Thursday, March 27, 2008

WSJ: Farm Lobby Beats Back Assault on Subsidies

Stories like this showcase the sheer lunacy of our political system - you don't know whether to laugh or cry at the inaneness. A sensible system would have some levers in place - i.e. when crop prices hit so and so level, we know times are tight and the subsidies would hit; but when crop prices rise above so and so level, they go away. But that would be common sense which we have no place for in legislation. And don't forget our tariffs on foreign sugar ethanol - can't have any of that seeping into the system.

If most of this money went to the every man small farmer, that would be one thing but all the pieces I have read on the subject show that 90% of the benefits accrue to ...whom else... the corporate (largest 10%) farmer. Cramerica - for the corporation, by the corporation - bought and paid for.
  • With grain prices soaring, farm income at record highs and the federal budget deficit widening, the subsidies and handouts given to American farmers would seem vulnerable to a serious pruning. But it appears that farmers, at least so far, have succeeded in stopping the strongest effort in years to shrink the government safety net that doles out billions of dollars to them each year.
  • "At some point, you have to step back and ask, 'Does this make sense for the American taxpayer?'" says Rep. Ron Kind. The Democrat from Wisconsin sponsored a measure that would have slashed about $10 billion over five years in subsidies -- and saw it get crushed on the House floor.
  • U.S. farm income, buoyed by demand for grain from rising middle classes around the globe and the biofuels industry, is projected to reach a record $92.3 billion this year. Still, farmers are expected to collect $13 billion in federal subsidies this year, according to the U.S. Agriculture Department, including payments for commodities, land conservation and emergency assistance.
  • A little more than a year ago, the stars appeared to be aligned for significant changes to the complex piece of legislation known as the farm bill, which allots billions of dollars to farmers and landowners to help stabilize grain prices, make products more competitive abroad and provide a plentiful food supply. President Bush wanted to cut subsidies. California Rep. Nancy Pelosi, who had backed a high-profile effort to reshape the system in 2002, had become House Speaker. And a broad coalition of advocacy groups was assembling to press lawmakers.
  • But.....As Congress tries to finish writing the new farm bill, the final tab is likely to be larger than the 2002 bill, which totaled more than $260 billion.
  • Influential interest groups -- which had toyed with supporting changes -- cut deals to get their own piece of the action. Lawmakers who supported an overhaul peeled off as the debate moved into the election year. Historical alliances between rural and urban lawmakers proved difficult to untie. (and there in a nutshell is our "system" where almost nothing is ever accomplished, unless it serves those who cut the deal)
  • The agribusiness industry plowed more than $80 million into lobbying last year, according to the nonprofit Center for Responsive Politics, which tracks spending on lobbying. Much of that was focused on the farm bill. "We got rolled," says Rep. Paul Ryan, a Wisconsin Republican who worked closely with Rep. Kind. "The agriculture community circled the wagons."
  • Farmers and their allies in Congress say a victory is all to the good because the bill, which is typically renewed every five years, is designed to provide farmers with a safety net through cycles of boom and bust. The heady times of the 1970s, when crop prices soared as the Soviet Union gobbled up American grain, devolved into the farm crisis of the 1980s, leaving farmers buried in debt.
  • As first conceived in the 1930s, the bill was designed to be a temporary boost to farm income. (no spending bill is ever temporary once passed!) It has since evolved into a thicket of hard-to-cut programs, providing payments and special loans to farmers to counteract swings in commodity prices and ensure market stability, as well as income. Subsidies flow to growers of corn, wheat and cotton, among other commodities. The legislation has also become a vehicle for funding food stamps, land conservation and school lunches, to name a few things, attracting supporters whose constituents have little or nothing to do with farms. (this is how you get a bill to become so popular almost no one wants to vote it down - it affects people that have nothing to do with farming - genius!)
  • That has helped create a powerful alliance that makes the farm bill difficult to challenge. The bloc helps ensure all programs in the legislation live on, when they might be vulnerable if considered separately. The 2002 farm bill tab was one of the most expensive ever, with a yearly payout that roughly totaled what the federal government appropriates annually for the Education Department.
