The American Soybean Association (ASA) recently asked each of the presidential candidates to respond to a series of questions about agricultural policy issues. The questions covered farm bill and crop insurance, estate tax, biodiesel, biotechnology, trade, research, regulations, and transportation and infrastructure. The candidates’ responses (full text here) were not exactly models of courageous and principled policymaking.
I won’t parse the entire thing, as it is just too depressing and some of the issues (e.g., the estate tax) fall outside my area of research. But I will comment on a couple of the topics.
On subsidies and crop insurance, both candidates pledged to support passage of the farm bill, and the crop insurance and disaster provisions it contains. Mr Romney — no Senator John McCain in this area, at least — went on to make a broader statement about his philosophy on farm supports:
On the broader question of farm programs, we must be cognizant that our agricultural producers are competing with other nations around the world. Other nations subsidize their farmers, so we must be careful not to unilaterally change our policies in a way that would disadvantage agriculture here in our country. In addition, we want to make sure that we don’t ever find ourselves in a circumstance where we depend on foreign nations for our food the way we do with energy. Ultimately, it is in everyone’s interest is achieve [sic] a level playing field on which American farmers can compete.
Ugh. That is a monumentally awful statement. First, not all nations subsidize their farmers. New Zealand and (not to brag) Australia, for example, subsidize their farmers very little, and in very minimally distorting ways, and yet their agricultural exports generally are thriving. They compete with other agricultural exporters because they try to be the best they can be given their natural resource endowments, research, experience, and human capital. Second, the caution against unilaterally changing policies is, of course, ubiquitous in many trade policy statements (see, e.g., Ex‐Im Bank, manufacturing, reducing tariffs generally). It is also economically insane to enact bad policies because other countries do so. Especially when it is becoming clear that other large agricultural subsidizers (e.g., Japan and the EU) are not exactly thriving, many and varied though their problems may be.
Third, as for the importance of farm supports in maintaining food independence, that’s also nonsense. As I’ve argued ad nauseum, (e.g., here), subsidies aren’t keeping us well‐fed: if food abundance depended on government support, we’d see nothing but so‐called program crops (soybeans, wheat, corn, cotton, and rice) on supermarket shelves. Judging by the size of my fellow Australians on my last visit home, no‐one is starving there despite very little government support for agriculture. By the way, if you want to read some comments from a president who actually knows what he is talking about, read Indonesia’s President Susilo Bambang Yudhoyono’s comments in this article, where he calls for lower trade barriers around the world, particularly for food security reasons.
Mr. Romney’s support for the Senate‐passed farm bill also is at odds with his statement to the ASA about the importance of open trade. Even putting aside Mr Romney’s typical mercantilist obsession with exports, I wonder if he realizes that the changes proposed in the Senate farm bill would increase the amount of subsidies deemed trade‐distorting by the World Trade Organization, putting trade liberalization at risk? U.S. government spending on trade‐distorting support, the “worst” kind, is at record lows right now, mainly thanks to higher commodity prices. But even a senior United States Department of Agriculture official admits (paywall) that the proposed changes to farm policy — including a move towards revenue insurance — would likely see that progress eroded:
But Joseph Glauber, chief economist at the U.S. Department of Agriculture (USDA), said in an interview with Inside U.S. Trade that if either the Senate‐passed farm bill or the version approved by the House Agriculture Committee were enacted, that would likely increase the level of U.S. trade‐distorting payments.
While stressing that his assessment is preliminary in light of the fact that no legislation has been finalized, Glauber said it is fairly apparent that cutting direct payments and replacing them with either a revenue guarantee program or a price‐loss program, as the two legislative proposals envision, would lead to an increase in amber box payments.
In fact, Glauber argued that changing U.S. farm policy along the lines of either of the farm bill proposals could make it more likely that the U.S. exceeds the $7.6 billion cap to which the U.S. informally agreed in the Doha round, especially in those years where commodity prices dip down and subsidy payouts increase.
Pass the farm bill, in other words, and multilateral liberalization efforts get more difficult.
