We need the right farm bill, not just any farm bill

Daren Bakst Research Fellow, The Heritage Foundation
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It sounds like Speaker of the House John Boehner (R-Ohio) just wants to pass a farm bill — any farm bill. On Wednesday, he announced that he will support the House farm bill despite his concerns with the $1 trillion legislation.

It’s time for Boehner and others to stop playing politics with farm policy and start getting serious about ways to improve the legislation. The goal shouldn’t be to pass any farm bill; it should be to pass the right farm bill.

For starters, the House bill should be split up into two separate bills: a food stamps bill and an actual farm bill (about 80 percent of the House bill’s spending would go toward food stamps, making the moniker “farm bill” extremely misleading). As Sen. Thad Cochran (R-Miss.), ranking member of the Senate Agriculture Committee, recently explained, lawmakers like to fold the food stamp program into the farm bill because “it helps get the farm bill passed.” It would be more honest — and more transparent — if farm programs and food stamps were not lumped together in a single bill.

From a cost perspective, this certainly isn’t the right farm bill. It’s projected to be 56 percent more expensive than the last farm bill, which was passed in 2008. The Congressional Budget Office (CBO) estimates that it will have a 10-year price tag of $940 billion. If history is any guide, however, the actual costs will be much higher.

There’s bipartisan support for reforming the most expensive farm program, crop insurance. Even President Obama has pushed reforms that would rein in that program’s skyrocketing costs. Under the House bill, those costs would actually rise.

The House bill is not all bad. It would, for example, eliminate the direct payment program — the subsidy program that pays farmers even if they don’t grow crops. Such a move is long overdue.

Unfortunately, the bill includes new taxpayer-funded programs that could be even costlier: a shallow loss program and a reference price program.

The shallow loss program would guarantee farmers up to 85 percent of their revenue, based on commodity prices from the previous five years. It would eliminate almost all risk for farmers — and shift it onto taxpayers.

The reference price program would designate certain standard prices for commodities (“reference prices”). If actual prices were lower than the reference prices, Uncle Sam would make up the difference. The House Agriculture Committee claims this program would cover deep or major losses only, but that’s just more false advertising. The bill sets reference prices so high that even minor losses would be covered. Worse, the program is effectively a guaranteed payment program for peanut farmers. Based on the CBO’s projected peanut prices for 2014-2018, the program — from the outset — would dole out payments to peanut farmers.

There’s also a much bigger problem with the House farm bill. With its price supports, import quotas and supply restrictions, it’s an exercise in central economic planning. These sorts of policies were hip in 1933 — and have failed every year since. For Congress to repeat the mistakes of the past would be inexcusable. And, of course, no legislator who embraces this bill can claim to be for free markets and limited government — at least, not with a straight face.

Rather than pre-approve the House bill and ram it through, lawmakers should separate the wheat from the chaff (or, at least, the food stamps from the farm policies) and adopt some common-sense, free-market reforms that would benefit taxpayers, farmers and consumers alike.

Daren Bakst is a research fellow in agricultural policy at The Heritage Foundation.

Tags : farm bill
Daren Bakst