It's not that the emperor has no clothes, it's that the taxpayers are paying for the emperor's Armani suit. This is the case with the current legislative action with the farm bill.
Let's start with the name of the legislation: the "farm bill." How many people outside of Washington, D.C. realize that 73 percent of the spending in the $969 billion "farm bill" is actually for food stamps? The "food stamp president" does. That's why the White House says it is "critical" to pass the farm bill.
Then there are rural Republican members of Congress who routinely denounce special interest politics and subsidies, but develop a serious case of amnesia when the farm bill is under consideration. Somehow these functioning adults, who clearly recognize loan guarantees to Solyndra were bad, believe heavily subsidized crop insurance is a public good.
Yet Professor Bruce Babcock of Iowa State University, an expert in crop insurance, avers otherwise. Babcock says that crop insurance is now so perverse with subsidies that are designed to help crop insurance companies sell more policies and sell more expensive policies, that farmers are not the ones being helped. He's calculated that if all corn, soybean, wheat, cotton, and rice farmers were given, at taxpayers' expense, a policy that would cover 70 percent their average yields on all their planted acreage, taxpayers would save almost $6 billion over 10 years. Moreover, according to Babcock, "the value to farmers would be about $5.6 billion more than the net benefits … from existing crop insurance."
And on top of crop insurance, the Senate farm bill even has a new concept on farm subsidies to cover "shallow losses" that it says will save money on farm subsidies. It's been developed into a subsidy program called the Ag Risk Coverage program and essentially assures that no farm may fall below 11 percent of its historic average revenue. What industry wouldn't want such a guarantee? Automakers? Wall Street Banks? Airlines? Even the American Farm Bureau Federation has concerns with the plan being too generous.
And speaking of Solyndra … the past three farm bills have included energy titles with wasteful energy grants, loans, and subsidies beyond what the Department of Energy doles out. One ethanol company, Range Fuels, was approved for $80 million in loans from USDA. It received half the loans, defaulted to USDA in 2011, and was sold for pennies on the dollar. It never produced the cellulosic ethanol it was supposed to.
Another energy program, the Biomass Crop Assistance Program, was created in the 2008 farm bill. It was supposed to cost $70 million over 5 years— yet it spent more than $500 million the first year. Fortunately, the 2008 farm bill sun-setted the program for 2012. The new farm bill resurrects the program and adds another $174 million. Who knows how much it will really end up spending?
Ironically, this institutionalized looting of the federal treasury isn't a Republican or Democrat issue. Range Fuels, was given its loans by the Bush administration. By and large, the farm bill is an home-state, bring-home-the-bacon issue—whether that bacon is in the form of crop subsidies, energy subsidies, or food stamps. If there is a place where Republicans and Democrats should come together its in opposition to wasteful government spending (defined here as spending that, through the corrupting influence of money special interest, is at odds with its own stated objective).
History supports a common sense conclusion that voters would rather elect a person they disagree with occasionally but is intellectually honest and aware, than one who tells them what they want to hear but can't be trusted. Good advice to heed for free market advocates tempted to vote for the farm bill.