  • Today, farmers make up less than 1% of the U.S. population, and agriculture production is dominated by large, industrial farms that have annual sales of $1 million or more. In 2006, average farm household income was $77,654, or about 17% more than average U.S. household income, according to the Department of Agriculture. Average farm household income is expected to be about $90,000 this year. Current law allows subsidies to farmers with annual adjusted gross income of as much as $2.5 million.
  • "If you're providing benefits to the wealthiest Americans, that's not a safety net," said Chuck Connor, deputy agriculture secretary and the Bush administration's lead farm-bill negotiator. "We felt that was fundamentally wrong."
  • Mr. Bush would later rue signing the 2002 bill, which hampered efforts to reach a deal in long-running global trade talks launched in Doha, Qatar, in the wake of the 9/11 attacks. In those still ongoing negotiations, poor countries -- whose economies are often dominated by agriculture -- are complaining U.S. subsidies give American farmers unfair advantages in the global marketplace
  • In January 2007.....the goal was to target more benefits at farmers who work the land and need financial assistance, while weaning benefits away from the well-to-do. Recent recipients include 92-year-old David Rockefeller Sr., heir to oil-baron John D. Rockefeller. He received $554,000 in subsidies from 1995 to 2005 for farm operations and land conservation in New York.
  • At the same time, disparate advocacy groups came together and began pressing for change. The loose-knit alliance included the National Black Farmers Association, which felt the subsidy system had ignored black farmers; the faith-based Bread for the World; and Taxpayers for Common Sense, a group advocating fiscal responsibility. "We decided to put on a game," says Washington lobbyist Rick Swartz, who organized the alliance. Some groups argued that farm subsidies hurt poor, unsubsidized farmers in the developing world. Others argued the programs can't be justified with the federal budget deficit as large as it is. Still others blamed the commodities subsidized in the farm bill for contributing to obesity, diabetes and heart disease.
  • The farm lobby already was fighting back. Led by the American Farm Bureau Federation, with more than six million members nationwide, the pro-subsidy force includes trade associations representing farmers of corn, wheat, cotton, soybeans, sugar, rice and peanuts. Many of these groups have their own lobbyists and entire teams devoted to farm-bill strategy.
  • Through the spring of 2007, roughly 3,000 Farm Bureau members came to Washington to lobby lawmakers as part of a well-organized "fly in." The farmers found receptive ears on the House and Senate agriculture committees that write the farm bill.
  • Soon after the Bush proposal was unveiled, Mr. Peterson, chairman of the House Agriculture Committee, vowed "to make sure that we protect the safety net." His committee proposed to lower the income limit on payments to $1 million from $2.5 million, and to $500,000 for beneficiaries who don't earn at least two-thirds of their income from farming. He agreed to additional changes, including one that would bar farmers from collecting multiple payments by setting up affiliate corporate entities.
  • As it became clearer the farm lobby wasn't going to be stopped, groups that had considered pushing for change focused on getting a piece of the pie. One such group is the United Fresh Produce Association, which, along with other fruit and vegetable groups, is likely to win specialty-crop producers up to $2.2 billion in aid for the first time.
  • Mr. Bush has vowed to veto both bills, a threat that gives him leverage in negotiations to wring concessions on reform. At the same time, Mr. Bush is dangling the prospect of $10 billion in new spending, in return for congressional support for more aggressive changes. As an inducement, the White House has suggested it could raise its proposed income cap to $500,000 from $200,000.
  • But farmers are standing fast. A group of Farm Bureau members from Iowa traveled to Washington earlier this month to give lawmakers "a dose of in-your-face reality," says a spokeswoman.
I don't remember learning this in Social Studies when the teacher finished with "And that children, is how a bill gets passed." So, much like the subsidies given to oil companies during their boom (don't need to windfall tax them, just don't give them subsidies!), the only way to get some of that tax money waste offset is to invest in the companies benefiting from our lawmakers largess...i.e. fertilizers.

For the Medicare version of "How a Bill Gets Passed" check out this 60 Minutes piece.

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