Finally, I note that Mr. Romney also couldn’t resist adding his standard, wrongheaded, and increasingly prominent talking point about “vigorously enforcing” U.S. trade law, and catching cheaters (plenty of blog posts by my colleagues on this topic can be viewed on this blog). I wonder if he realizes that the United States itself has been caught breaking the rules of agricultural trade, and how hypocritical his statements about farm subsidies and trade are in that context? Plenty of damage, and retaliation, has been unleashed because of various ways the U.S. government conducts its affairs in agriculture.
So, in short, there is not much to like in either candidate’s statements, with Mr. Romney deserving special opprobrium because of his professed free‐market, limited government principles. But we knew that.
Republicans are jumping on the news that participation in the food stamps program hit a new record of 46.7 million individuals in June (about one in seven Americans). In a sluggish economy, an increase in food stamps participation is to be expected. Thus, it’s fair to hold up the increase in food stamps usage as being emblematic of the Obama administration’s failed economic policies. In addition, the president’s 2009 “stimulus” bill increased benefits and eligibility.
What Republicans don’t want to acknowledge is the role they played in expanding the food stamps program before President Obama ever took office. The 2002 farm bill—passed by a Republican‐controlled House and signed by Republican President George W. Bush — expanded the food stamps program. As the Wall Street Journal’s editorial page correctly noted yesterday, “The food‐stamp boom began with the George W. Bush Republicans, who expanded benefits in the appalling 2002 farm bill.”
The 2008 farm bill further expanded the program. However, on this the Journal lets the GOP off the hook when it says “But the supercharger was a 2008 bill out of the Pelosi Congress that goosed eligibility and rebranded the program as the Supplemental Nutrition Assistance Program, to reduce the stigma of being on the dole.” Although Bush vetoed that farm bill (he didn’t cite the increase for food stamps in his veto message), congressional Republicans were instrumental in enabling the “Pelosi Congress” to override it. In the House, 99 (out of 195) Republicans joined most Democrats in voting to override the veto. In the Senate, only 12 Republicans voted to sustain Bush’s veto.
One of those Republicans who voted to override Bush’s veto — and who also voted for the 2002 farm bill — is Sen. Jeff Sessions of Alabama. Sessions, who is the ranking member of the Senate Budget Committee, has been a chief critic of the growth in food stamps under President Obama. Sessions has been particularly critical of the administration’s efforts to “recruit” new food stamps recipients. For example, a “Community Outreach Partner Toolkit” produced by the USDA in 2011 that suggests throwing a “great party”:
Host social events where people mix and mingle. Make it fun by having activities, games, food, and entertainment, and provide information about SNAP. Putting SNAP information in a game format like BINGO, crossword puzzles, or even a “true/false” quiz is fun and helps get your message across in a memorable way.
It’s probable, however, that the food stamps outreach is being driven by the bureaucrats at the USDA. To Sessions’s credit, he acknowledges as much in a press release on the USDA’s recent cessation of radio ads designed to attract Spanish‐speaking individuals to the program. It’s important to note that these “radio novellas” were produced during the Bush administration. Similarly, a partnership with the Mexican government to make Mexican nationals more aware of U.S. welfare programs — including food stamps — was signed by Bush’s agriculture secretary Ann Veneman in 2004.
The Obama administration certainly deserves to be heavily criticized for the growth in government dependency. But attacks from Republicans (e.g., Newt Gingrich calling President Obama the “food stamps president”) have been too disingenuous. Yes, Republicans are now calling for the food stamps program to be cut, but given their culpability in its growth — and the fact that it’s an election year — it’s hard to view their sudden discovery of religion as anything more than standard politics.
Addendum: Here’s Chris Edwards’ recent chart showing the growth in food stamps spending under presidents Bush and Obama:
Surprisingly, President Obama’s first direct attack on Paul Ryan since the congressman’s selection as Mitt Romney VP nominee doesn’t involve the threat of grandma being pushed off a cliff. Instead, it involves the latest farm bill, which has too many subsidies and food‐stamp increases for House Republicans’ tastes (good for them).
