The New Farm Bill Is (More) Welfare For Farmers
Veronique de Rugy writes in the WashEx that the Occupy movement was right to protest the bank bailouts -- but they forgot something:
Cronyism is not restricted to the financial sector. The farm bill currently going through Congress would bail out farmers for the years to come if they ever saw their revenue fall by a small share from their recent record-high levels.The "shallow loss" program would effectively guarantee farmers' revenue. Here is how it would work. Under current crop insurance program, farmers can buy insurance that covers poor yields and declines in prices. The government heavily subsidizes such insurance by paying about two-thirds of the premiums, at a cost of $7 billion annually.
Like most insurance plans, the current system doesn't insure against all revenue losses. The shallow-loss program would change that by sending money to farmers in the event that their actual revenue fall by 11 percent to 21 percent, a drop typically not covered by existing crop insurance.
De Rugy points out:
There is no valid justification for taxpayers paying for a crop insurance program for some of the wealthiest farmers in the country, and it would be irresponsible to expand it further. Sold as a deficit reduction plan, shallow loss is a budget calamity waiting to happen.
I think there is no justification for any taxpayer to pay for any other taxpayer's business, whether they're in the business of farming or advice columning.
This is one thing that Clinton did right and GW Bush did wrong. Under Clinton, the government was well on the way towards eliminating farm subsidies. W reversed all of the Clinton reforms.
Cousin Dave at June 17, 2012 7:41 AM
I have never been able to get my head around paying farmers not to work.
Dave B at June 17, 2012 10:28 AM
The government should have been out of farming, in general, years ago. They distort the market. The need during the dust bowl years made sense, before modern methods, like crop rotation were widely known and adopted. And even then it should have been a matter of the government supplying the information equally, but if you didn't heed it and went under, your neighbor bought your property and added it to his own.
Some of the problem is that some farmers don't adopt new technologies and ideas. But the average corn yield per acre in the '30s was about 20 bushels. Now it is in the 145 bushel range [1]
I do agree that U.S. shouldn't be beholden to Cargill, Monsanto, and ADM but at the same time perverting the tax code that the corporate farms don't get the same tax breaks that private farm families get is also perverse.
Another issue that affects what used to be private family farms is the inheritance taxes. Back in 1910 great-great-grandpa bought 500 acres for $10K. That same property has been passed on but is now worth $10M. So to pass that same property on without tax repercussions on death is to incorporate the family.
Just throwing in my $0.02.
Jim P. at June 17, 2012 12:03 PM
Farm subsidies pay out in the thousands. Subsidizing corporations pay out in the billions.
Now, consider carefully: which one would you rather subsidize?
Patrick at June 17, 2012 5:18 PM
"Occupy movement was right to protest the bank bailouts"
That is too broad a term. Investment bank bailout was wrong, but commercial bank bailout? No way. But of course, commercial banks did not run like commercial banks and somehow, they were also allowed to do all the things that investment banks did which is a complete mess of a system and a recipe for disaster, but that is the fault of the system and not of the people who had no choice of a safe place to put their money.
Redrajesh at June 18, 2012 10:35 AM
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