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Senate Passes Half-Trillion Dollar Farm Bill; Ball’s In House’s Court
Posted: Tuesday, June 11, 2013 12:00 am | Updated: 9:24 am, Tue Jun 11, 2013. 0 comments WASHINGTON (AP) – The last time Congress passed a farm bill, Democrats had control of the House and the food stamp program was about half the size it is today. That was five years ago. Conservatives calling for an overhaul of the domestic food aid program will try to trim the nation’s nearly $80 billion grocery bill when the House weighs in on farm legislation in a few weeks. The Senate overwhelmingly voted Monday to expand farm subsidies and make small cuts to food stamps in a five-year, half-trillion dollar measure. But passage in the House isn’t expected to be so easy – or so bipartisan. House Speaker John Boehner, R-Ohio, said Monday that his chamber will take up its version of the farm bill later this month. He made clear his own dislike for generous farm subsidies included in the bill, saying his “concerns about our country’s farm programs are well-known.” But Boehner acknowledged that the rest of the chamber might not agree with him. “If you have ideas on how to make the bill better, bring them forward,” Boehner said in a statement directed to his colleagues. “Let’s have the debate, and let’s vote on them.” House consideration will come after more than a year’s delay. The Senate passed a similar version of its farmbill last year, but the House declined to take it up during an election year amid conflict over the amount to cut from food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP. One in seven Americans now use the program. The Senate bill would cut the food stamp program, now known as the Supplemental Nutrition Assistance Program, or SNAP, by about $400 million a year, or half a percent, and Senate Democrats have been reluctant to cut more. The farm bill approved by the House Agriculture Committee last month would cut the program by $2 billion a year, or a little more than 3 percent, and make it more difficult for some people to qualify. In his statement Monday, Boehner signaled support for the House bill’s level of food stamp cuts, saying they are changes that “both parties know are necessary.” Other Republicans are expected to offer amendments to expand the cuts, setting up a potentially even more difficult resolution with the Senate version. At the same time, Democrats are expected to try and eliminate the cuts. Food stamps were added to the farm bill decades ago to gain urban votes for the rural measure, which sets policy for farm subsidies, programs to protect environmentally sensitive land and other rural development projects. But with the program’s exponential growth during the recent economic downturn, food stamps are now making passage harder. “I expect it to come from all directions,” House Agriculture Committee Chairman Frank Lucas, R-Okla., said last month, acknowledging the complications of moving the bill through his chamber. On the Senate floor, senators rejected amendments on food stamp cuts, preserving the $400 million annual decrease. The bill’s farm-state supporters also fended off efforts to cut sugar, tobacco and other farmsupports. Senators looking to pare back subsidies did win one victory in the Senate, an amendment to reduce the government’s share of crop insurance premiums for farmers with adjusted gross incomes of more than $750,000. Sens. Dick Durbin, D-Ill., and Tom Coburn, R-Okla., said their amendment would affect about 20,000 farmers. Currently the government pays for an average 62 percent of crop insurance premiums and also subsidizes the companies that sell the insurance. The overall bill expands crop insurance for many crops and also creates a program to compensate farmers for smaller, or “shallow,” revenue losses before the paid insurance kicks in. The crop insurance expansion is likely to benefit Midwestern corn and soybean farmers, who use crop insurance more than other farmers. The bill would also boost subsidies for Southern rice and peanut farmers, lowering the threshold for those farms to receive government help. The help for rice and peanuts was not in last year’s bill but was added this year after the agriculture panel gained a new top Republican, Mississippi Sen. Thad Cochran. Critics, including the former top Republican on the committee, Kansas Sen. Pat Roberts, said the new policy could guarantee that the rice and peanut farmers’ profits are average or above average. The House has similar provisions expanding crop insurance and rice and peanut subsidies. Dairy programs could also be contentious on the House floor. Both the Senate and House bills would overhaul dairy policy by creating a new insurance program for dairy producers, eliminating other dairy subsidies and price supports. The new policy includes a market stabilization program that could dictate production cuts when oversupply drives down prices. The program faced little opposition in the Senate but a similar overhaul in the House bill is expected to face resistance in that chamber, where Boehner last year called the new stabilization program “Soviet-style.” Boehner reiterated those concerns in his statement Monday, saying he will support an amendment on the floor to challenge the proposed policy. The Senate bill also would: Overhaul dairy policy by creating a new insurance program for dairy producers, eliminating other dairy subsidies and price supports. The new policy includes a market stabilization program that could dictate production cuts when oversupply drives down prices. The program faced little opposition in the Senate but a similar overhaul in the House bill is expected to face resistance in that chamber, where Boehner last year called the new stabilization program “Soviet-style.” He reiterated those concerns in his statement Monday, saying he will support an amendment on the floor to challenge the proposed policy. Make modest changes to the way international food aid is delivered, a much scaled-back version of an overhaul proposed by President Barack Obama earlier this year. Senators adopted an amendment that would slightly boost dollars to buy locally-grown food close to needy areas abroad. Currently, most food aid is grown in the United States and shipped to developing countries, an approach the Obama administration says is inefficient but that has support among farm-state members in Congress. Consolidate programs to protect environmentally-sensitive land and reduce spending on those programs. Expand Agriculture Department efforts to prevent illegal trafficking of food stamp benefits. Continue reading