Now, I’m no expert in agriculture policy — for more on farm bills and related disasters, I recommend my colleague Sallie James’s work — but one provision in the disputed legislation caught my eye: Apparently the federal government plans to buy over $150 million of meat and fish. Sounds like a great cookout, but what gives the government the power to do that? Where exactly is the Constitution’s BBQ Clause?
If only President Obama could take a page from another embattled Democratic president facing a drought‐stricken nation: In 1887, Grover Cleveland vetoed a bill appropriating $10,000 for seeds for suffering Texas farmers, saying, “I can find no warrant for such an appropriation in the Constitution.” (For more on that and other similar examples, see this report from 10 years ago this month.)
What a long way we’ve come.
Republicans and Democrats have reached a deal that substantially increases the prospects for passage of a massive farm bill in the Senate. The Senate will vote on 73 amendments and then vote on passage. According to Senate Agriculture Committee chairwoman Debbie Stabenow (D‑MI), the deal “is really an example of the Senate coming together to agree to get things done.”
It’s also an example of Republicans and Democrats coming together to fleece taxpayers. Chris Edwards and I noted this in an op‐ed we penned yesterday for The Hill:
Pundits claim that partisanship is creating gridlock in Washington. But in the Senate, the two parties still know how to make bipartisan deals on big government subsidy legislation. That chamber may move ahead with a massive agriculture bill that would spend almost $1 trillion over the next decade. Supporters are calling it a “reform” bill because it would trim a measly two percent from projected spending over the period.
Sen. Stabenow crowed that “We are now closer than ever to achieving real reform in America’s agriculture policy.” Here’s our response to that claim:
This year, Farm Bill supporters are claiming that their bill represents major a “reform.” It is true that the Senate bill would end some types of subsidies, such as “direct payments.” However, it would replace them with new subsidies, such as a “shallow loss” program to deliver more aid if farm revenues fell below the high levels of recent years. This new program could end up costing as much or more than direct payments, and may cause more distortions to agricultural markets…Real reform would entail abolishing farm subsidy programs and not replacing them with anything — except with the natural entrepreneurial skills of farm businesses.
Assuming that Stabenow & Co. have to votes for passage, attention is going to turn to the Republican‐controlled House. Edwards and I note that thus far Speaker John Boehner (R‑OH) and his lieutenants have been silent on the Senate version of the farm bill, which is curious because the House leadership has made its intentions clear on other major bills that the Senate wants to pass before the November elections:
Perhaps the House leadership is hoping that the Senate bill goes down in flames before they have to make any decisions on it. After all, House Republicans that favor major cuts to farm subsidies will face internal opposition. The House Agriculture Committee chairman, for example, is Rep. Frank Lucas of Oklahoma, who is a National Association of Wheat Growers “Wheat Champion.” For the passage of the last major Farm Bill in 2008, 100 House Republicans helped the Democrats override President Bush’s veto of that spending monstrosity.
Now that it appears that the Senate bill won’t be going down in flames, here’s the big question: Will the more conservative House go along with the taxpayer‐funded farm pig out?
With trillion dollar deficits and mounting federal debt, will Congress finally get serious about cutting farm subsidies? We’ve been disappointed before, but there are a few hopeful signs — like the front‐page story in this morning’s Washington Post—that this Congress may be serious about cutting billions in payments to farmers. As the Post reports:
In their recent budget proposals, House Republicans and House Democrats targeted farm subsidies, a program long protected by members of both parties. The GOP plan includes a $30 billion cut to direct payments over 10 years, which would slash them by more than half. Those terms are being considered in the debt‐reduction talks led by Vice President Biden, according to people familiar with the discussions.
The Post story profiles a freshman Republican from Kansas, Tim Huelskamp, a fifth‐generation farmer himself, who has been traveling his sprawling district telling his farmer constituents that they can no longer be exempt from budget discipline. Many farmers in his district appear to agree.
It remains an open question whether the Republican freshman class will live up to Tea‐Party principles of limited government when it comes to agricultural subsidies, as we have speculated ourselves (here, here, and here) at the trade center.
