All of the Capitol Hill chest-thumping about spending cuts masks a fundamental paradox: how will Republicans make serious cuts in the entitlements their constituents love — and their local economies depend upon? Specifically, will Congressional Republicans (many of whom come from rural states and districts) make substantial cuts to farm subsidies?
Last Saturday’s weekly Republican radio address gave us a great example of this paradox, when freshman senator Ron Johnson (R-WI) said “big government is blocking job creation” and “real reductions must be part of the solution.” But on the campaign trail last October, he claimed that “most Americans” support “safety net” programs for farmers.
Does Johnson’s vision of “big government” include USDA, which employs many Wisconsinites? Is he comfortable with USDA’s aerial surveillance of American farms to ensure that if a certain farm is getting subsidies for a certain commodity like soybeans, that soybeans were actually planted there? I wonder if his vision for “real reductions” includes reducing the $537 million that his state gets annually in farm subsidies — entitlements, actually.
Johnson’s fellow Badger State Republican, Congressman Paul Ryan, has a mixed record on ag spending. While he voted against the 2008 farm bill (which increased farm entitlements), he voted for the 2002 farm bill, which the libertarian Cato Institute says increased subsidies by $45 billion over five years. Ryan’s district has three USDA offices and received $15.7 million in farm entitlements in 2009.
As chairman of the House Budget Committee, Ryan could have a major impact on agriculture spending. Not only will he set the agricultural spending ceiling for the next fiscal year, he will also play an important role in placing funding limits for the 2012 farm bill, which will set farm entitlement laws for at least five years.
Will Ryan be bold and take a red pen to farm entitlements? Or will he flinch to keep farmers in his district happy? Remember, he justified his votes for TARP and the auto bailout by saying “it’s important to keep in mind where I come from.”
There’s more. In 2006, Ryan voted for a law (H.R. 4015) to stop Mr. Hein Hettinga, an Arizona milk processor, from independently selling milk to Costco at a lower price, by subjecting Hettinga’s business to USDA’s maze of mandatory pricing and marketing regulations. In what was probably a first, both the Washington Post and Glenn Beck thought this was an outrage.
Saddling entrepreneurs with big-government rules while raising prices for consumers AND voting for bailouts — I think Paul Ryan’s cheerleaders should put down their pom-poms for now.
Over in Kentucky, Senate Republican and Tea Party fave Rand Paul’s $500 billion spending cut proposal includes tighter rules for food stamps — but not for farm entitlements. Then again, he’s living up to his promises. On the campaign trail last June, he said he was “much more moderate” on the farm spending issue than the media had portrayed. He also revealed his ignorance about ag programs when he declared that dead farmers shouldn’t receive payments. Farm entitlements are tied to specific acres (not individuals); when the landowner dies, the payments go to the next one.
Paul wants to reduce farm entitlements to 2008 levels. However, the Environmental Working Group (which uses USDA data) reports Kentucky got $291 million in farm entitlements in 2008, which was $30 million more than it received in 2009.
Incidentally, Paul the Elder (Representative Ron) saw $64.6 million in farm entitlements flow to his 14th district of Texas in 2009, which is in the top 20% of recipients.
If farm entitlements were an extreme sport, North Dakota would win the gold medal. In 2009 North Dakota got $882.3 million in payments; with a population of 646,844, that works out to $1,360 per person!
But would Republicans be willing to end the cash transfers to North Dakota if it means endangering the open 2012 Senate race plus the re-election chances of at-large freshman Republican Congressman Rick Berg? It seems the House Republican Study Committee’s answer would be no.
Although the RSC has a much-ballyhooed spending cut proposal, they left farm entitlements untouched. Their ag cuts were limited to ending a couple of programs such as organic food certification at $22 million per year. Sadly, that’s miniscule compared to the cash inflows some RSC members’ districts enjoyed in one year in “untouchable” farm entitlements. For example, Tim Huelskamp’s (R-KS 1) district got over $368 million in 2009, Randy Neugebauer’s (R-TX 19) picked up $360 million, and Steve King’s (R-IA 5) received over $216 million. That’s nearly a billion dollars in annual cash payments going to just three congressional districts.
While the RSC’s reluctance to address farm entitlements is not excusable, it’s understandable considering how much a district like Huelskamp’s depends on government payments to sustain the local economy. This argument, however, echoes what liberal activists were saying in the 1990s about welfare: lifelong cash payments to single mothers were necessary to keep inner city communities alive, etc. Back then, House Republicans responded boldly by enacting welfare reform; something not even President Reagan could do. Now their challenge is to deal with those entitlements that favor Republican constituencies.
Speaker John Boehner said recently, “There’s no limit to the amount of spending we’re willing to cut,” and I believe him. I also know the speaker has a strong stomach for Ohio diner chili. He’ll need lots of intestinal fortitude to deal with the howls from his rural House colleagues if he decides we must have welfare reform for farm entitlements.
FDR initiated our complex system of farm entitlements in 1933 as an experiment in what Amity Shlaes has called “planned capitalism,” with the government constantly intervening in the supply and demand of agricultural commodities. It was the next best thing to Soviet-style nationalization. After 78 years, it’s time to end the experiment; America’s crushing debt burden makes it a luxury we can no longer afford.
Joanne Butler is a senior economics fellow at the Caesar Rodney Institute of Delaware. You can email her at email@example.com.