Farm Bill Is One Expensive Civics Lesson

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Farm Bill Is One Expensive Civics Lesson

By: John A. Baden, Ph.D. John C. Downen
Posted on May 15, 2002 FREE Insights Topics:

Since 9/11 there has been an understandable resurgence in support for government. While there are good security reasons for this, there is also a huge potential for damage. Both the steel tariff and the farm bill are excellent examples of the dangers and injustice inherent to activist government.

Nearly all environmentalists, conservatives, and libertarians are strongly critical of the Farm Security Act of 2001 signed by President Bush on May 13. Our friends in think tanks, e.g. Cato, Heritage Foundation, and the National Center for Policy Analysis, are apoplectic. Its consequences are clearly inefficient, economically unjust, and anti-conservation.

We understand and agree with their arguments - but we see a civics lesson in the farm bill. First, the basic criticisms:

1) Although justified as saving the "family farm," according to the Environmental Working Group (ewg.org), from 1996 to 2001 the top 20 percent of subsidy recipients claimed 85 percent of all subsidies, for an average annual payment of $30,845, or $154,225 for the five years. The remaining 80 percent received only $1,358 per year. And these are only growers of eligible crops, which leaves about 60 percent of all farmers and ranchers unsubsidized. And now it gets worse.

2) The aid goes to the wealthy. As Brian Reidl of the Heritage Foundation points out, taxpayers are subsidizing 14 members of Congress, 15 Fortune 500 companies, and other struggling farmers like Ted Turner ($12,925 in 2001), Sam Donaldson ($29,107 in 1996), David Rockefeller ($134,557 in 2001), and Scottie Pippen of the Portland Trailblazers ($26,315 annually not to farm land he owns in Arkansas). "These mega-corporations and multi-millionaires will rake in as much as 160 times the median annual farm subsidy of $935," Reidl said.

3) Five crops - cotton, rice, wheat, soybeans, and corn - "receive more than 90 percent of all farm subsidies, while growers of most of the 400 other domestic crops are completely shut out of farm subsidy programs" according to Heritage. (A potpourri of other crops, from mohair to honey, was strategically included to pick up votes.)

4) It will cost $180 billion over 10 years, a nearly 80 percent increase in subsidies. The average family will pay $4,400 in higher taxes and higher food prices over the life of the program.

5) It will foster fundamentally dishonest opportunism, e.g. rewarding those who can hire creative lawyers and accountants to play the system. For example, according to the EWG, "Tens of thousands of 'paper farms' have been created for the purpose of maximizing subsidy payments and avoiding (congressional) payment limitations." Now individuals can receive a maximum $275,000 per year. With two other corporate entities they can reap another $275,000, or $550,000 per year.

Tim Searchinger of Environmental Defense recently pointed out that "the increases in conservation spending are outweighed by the environmental threats posed by the unprecedented incentives to overproduce feed grains, rice, and cotton. For every acre of wildlife habitat saved as a result of this farm bill, two or more acres of habitat will be destroyed."

Beyond the purely domestic effects, David Orden and Robert Paarlberg of Cato argue that the bill "will damage U.S. positions in international trade; foreign countries will respond by maintaining restrictions on the importation of American-made goods and will continue, and even increase, subsidies to their own farmers." In fact, Brazil and Australia have vowed to challenge the bill's subsidies before the WTO.

We agree with all these criticisms. Yet we see an advantage in the bill's passage, although we will suffer fallout as all farmers and ranchers are stigmatized as parasitic on the taxpayers.

The benefit is a clear and important civics lesson. Here it is.

The ethically legitimate functions of government are limited: national defense, enforcing property rights and contracts, and protecting the weak from the strong. When it goes beyond, we expect government to become an engine of plunder. Specifically, government transfers wealth and opportunities from the middle class to the conniving, well-organized, and wealthy interests.

Bush has just given us two clear examples of this exploitation, the steel tariff and the farm bill. We will pay dearly - and likely, so will he. Reputations squandered are hard to revive.

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