Farm subsidies have certainly been a weak spot of Republicans in the past. According to our online trade‐vote feature, more than half of the GOP House caucus voted in May 2008 to override President Bush’s veto of the previous, subsidy laden farm bill. In July 2007, more than half the GOP caucus voted against any cuts in the sugar program, and more than two‐thirds opposed any cuts in cotton subsidies. (Of course, Democrats were just as bad overall on farm subsidies.)
The next farm bill, due to be written by this Congress, will tell us a lot about whether the Republicans really believe what they’ve been saying about limiting government and reducing the debt.
Heartening news from the Appropriations Committee yesterday: they voted to cut aid to farmers generally, and to make significant changes to an egregious cotton program. But first, some background. You’ll recall the embarrassing deal made by the Obama administration last year to head off Brazil’s right to impede American exports in retaliation for WTO‐illegal cotton support. The United States is, in other words, now sending almost $150m worth of “technical assistance” and “capacity building” funds to Brazil, just so we can continue to subsidize American cotton growers without penalty (so much for U.S. promotion of the rule of law in international commercial relations). Rep. Ron Kind (D‑WI) tried to end that deal earlier this year, but to no avail. Big Ag’s friends in Congress argued, unfortunately successfully, that any changes to the cotton bribes should be dealt with in the context of the 2012 Farm Bill, and by the agriculture committees (good luck with that).
But yesterday, the Appropriations Committee approved by voice vote an amendment from Rep. Jeff Flake (R‑AZ) to take the fiscal 2013 payment to Brazil from funds that would normally go to supporting U.S. cotton growers. According to an article [$] in the Congressional Quarterly, Rep. Flake argued that “American cotton growers should pay the bill since the United States was making the payment on their behalf.” Well played, sir. Rep. Rosa DeLauro (D‑CT) filed an amendment that would send the FY2012 cotton payment to the Women’s, Infants and Children nutrition program instead.
The Committee also voted to lower the income eligibility cap to $250,000 AGI.
The CQ article did contain this worrying footnote, however:
Support for the amendments may be tenuous — especially if lawmakers cannot hide behind the anonymity of a voice vote. After winning the voice vote in committee, Flake sought a roll call, prompting appropriators of both parties to suggest that he did not need the recorded vote. Flake took their advice and demurred.
Leglislators are usually shy about publicizing their positions only when they think it could get them in political hot water, so let’s not uncork the champagne yet.
The Washington Times says that the upcoming farm bill re-write could “sow division in the GOP.” While House Republican leaders John Boehner, Eric Cantor, and Kevin McCarthy voted against the 2008 farm bill, the new chairman of the House Agriculture Committee, Frank Lucas (R-Okla.), is a dedicated supporter of farm subsidies.
The Times recalls Boehner’s comments on the 2008 farm bill:
“The farm bill has often been abused by politicians as a slush fund for bizarre earmarks and wasteful spending projects, and the latest version ... is no different,” Mr. Boehner, then the GOP minority leader, said at the time.
It’s too bad then that the Boehner-friendly Republican Steering Committee, which decided the committee chairs, didn’t appear to blink at handing the agriculture committee gavel to a key supporter of the “slush fund.” And it’s not as if Lucas has been circumspect in his intentions. Lucas’s agriculture issues section on his website, which hasn’t been updated since the Republicans took back the House, makes that perfectly clear:
As Ranking Member of the Agriculture Committee, I have long been a champion of voluntary agriculture conservation programs. During the drafting of the 2002 Farm Bill, I worked to secure the largest ever increase in programs such as Environmental Quality Incentives Program, the Conservation Reserve Program, and many others. In the 2008 Farm Bill, I advocated for renewable energy provisions to be included in the farm bill which would allow rural areas to play a larger role in making the U.S. less dependent on foreign sources of energy. I am proud that the 2008 Farm Bill devotes a funding stream to renewable energy research, development, and production….
[I] will work closely with Chairman Peterson and other members of the committee to ensure that cuts are not made to agriculture producers – farmers and ranchers.
Lucas isn’t shy about touting his support from the myriad farm lobby groups either: