Monday, January 27th, 2014 and is filed under Debt
Some things will never change in Washington. And this week’s deal on the Farm/Food Stamp bill is a perfect example of Washington’s recalcitrance to conservative reforms. After months of a protracted K Street food fight, the majority of the lobbyists appear to have brought home enough bacon and have settled on a deal.
Throughout the week you will find headlines heralding the bipartisan agreement to “save” $24 billion in Farm Bill – $8 billion from food stamps and $15 billion from agriculture. But as we’ve learned from past experiences, spending cuts in Washington parlance are quite unique.
The CBO’s 10-year score for the 2008 Farm Bill was $604 billion. After Obama engendered a massive increase in food stamp spending with looser eligibility requirements, the overall baseline was driven up to roughly $972.8 billion. The House proposed a $40 billion “cut” in food stamp spending from that baseline. The Senate proposed a $4 billion “cut.” They get together in conference and….drum roll…we have an $8 billion cut….off the $972 billion baseline. That is what counts for cutting spending in Washington.
Moreover, any projected score on food stamp spending is meaningless. The food stamp program is part of mandatory spending, and given the fact that this bill fails to structurally reform the program on a large scale, the 10-year cost will continue to rise as more people are encouraged to join.
On the agriculture side, this bill is an even bigger joke. Drafters of the bill are boasting how they are abolishing $5 billion in direct subsidies. The problem is that this bill creates new subsidy programs, which will be even more expensive and market-distorting – and they will be permanent law, not subject to reauthorization.
The Agricultural Risk Coverage (ARC) would guarantee shallow loss off of record revenue farmers have been enjoying over the past few years. The shallow loss program would kick in when revenue dips below 86% of the past few years. The Price Loss Coverage (PLC) would trigger subsidies when prices for certain commodities dip below target prices. For many crops, prices are already beginning to drop towards the cusp of those trigger levels. Hence, the cost of these programs will probably spike much higher than originally projected when CBO scored the bill with the higher prices.
The only logical outcome of this bill is that reforms to both agriculture subsidies and food stamps will be precluded for another five years. So much for the GOP promise to sever the two issues so we can reform each one independently in the future.
It’s also important to note that it’s bills like this which help create a culture of dependency in red states (on top of the blue state dependency culture). You will hear many of the Republicans who represent these districts speak out passionately against Obamacare, yet celebrate the endless agriculture subsidies in this bill. What they fail to tell you is that it is precisely this bipartisan culture of injecting the federal government into private enterprise that has given rise to the climate which engendered passage of Obamacare. The Feds didn’t take over the healthcare sector overnight. It was facilitated by the precedent of decades’ worth of government intervention in private industries such as agriculture. If government can completely control commodity prices through price targeting, trade barriers, and production quotas, it wasn’t such a drastic leap to take over the healthcare sector.
Federal intervention into state and private business will not end overnight or in one year. But this Farm Bill is one more indication that we will never have a chance to downsize government so long as the current politicians are leading both political parties. They continue to add more government intervention even on top of the rare programs that are repealed.
This bill doesn’t represent incremental reform; it is a classic bait-and-switch subterfuge to spend more and grow government, while seizing the mantle of fiscal reform. Conservatives beware.
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