forces the government to buy up surplus sugar for biofuel conversion to new price-support proposals for rice and peanuts. What Congress does in the days and weeks ahead could determine whether taxpayers and consumers avoid those traps or become snared in them.
- Read David Brodwin: U.S. Trade Agreements Threaten Public Health and Freedom
- Read Chad Stone: Facts Show Little SNAP Food Stamp Fraud or Abuse
- Check out U.S. News Weekly, now available on iPad