Stalin’s Five-Year Plan Reincarnated

Tuesday, May 14th, 2013 and is filed under Blog, Economy, Issues, News

With farm incomes on the rise in recent years, what is Big Ag supposed to do?  How can they justify more subsidies?  Well, for one thing, they can spend more time demanding an endless flow of cheap labor to which they can pay below market wages.  But that would require the passage of an amnesty bill, something that many House members are not excited to do.  So now they are pushing a new farm bill, which is being sold as legislation that cuts the deficit and eliminates farm subsidies.  The reality is that this is nothing but a rope-a-dope ploy to expand government intervention and other forms of subsidies.

After extending the 2008 farm bill for an additional year last September, both the Senate and House agriculture committees are introducing new versions of the ‘5-year farm bill.’  You might be wondering why we need a farm bill.  What is this?  Stalin’s 5-year plan?  Well, after decades’ worth of direct subsidies, crop insurance, conservation subsidies, marketing loans, disaster aid, trade barriers, commodity price supports, and production controls, our agriculture system is sort of reminiscent of the Soviet Union.

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The Time to End Agriculture Dependency is Now

Tuesday, February 19th, 2013 and is filed under Blog, Issues

Despite the electoral failures of the past two presidential elections, we can still take solace in the fact that there are more red states than blue states; more red districts than blue districts.  Hence, there are more parts of the country where people are intuitively suspicious of a large federal government than where there are people who are overtly appreciative of the federal leviathan.  So why is it that there are only a small group of elected officials who are committed to significantly shrinking the size of the federal government?

Creating dependency is the catalyst for cementing a long-term coalition of big government statists.  Most people think of big urban states and cities when discussing the politics of dependency and special interests; however, the red states have their own share of parochial interests.  Any region or constituency can be fertile ground for creating dependency on the federal government, no matter how innately they are predisposition to hate the federal government.  It is not hard for a selfish politician to raise the specter of government involvement in a local interest and perpetuate the expectation that government will permanently foster that interest.

Nowhere is this phenomenon of red state dependency more evident than in the Agriculture community.  Farmers are naturally hard workers who believe in rugged individualism.  But self-centered politicians representing these districts have worked in tandem with local parochial interests to ensure that the people of some of our most conservative districts are only represented by supporters of big-government dependency and special-interest politics.  In order to secure an endless flow of farm subsidies (or energy subsidies), these politicians have often teamed up with other special interests in Congress to help grow all sectors of government.  Hence, we have some of the most conservative districts being represented by members who help promote the greatest common factor of all spending bills.

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The Coming of the Perpetual Milk Cliff

Wednesday, January 2nd, 2013 and is filed under Blog, Issues, News

Only in Washington could they concoct a scheme in which we are forced to increase spending on market-distorting subsidy programs lest we suffer the pain of further market distortions through government price controls.  Yet, that is the case with the so-called dairy cliff that would have been crossed had Congress not passed an extension of the current farm bill.

Last year, conservatives successfully blocked the enactment of a new 5-year farm bill, which would have permanently locked in Obama’s food stamp spending levels and would have created new crop insurance and price support programs.  Unfortunately, proponents of the bloated farm bill have always been able to hold an archaic bogyman over those of us who seek to stymie the farm bill.  Pursuant to a silly 1949 act of Congress, every time we fail to renew expiring farm programs, the government must begin imposing Soviet-style price controls on milk by decreasing supplies through massive purchases of milk, butter, cheese, and other dairy products.  Under permanent law, the USDA would begin purchasing dairy products at a rate of $38.54 per hundredweight, more than double the current price ($18 per hundredweight).  This market manipulation could double the price of milk, dairy products, and everything else up the food chain.

In a sane world, both houses of Congress would convene and repeal this inane and outdated law within a few minutes by unanimous consent.  That way we could debate a long-term farm bill without having the sword of the 1949 law brandished over our necks and forcing Congress to rush through bad legislation.

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Legislative Lowdown: This Week in Washington

Monday, December 31st, 2012 and is filed under Blog, News, Taxes

Due to the Holiday weekend, we will not be sending out our weekly legislative bulletin, the Madisonian.  Nonetheless, this is a busy week.  Here is what we must prepare for.

