Are we prepared to let some liberals get to the right of many Republicans on the issue of farm subsidies?
As we noted last week, the new Farm Bill being considered before the full Senate is a model subterfuge designed to convince people that the authors are serious about cutting spending. They are agog with glee over the great “bipartisan” work on the Agriculture Committee that led to the death of direct farm subsidies. However, as we reported last week, the bill contains a new shallow loss insurance program that guarantees all farmers 90% of their annual revenue – even at record high prices. The cost of the new program will ultimately surpass the savings from elimination of direct payments.
The new idea, which enjoys broad support among many Republicans as well as Democrats, is so absurd that even the Washington Post is criticizing it. In an editorial titled “A Fertile Ground for Change,” they argue that “lavish crop insurance is neither morally nor economically justifiable, especially at a time when agriculture is financially stronger than ever.” Amazingly, they articulate the problems with anti-free-market government interventions like the shallow loss program:
Excessive crop insurance encourages farmers to plant marginal land, secure in the knowledge that they’ll be bailed out if it does not produce. It reduces their incentive to set aside cash reserves during good years — and farm income exceeded $100 billion for the first time in 2011, so producers are hardly suffering. The more crop you grow, the more premium support you get (up to a maximum subsidy rate of 80 percent). Good for big farms, bad for their smaller competitors. The Government Accountability Office (GAO) reported in April that 53 big farm entities got more than $500,000 each in subsidies during 2011. Capping subsidies at $40,000 each would save $1 billion per year, the GAO found.
Wow, this is epic. The Washington Post has finally realized that government intervention is the private sector comes at a cost.
What’s worse is that even Obama is willing to cut more from farm subsidies than some Republican supporters of Big Ag. As The Hill noted last week, Obama has indicated that he’d be open to cutting more from the farm bill over and beyond the miniscule $23 billion over 10 years that was passed out of committee. Now, we all know that there is a reason why liberals exhibit more alacrity to cut spending on farm welfare than food stamps, which accounts for 80% of the Farm Bill. It is because the farming community is mainly in red states and districts; not exactly part of the liberal base.
Nonetheless, irrespective of how pure their intentions appear on the surface, we must not squander this opportunity to push more spending cuts. If the Washington Post says they want to block the shallow loss program and Obama says he want more cuts to Big Ag, why should be stand in their way?
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