At The Trough
An awful farm bill faces opposition Jun 1st 2013 | CHICAGO We plough the fields and scatter BRUCE SPRINGSTEEN once sang about “going on the town now looking for easy money”. As easy money goes, it is hard to beat farm subsidies. Handouts for American farmers were a tasty $256 billion between 1995 and 2012. The fattest subsidies went to the richest farmers. According to a study by Tom Coburn, a fiscally conservative senator, these have included Mr Springsteen himself, who leases land to an organic farmer. And Jon Bon Jovi, another rocker, paid property taxes of only $100 on an estate where he raises bees. Taxpayers will be glad to know he is no longer “livin’ on a prayer”. Every five years, Congress mulls a new farm bill. To confuse matters and gin up more votes, the bills typically address two entirely separate problems: the plight of the poor (to whom the federal government gives food stamps) and the unpredictability of farming (which the government seeks to alleviate). Politicians from rural states, which are grotesquely over-represented in the Senate, back farm bills for obvious reasons. Many urban politicians back them, too, not least because some of their constituents depend on food stamps. This time, unusually, the farm bill faces a fight. It will cost around $950 billion over a decade, says the non-partisan Congressional Budget Office (CBO). That’s plenty of potatoes to squabble over. Republicans complain that claiming food stamps has become too easy under President Barack Obama—the number of claimants has risen from 26.3m in 2007 to 47.6m today. They want to trim the programme from $760 billion to around $740 billion over ten years. Democrats retort that the rolls have swollen because the economy is in the doldrums. They insist that food stamps are a vital safety net for the poor and do not want them cut. Oink, oink Handouts to farmers may also be vulnerable. Proponents of the new bill (of which there are two draft versions) boast that it ends “direct payments” to farmers. These are the subsidies paid to producers of wheat, corn, cotton, rice, peanuts, etc, regardless of whether they actually grow these crops—or even plant them. Other plums, such as “counter-cyclical payments” (extra handouts when prices are low) are also to be eliminated. That may sound like a ray of sunshine for taxpayers, but there are clouds looming. Vincent Smith, a professor of farm economics at Montana State University, says the new bill offers a “bait and switch”. Direct payments are the bait, he explains, but they have been replaced by an expanded programme of subsidised crop insurance. The CBO calculates that more than two-thirds of the $50 billion saved by cutting direct payments would be used to boost other farm programmes, such as crop insurance and disaster relief. If crop prices fall, insurance payouts will explode. And crop prices are near historic highs right now. Federal crop insurance is not new; it began in the 1930s. But its cost has already risen from $2 billion in 2001 to $7 billion last year (see chart). It is expensive because taxpayers pay two-thirds of each farmer’s premiums, and most of the claims. During last year’s drought, crop-insurance payouts were a bountiful $17 billion. Uncle Sam shouldered three-quarters of that. Insurance already costs more than direct payments, and there is no limit to how much of it farmers may receive. The bigger the farm, the bigger the trough. (If taxpayers need insurance against misfortune, they must pay for it themselves, of course.) Subsidised crop insurance is also bad for the environment. Craig Cox of EWG, a green pressure group, worries that it spurs farmers to take greater environmental risks, for example by farming on flood plains or steep hills. He fears that a “pumped-up” version will create even more perverse incentives. On May 23rd an amendment sponsored by Mr Coburn, a Republican, and Richard Durbin, a Democrat, passed through the Senate. It reduces by 15% the subsidies for crop-insurance premiums if a farmer makes profits of more than $750,000 a year. Some farms currently receive more than $1m a year in subsidy. Mr Durbin says the amendment will save more than $1.1 billion over ten years—a whopping 1/875th of the total bill. The sugar lobby fought off an attempt to remove Depression-era supports that keep sugar much more expensive in America than in the rest of the world. The industry’s sweetheart was Al Franken, a Democrat from Minnesota and the author of a book called “Lies and the Lying Liars who Tell Them”. He argued that cheap sugar would destroy American jobs. Such as those of Minnesota’s many sugar-beet growers. The bill may face pitchforks in the House of Representatives. John Boehner, the Speaker, fumes that it takes “Soviet-style” dairy supports and makes them worse. A new scheme seeks to protect the margins of milk producers, who are grumbling that the cost of cattle feed has risen. Randy Schnepf of the Congressional Research Service wonders whether this might be because the government also encourages Americans to turn corn into ethanol and burn it in their cars. Mr Boehner’s spokesman says the Speaker would like an open debate on the floor of the House. He expects lawmakers to tussle over crop insurance, dairy supports, food stamps and the food aid that America sends overseas. This last point is important. Congress has traditionally decreed that such aid should be shipped from America, which costs more and ruins farmers in the poor countries that the policy is supposed to help. Mr Obama has urged lawmakers to allow food aid to be bought locally, thus saving more lives. One way of doing this would be via the farm bill, but neither draft allows it. Continue reading