This will be one of the most unique weeks in Washington.  For the first time in 4 decades, a previous Congress and a new Congress will operate during the same week.  Due to the eleventh hour work on the tax cliff spilling into the new year, the members of the 112th Congress are still in town, even as the new members of the 113th Congress are sworn in this Thursday.  This creates a double opportunity for politicians to stick us with bad legislation.

Tax Cliff – In the final day before the Bush tax rates are scheduled to expire, Republicans and Democrats are actually not too far apart in their respective positions, despite failing to strike a deal.  It’s amazing how they pretty much agree on all the fundamentals, even as they haggle over the minutia.  The bottom line is that they are both willing to raise taxes on upper-income earners while offering no meaningful spending cuts.  They have also agreed to let the sequester take effect for now.

Harry Reid is offering to raise the rates (income, capital gains, and dividends) on individuals earning more than $360,000 and families earning more than $450,000.  Republican senators countered with an offer to raise the threshold for individuals to $450,000 and families to $550,000.  Meanwhile, Mitch McConnell and Joe Biden are negotiating a deal which would use the threshold of $400,000 for individual filers and $450,000 for families. Republicans are still demanding that the current Death Tax rate – 35% at a $5 million exemption – be extended permanently, while Democrats want the rate to go up to 45%.  For their part, Republicans have agreed to drop their demand that Social Security benefits be adjusted to reflect a slower rate of growth as calculated by the “chained CPI.”  The emerging deal would also throw in yet another extension of the super long-term unemployment benefits without paying for them.

The irony is that none of these plans would bring in a significant amount of revenue, even for those who subscribe to the notion that we should deal with the debt problem through tax increases.  So once again, we are headed for a deal where taxes go up, spending stays the same, and the debt will continue to increase.  Remember that even the paltry sum of revenue that is projected to come into the Treasury from the tax increases is unrealistic because those estimates are not factoring in the damage to the economy created by such tax hikes.

Meanwhile, nothing is being done about the 5 major Obamacare tax hikes that are set to take effect this week, including the deleterious 2.3% tax on all medical devices, the millionaires’ surtax, and the 0.9% increase of the Medicare payroll tax.

Then there is the debt ceiling which will be breached this week, but the Treasury will enact “extraordinary measures” to maneuver some debt payments in a way that will forestall the deadline for another two months.  At present, neither party has proposed a credible plan to limit government in a way that will ensure this will be our last debt limit increase.  Conservatives must oppose any effort to raise the debt limit without such a plan.

Finally, we must remember that January 1 is not the end of the story.  It’s not a cliff.  Congress can always extend the rates retroactively, and if that is done within the first month or so, there will be only minimal disruptions to payroll.  The idea that there must be an agreement by midnight is absurd.

Farm Bill/Milk Price Controls

Conservatives successfully blocked the enactment of a new 5-year farm bill, which would have permanently locked in Obama’s food stamp spending levels and would have created new crop insurance and price support programs.  Unfortunately, proponents of the bloated farm bill have always been able to hold an archaic bogyman over those of us who seek to stymie the farm bill.  Pursuant to an insane 1949 act of Congress, if an extension of the 2008 farm bill is not passed, the government must begin imposing Soviet-style price controls on milk by decreasing supplies through massive purchases of milk, butter, cheese, and other dairy products.  Under permanent law, the USDA would begin purchasing dairy products at a rate of $38.54 per hundredweight, more than double the current price ($18 per hundredweight).  This market manipulation could double the price of milk, dairy products, and everything else up the food chain.

In a sane world, both houses of Congress would convene and repeal this inane and outdated law within a few minutes by unanimous consent.  That way we could debate a long-term farm bill without having the sword of the 1949 law brandished over our necks and forcing Congress to rush through bad legislation.

However, Congress is not sane, and they have no plans to repeal the law.  They are still trying to block the law by passing a new extension of the farm bill – yet another oblique and temporary panacea!  Last week, House leaders offered three options, including an extension of current farm programs until the end of FY 2013, along with two 30-day extensions as alternative options.  The problem with the extension is that it continues to offer direct subsidies to farmers, something that both sides have already agreed to terminate.  It also includes $850 million in dubious emergency funding, which is not offset with other savings within the fiscal year.  Furthermore, this bill contains its own version of milk price supports and dairy regulations, which were referred to as “Soviet-style” by none other than Speaker Boehner.  Finally, this bill does nothing to end the ridiculous practice of pairing food stamp spending with agriculture programs.

