From the WSJ Opinion Archives
OUTSIDE THE BOX
A Harvest of Pork
By backing the farm bill, President Bush sells out his principles.
How to say it: Your columnist is a hopeless idealist? A naive optimist? Perhaps both, for I wrote a piece in this space last September praising the Bush administration for its effort to return U.S. agricultural policy to, in the president's words, a "market-driven approach." Agriculture Secretary Ann Veneman had issued an excellent report that questioned the fundamental concept of farm subsidies. It examined the impact of subsidies and concluded that "government intervention distorts markets and resource allocation, produces unintended consequences, and spreads benefits unevenly. We cannot afford to keep relearning the lessons of the past."
Alas, it was all for show, perhaps to appease the Republican Party's market conservatives. The market mirage has evaporated, and with the enthusiastic support of the Bush administration, House and Senate conferees have agreed on a nearly 80% increase ($83 billion) in farm subsidies over the next decade. We are back to repeating the mistakes of the past, for the new farm bill increases existing subsidies, adds new ones, increases costs to taxpayers and underscores columnist Robert Samuelson's observation that "farm subsidies are huge political bribes."
Farmers compose but 2% of the U.S. population, and one dollar in three of farm income comes from the federal government. The Heritage Foundation calculates that under the new bill there will be $462 billion in higher taxes and food prices over 10 years, costing the average household $4,377. Considering that it would cost but "$4 billion per year to guarantee every full-time farmer in America an income of at least 185% of the federal poverty line ($32,652 for a family of four in 2001)," why are we doing this? It's politics, of course, an effort to gain votes by spending federal money, not an unheard-of practice, but one rarely rising to this level of cost and complexity.
Mohair, wool, and honey subsidies have returned to the subsidized crop list after a six-year absence ($300 million). Peanuts have a new and improved subsidy program ($3 billion) plus a buyout of the old one ($1 billion). Chickpeas, lentils and dry peas get a new marketing loan subsidy. The old soybean subsidy--$3.8 billion in 2001--wasn't large enough, so it was increased. A new apple subsidy ($94 million) and an additional sugar subsidy ($500 million) were added too. Cotton subsidies go up through a higher target price. Livestock subsidies used to be capped at $10,000 a farmer; they've jumped to $75,000, and apparently farmers can get six years of subsidies in one payment.
Now comes America's first national dairy subsidy, expanding what was once the province of New England dairy industry. Dairy farms will now get a monthly payment if the price of milk falls below a predetermined amount--which is estimated will cost $1.3 billion over the 3 1/2-year life of the program. (Just in time for the 2006 election.) Farm-state legislators assure us it focuses only on the small, family dairy farmer, because it is limited to farms with fewer than 140 cows. Unless the farmer is married, of course, in which case it is 280 cows. A family of four can collect subsidies for a herd of 560.
With this nationwide subsidy, milk production will increase (especially since generous grain subsidies will make feed cheaper), so the price of milk will drop below the target price and the subsidies will kick in. The Food and Agriculture Policy Institute estimates the cost will be $3.6 billion.
Meanwhile farm subsidies have spilled over into the energy bill that is now in a House-Senate conference. Sen. Tom Daschle added a new ethanol subsidy, which requires gasoline refiners to triple their use of ethanol (a derivative of corn) by 2012 and bans by 2006 the use of the gasoline additive MTBE, ethanol's competitor in reducing smog. Consumers will have to pay $8 billion more over the next 10 years at the pump, as refiners struggle to refine grain into ethanol to reformulate your gasoline.
It is doubtful that very much of this largesse will actually help America's small-time farmers. As the Veneman study explained, "There is still no direct relationship between receiving benefits and the financial status of the farm," since the size of farm-subsidy payments is based on acreage and harvest, not on the economics of the farm. So the poorest 6% of the farms receive less than 1% of the payments. The new bill pretends to deal with this by limiting subsidy payments to $360,000 a farm (down from $460,000), but it is apparently rife with loopholes. Iowa's Sen. Tom Harkin insists that it is "not a meaningless limit," a sure sign that it is.
So there it is, a massive mountain of money moved from taxpayers to farmers. In the first Clinton term agricultural subsidies averaged about $7.5 billion a year; in 1998 they jumped to $12.3 billion, then to over $20 billion in each of the last three years. But it's never enough; once the pigs get to the trough they always need more slop. When it comes to farming, the more administrations change, the more things stay the same. Or in this case, get worse.
Next week's Rose Garden signing ceremony will feature smiling war socialists of both parties celebrating the signing away of the market principles the White House once espoused. Your columnist will take solace in the thought of how much worse it might have been if Al Gore were president. In that case we might have gotten a bill that was some real help to farmers.
Mr. du Pont, a former governor of Delaware, is policy chairman of the Dallas-based National Center for Policy Analysis. His column appears Wednesdays.
