What savings? 2012 Farm Bill is agribusiness as usual
By Christine Harbin
The Senate has taken up the formidable Farm Bill, which sets agricultural and food policy in the United States. Proponents of the Senate bill claim it will save money and cut subsidies, but this is a half truth at best. In reality, the Agriculture Reform, Food and Jobs Act of 2012 (S. 3240) is shaping up to be a big, expensive, $969 billion boondoggle—just like its predecessors—and it needs some serious changes.
Sen. Debbie Stabenow (D-Mich.) claims the bill saves $23.6 billion over the next decade. That 2% cut is a tiny haircut after years of rampant budget growth. Overall farm bill spending nearly doubled from 2008 to 2011 (rising from $51 billion to $98 billion per year), with much of the increase due to a stimulus-injected federal food stamp program. Lawmakers are now patting themselves on the back for locking in those huge increases and then cutting a little bit around the edges.
Bill authors are also congratulating themselves for ending the direct payment program, but this, too, is a red herring. Farmers may be giving up direct payments, but in exchange they’re getting a massive new entitlement program called the “shallow-loss” program. Here Congress plans to guarantee that a crop producer’s revenues will never fall below 90% of their average revenues over the last five years. If a crop has a bad year or if prices fall, Uncle Sam is there to make up the difference. According to a report from the American Enterprise Institute, this program would cost $8 to $14 billion annually for the next five years—much more than the $5 billion Congress currently spends on direct payments each year.
The Senate bill spends more on subsidies in other areas, too. For starters, it expands federal spending on crop insurance assistance; the non-partisan Congressional Budget Office (CBO) estimates this will cost $94.6 billion through 2022, which is $5.1 billion more than current law.
It also expands subsidy programs on research and development. Although most industries in the U.S. pay for their own R&D, agriculture is a noteworthy exception. According to CBO, the bill will spend over $2.4 billion subsidizing energy and agricultural research programs over the next ten years—more than doubling previous funding for the programs.