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Let’s Just Call the Bush Tax Rates a Subsidy

Tuesday, December 11th, 2012 and is filed under Blog, Taxes

Listening to the self-righteous protestations of the class warriors, one would come away with the impression that the rich don’t pay any taxes.  In fact, the top 1% of tax filers paid 37.4% of all federal income taxes in 2010; the top 2% paid almost 50%.

Unfortunately, when it comes to real handouts for the rich, liberals are silent.  In their dyslexic worldview, a tax cut is a handout and a handout is a tax cut.  That is why both Democrats and Republicans are plotting to surreptitiously slip in a farm bill to the final negotiations over the tax rates.

At present, more than 3/4 of farmers who earn upwards of $250,000 a year receive subsidies from at least one farm program.  Farm subsidies and crop insurance programs help promote income inequality in farming by offering larger subsidies to those who already have larger farms.  These farmers can enjoy multimillion dollar insurance policies that are subsidized in order to guarantee their multimillion dollar investments that would otherwise not be supported by the free market.  Also, federal guarantees of bankers’ loans to rich farmers have further increased their borrowing capacity, thereby driving up the cost of land acquisition.  This, in turn, has shut out small farmers from the business, making it nearly impossible for them to compete.

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Only in Washington

Monday, November 26th, 2012 and is filed under Blog, Debt, Taxes

For those of us who are not schooled in the ways of Washington, here is a glimpse into the duplicity of the “budget savings” as part of the fiscal cliff negotiations.

House Agriculture Chairman Frank D. Lucas has raised hopes that Congress might still be able to produce a multi-year farm bill soon, possibly as part of a package to block impending tax increases and spending cuts.

Lucas says Speaker John A. Boehner has indicated that the billions of savings over 10 years that a farm bill provides makes it an attractive option for legislation to avoid a combination of budget sequester and across-the-board spending cuts known as the fiscal cliff. The chairman had no details on timing, but people following the legislation say movement would have to occur by the first week of December. (CQ subscription)

Let’s do some rudimentary math.  The last farm bill, which was enacted in 2008, authorized $604 billion in spending.  The current House bill proposed by Lucas (HR 6083) authorizes $957 billion in spending extrapolated over 10 years.  Yet, this 58% increase is considered a cut in ‘Washington speak’ because the phony CBO baseline, which locks in Obama’s food stamp spending, projects $992 billion in spending.  Hence, passage of the farm bill, which locks in the record food stamp spending and creates new farm welfare programs, will be scored as a spending cut – to the extent that it can be used for the spending cut side of the ‘grand bargain.’

This is almost as bad as Republicans agreeing to use the war spending – money that will never be spent – as part of budget savings.

When the rubber meets the road at the end of the year, we will wind up with tax increases in exchange for spending increases that are disguised as budget savings.  That is why we are so “intransigent” about raising taxes.

No Farm Bill in Lame Duck

Thursday, October 25th, 2012 and is filed under Blog, Issues

Irrespective of the outcome of this election, there must be no effort to pass major legislation during the lame duck session.  We don’t need political suicide bombers who have nothing to lose deciding consequential issues immediately preceding their departure from Congress.  As such, we must block any faux grand bargain during the post-election session.  Unfortunately, it looks like we will have to contend with another threat during the lame duck; the trillion dollar food stamp/farm bill.

Yesterday, Majority Leader Eric Cantor told a crowd in Boise, “I’m committed to bring the issue to the floor and then to see a way forward so we can get the votes to pass (a Farm Bill).”

I’d like to give him the benefit of doubt and assume that he is referring to a totally new bill – one which would sever the pernicious tie between farm subsidies and food stamp spending, while block granting the food welfare and phasing out the farm subsidies.  Unfortunately, he is likely referring to the House Agriculture Committee bill (H.R. 6083).  This bill should never come to the floor in a Republican Congress, let alone a lame duck session.

The House bill authorizes $957 billion in spending over 10 years, 80% of which will go towards food stamps.  Despite erroneous claims in the media regarding severe cuts to food stamps, this bill actually consummates the Obama-era baseline into our entitlement empire forever.  Furthermore, this bill adds an additional 3 crop insurance and price support programs that distort the market, encourage risky behavior, protect parochial interests, and are tendentious towards large farms.  This bill also continues the egregious coddling of rich sugar farmers and the dairy supply regulations that you so aptly referred to as “Soviet style.”

