The sorry socialist state of the farm bill

· December 12, 2018  
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Wheat and twenty-dollar bills
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Stalin had his five-year plans to socially engineer land use, agriculture, and the economy. We have our five-year farm bills.

It is emphatically the role of the federal government to control immigration enforcement, not agricultural production. Yet rather than spending their waning days in power ending the sanctuary city crisis fueling drugs and gangs, Republicans are passing another nanny-state farm bill that bankrupts the nation, distorts agriculture and land-use markets, creates a monopoly for wealthy interests, and nationalizes our agriculture. While farm bills were always bad, leave it to Republicans to wait to pass the worst version precisely when they control all three branches.

In classic GOP fashion, they took the $900 billion farm and food stamp bill, agreed to 95 percent of the premise of its socialist underpinnings, began negotiations by promising to change five percent, and then, in the spirit of bipartisanship, agreed to make it even worse than it was before. Yesterday, in its haste to forge ahead with jailbreak, the Senate passed the bill less than 24 hours after the final 807-page conference report was published. The House is slated to pass it today. And of course, even though this bill violates Trump’s promises from his budget blueprint earlier this year, the president can’t seem to find his veto pen.

This bill accounts for roughly $215 billion in spending every year, yet contains no meaningful reforms, even though the deficit just for the first two months of this fiscal year has already topped $300 billion! Put another way, by next year, interest on the debt itself may double the entire annual cost of the farm bill. Yet debt reduction and the restoration of the free market are the last things on the minds of the swampsters.

Here are the five broad problems with the farm bill:

1) Endless welfare without enough work requirements: To begin with, the House version of new work requirements was extremely weak and actually created a program that would cost as much money as the bill would save. Now, House Republicans totally caved in conference committee and have enshrined the Obama-era level of food stamp spending, roughly $70 billion a year, without any reforms. Trump promised in his budget to reduce the cost by 34 percent ($129 billion) by converting the program from a cash-value voucher to a USDA food package in a plan called “Harvest Box.” House Republicans also proposed more work requirements and limiting certain categories of households from eligibility. They didn’t fight for these provisions for a minute.

2) Making crop insurance like dysfunctional medical insurance: The 2014 farm bill created two new market-distorting, price-fixing programs to cover shallow loss: Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC). In addition to the premium subsidies doled out to the insurance companies so they can continue raising their premiums, these $48 billion programs allow farmers to be subsidized for revenue loss directly. This is the Obamacare of agriculture subsidies because it fixes prices on crops, inflating the costs, and expands the concept of insurance to non-catastrophic and cyclical revenue declines. The president promised to lower the eligibility cap from $900,000 in income ($1.8 million for married) to $500,000, but that didn’t happen. Worse, the bill increases the floor of the price targets, so that now it takes an even lower price drop to trigger the subsidy program and farmers can jump back and forth between the two programs from year to year to maximize their profit. If government wouldn’t get involved in the first place, the private sector would take care of insurance just like car and homeowners’ insurance. Instead, we have allowed crop insurance to become like the market-distorted dumpster fire of medical insurance.

3) Crop insurance for non-farmers! The bill allows first cousins, nephews, and nieces of farmers to receive up to $125,000 in annual farm subsidies even if they are not farmers themselves but have some nebulously managerial involvement in the business (undefined by the bill). This is a provision even Chuck Grassley strongly opposed. This allows large corporate farms to get even more subsidies at a time when the top 10 percent of farms are already receiving 68 percent of the subsidies. It allows a corporate manager in his DC office to give some legal advice to a farm conglomerate and collect subsidies. It also allows corporate farms owned by those earning more than $1.8 million as a married couple to funnel subsidies through other associates and relatives.

4) Paying landowners to buy, monopolize, and not even farm: Trump promised to cut $14 billion in the phony conservation program parts of the bill that pay rich companies to buy up land in order to keep it dormant. This bill expands the number of acres under the program rather than cutting it. Again, it enriches wealthy landowners and further inflates the cost of land, just like any subsidized asset bubble. Ironically, this bill expands the very subsidy and crop insurance programs that encourage overutilization of land for government-driven farming, yet they have the temerity to talk about “conservation.”

In general, the market distortions have caused many farmers to rent land from landowners who become the biggest recipients of these bills, thanks to government choosing which crops to subsidize. What happens when governments pick winners and losers? A 2017 Congressional Research Service report noted that 94 percent of the farm subsidies under Title I of the bill go to just six commodities, with 46 percent going to corn. Remember, corn is already benefiting from the greatest subsidy of all – the ethanol mandate, requiring all fuel producers to blend in ethanol into the nation’s gasoline supply. Furthermore, the CRS notes that these six commodities, despite receiving 94 percent of the subsidies, only account for 27 percent of the output value of all farming. This finding, in its estimation, “merits further inspection of how the programs function across program crops.”

According to the USDA, 54% of all cropland is rented, not owned, and it is most pronounced in the crops that receive the most subsidies. Thus, this is not even a farmer subsidy bill, but a landowner subsidy bill.

5) Parochial handouts:

The bill increases direct subsidies for dairy farmers and even offers cash rebates for those who participated in an expiring program. Rep. Colin Peterson, D-Minn., aptly explained the handouts for dairy farms thusly, “Under what we have put in the bill, you will not be able to lose money, unless you really try.”

Section 11120 of the conference report amends the original bill to force taxpayers to subsidize the development of private insurance plans even when the costs are deemed unreasonable so long as those are the “actual documented costs incurred by the applicant” (see page 751). Thus, a private company can blow millions on research and development for a boondoggle and then charge all of us simply because they incurred it!

After finding a way to subsidize, manipulate, and monopolize every commodity under the sun, section 12613 creates a report for the establishment of “a Natural Stone Research and Promotion Board” that will study whether to add stone to the list of agricultural commodities promoted by government. Leave no stone unturned means leave no subsidy unturned!

This bill comes off the backdrop of the tariffs that are killing soybean farmers, thereby engendering a separate $12 billion special subsidy in addition to premium support, shallow loss, and disaster relief subsidies. So we over-subsidize and over encourage land use to overproduce, then screw them on tariffs, then subsidize them. As Ronald Reagan said, “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

According to the American Enterprise Institute, “50 percent of farms in the lower 70 percent of the crop sales distribution received no subsidy or program payments.” Yet every single Senate Democrat without exception voted for this boondoggle that subsidizes wealthy corporations. They love taxing the rich, but they love subsidizing the rich even more. They hate hard-earned income when it causes inequality, but they love subsidy inequality. They despise income inequality when it’s earned fair and square, but they have no problem with subsidy inequality when it’s a handout, distorts markets, contributes to endless debt, and is likely unconstitutional.

Even worse, like all market-distorting subsidies in other industries, this creates a monopoly for the big players to shut out upstart competitors. The more government subsidizes specific crops and picks winners and losers, the more government distorts the land-use market and bids up the price for land. This hurts small farmers. It’s just like the monopoly government has created in health care through its corporate subsidies. The farm bills have led to the destruction of private farms in favor of corporate conglomerates, just like they created a monopoly for health care administration corporations destroying private practice. This is why even Chuck Grassley voted against the bill.

Unfortunately, this is a winning narrative that Republicans can’t use because all but 13 of them voted for the same venture socialism.


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Author: Daniel Horowitz

Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.