Cronyism + Dependency = the Farm Bill

by Veronique de Rugy

With the support of many Republicans, the House Agriculture Committee has approved a five-year farm and nutrition bill. The 35–11 committee vote is troubling when you realize how incredibly similar the House version of the bill is to the horrendous Senate version. This bill is the perfect example of what the ugly marriage between cronyism and dependency looks like

Let’s start with cronyism. No matter what the headlines are saying, this bill is not fiscally responsible. To be sure, it cuts direct subsides, but replaces them with other payments to farmers. Think about the shallow-loss program; it provides protection to farmers from bad weather and poor prices at a time when crop prices are at an all- time high. (The same would be true for dairy farmers.) It’s paid by taxpayers, the same taxpayers who are already footing most of the crop-insurance costs. Why should farmers be protected from variations in their revenue? Why can’t crop farmers pay for their own insurance? Because agriculture subsidies have become a third-rail entitlement. Farmers expect payments, and Congress delivers.

#more#Then there is the food-stamp part of the bill. Eighty percent of the bill is devoted to food stamps, known as the Supplemental Nutrition Assistance Program. When the food stamp program was first expanded nationally in the 1970s, just 1 in 50 Americans participated. Today, 1 in 7 Americans receive $134 each month, at a monthly cost of more than $6 billion. This bipartisan Farm Bill would  make these high levels of dependency permanent.

The weak economy has played a role in the increase of food-stamp spending, but the more important part of the story comes from the eligibility changes implemented by the Bush and Obama administrations (see this chart).

Now beyond the impact on our society of this large increase in dependency (and the disturbing fact that the Department of Agriculture is trying to increase food-stamp enrollment through ads like this one), this number raises another question: Why are food subsidies even run by the Department of Agriculture? They represent 74 percent of the department’s budget (see the USDA FY2012 budget, p. 2). By contrast, farm programs account for $22 billion of the $151 billion in agriculture spending. Food subsidies should transferred out of the Ag Department. 

Better yet, food stamps and other nutritional welfare programs should be block-granted and provided by the states, not the federal government. Over the last few years, the idea of reforming Medicaid by giving block grants to the states has been recognized as a very sensible policy position. If block granting will let states design more effective Medicaid programs at lower cost, it should provide the same benefits for food stamps and all the other nutrition welfare programs.

I hope we will start having a debate about this issue.