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Preparing for the Next Battle

Wednesday, October 10th, 2012 and is filed under Blog, Elections, Foreign Policy

One of the more surprising and uncanny elements of this campaign season is the degree to which tea partiers are supporting Mitt Romney.  Despite the constant impugning from RINOs who accuse us of being intransigent ideologues, we have actually shown a pragmatic disposition in offering our full support for Mitt Romney.  Unlike the RINOs, we genuinely sense the impending disaster that will ensue following Obama’s reelection.  We intuitively understand that we must support the one man who can rid us of Obama, irrespective of that man’s ideological vices.

However, even as we work indefatigably to get out the vote for Mitt Romney, we must concurrently prepare for the next battle – the battle that will commence the day after the election.  We must be prepared to fight a president from our own party when necessary.

Every time Romney exhibits a fighting spirit in his rudderless campaign, as he did during the debate last week, he tends to follow that performance with an encore of milquetoast liberal positions.  That’s why we must be prepared to fight him from day one on his liberal policy positions.

Consider several positions Romney has taken on some policy issues over the past week.

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Undoing the Food Stamp Presidency

Monday, September 24th, 2012 and is filed under Blog, Debt

Shortly after the November elections, Congress will reconvene for the lame duck session and consider the farm bill at the behest of a bipartisan coalition of statists.  The farm bill is really a food stamp bill.  The House version (H.R. 6083) authorizes $957 billion in spending over 10 years, $756 billion of which will be spent on food stamps and other nutrition programs. The Senate version (S. 3240) authorizes $969 billion in spending over 10 years, $772 billion of which will be spent on food welfare programs.

To put this in perspective, the 2008 farm bill authorized roughly $400 billion in food stamp spending.  In other words, the current farm bill proposals would consummate Obama’s food stamp presidency into the permanent welfare structure.

Instead of doing Obama’s bidding in the lame duck session, John Boehner should bring real welfare reform to the House floor – the State Nutrition Assistance Flexibility Act (H.R. 6518).  This legislation, sponsored by Reps. Tim Huelskamp, Paul Broun, Steve Chabot, and Jim Jordan, would combine  6 food welfare programs into one entity, and block grant it to the states.  Believe it or not, there are 17 different programs dedicated to providing food assistance.  This bill would combine the following 6:

  • Supplemental Nutrition Assistance Program (SNAP)
  • The Emergency Food Assistance Program (TEFAP)
  • Community Food Projects
  • Commodity Supplemental Food Program
  • Senior Farmers’ Market Nutrition Program
  • Fresh Fruit and Vegetable Program (FFVP)

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Farmers Enjoy Record Income…Time for More Subsidies?

Thursday, September 6th, 2012 and is filed under Blog, Economy

When Congress returns from the August recess next week, one prominent bill on the agenda will be the bailout for farmers who knew they would not be covered by government subsidies this year.  The government-subsidized insurance program for cattle farmers expired a year ago, and like most prudent businessmen, they should have prepared to mitigate their risks and play like everyone else in the market.  But they likely suspected that the politicians in Washington would bail them out anyway.  As such, they did nothing to prepare for a potential drought (which is always a threat).

The Senate will likely vote on the $383 million bailout package (H.R. 6233), which retroactively covers cattle farmers…along with many other special interests that were not hit by the drought.  The House already passed the bill immediately preceding the August break.

Through the entire debate over the bailout package, and the underlying farm/food stamp bill, which costs $957 billion, you will never read this headline: Farmers Expecting Record Incomes!  Here is the latest report from the USDA Economic Research Service:

In current dollars (ignoring the effects of inflation), U.S. net farm income is forecast to exceed $122 billion in 2012 and net cash income is expected to exceed $139 billion, both record nominal values. The expected increase in income reflects large price-led gains in corn and soybean receipts, as well as large increases in crop insurance indemnities. Crop farm gains should be more than enough to offset livestock farmers’ higher feed expenses and a decline in sales of wholesale milk. Extreme hot and dry conditions in the Plains and Corn Belt are drastically cutting projected corn and soybean yields. With corn and soybean supplies for the 2012 marketing year expected to be the lowest in 9 years, prices are increasing dramatically, resulting in higher than expected 2012 calendar-year receipts for many crops. This chart is from the Farm Sector Income & Finances topic page on the ERS website, updated August 28, 2012.

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