Welfare outrage

Clone83

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I see that there was a good farm policy op-ed published today in the Los Angeles Times. You should be able to follow the link and read it without registering with the newspaper. I did. If not though, IMO it is worth the read. It even addresses some of the specific questions brought up in this thread.

Excerpted below is about a third:

The dirt on farm subsidies - Los Angeles Times
by Brian M. Riedl
July 24, 2007
Republican and Democratic congressional leaders rarely agree on a major issue. Yet both House Speaker Nancy Pelosi (D-San Francisco) and Minority Leader John A. Boehner (R-Ohio) have gone on the record as opposing the current $25-billion farm subsidy system, which Congress is rewriting this month.

Changing the system won't be easy. They will have to battle the powerful agriculture lobby and its allies on the House Agriculture Committee, who are once again employing Norman Rockwell imagery to assert that farm subsidies are an all-American necessity that ensures an adequate food supply and alleviates farmer poverty.

But two seemingly arcane aspects of farm policy undermine both claims. First, farm subsidy eligibility is restricted to growers of only a few crops. Second, once a farmer's eligibility is established, subsidies increase with the size of the farm. These make farm subsidies just another narrowly targeted corporate welfare program.

On the first point, producers of just five crops -- wheat, cotton, corn, soybeans and rice -- receive nearly all farm subsidies. In fact, only one-third of the $240 billion in annual farm production is targeted for subsidies. All other farmers -- including growers of fruits, vegetables, livestock and poultry -- receive nearly nothing.

This raises the question: If farm subsidies are necessary to produce an adequate food supply with stable prices and thriving farmers, why haven't the growers of nonsubsidized crops experienced these problems? . . .
Also, that statement about Nancy Pelosi seems to contradict the SF Chronicle article I linked a couple posts into this thread, so I'm not sure what to make of that. Since they were published 3 days apart, perhaps she changed or reaffirmed her position. But it could simply refer to what she was on record as saying before.
 

Clone83

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For the third day in a row, FEE posted on farm subsidies:
The Foundation for Economic Education

Follow the link, and from the 7/25 In Brief, you can find an article from USA Today, “Ranchers, Farmers Battle Over Corn,” and a 2001 article published in The Freeman, “Ethanolics Anonymous.”

Here is an excerpt from the USA Today article:
Ranchers, farmers battle over corn
The farmer and the cowman should be friends, according to the lyrics of Oscar Hammerstein and Richard Rodgers' musical Oklahoma.

Their famous production was written decades before the ethanol boom, however. . . .
You might also want to check the comments. As I’ve said before, I see no reason that market-determined prices would not be far superior at making these calls.

Also . . .

USA Today also has a good article today about farm land values:
Land prices leave farmers in a lurch

Embedded there is a link to another:
Water constraints rain on ethanol zeal

And the Omaha World-Herald has been running a special series:
Irrigation Empire: A Special Report

An excerpt from the first article in the series:
Irrigation Empire Part 1: Rolling Back Years of Growth In Pumping Ground Water
Nowhere in America is there a freshwater sea as large as the aquifer under Nebraska. Nowhere in America is more water pumped from the ground for crops than in Nebraska. And no other Western state has waited until now to slow the drought-driven push by irrigation farmers - a tiny fraction of Nebraskans - to overuse groundwater.

As a result, significant declines plague parts of Nebraska, rivers are being sapped, mighty Lake McConaughy is shrinking, and now all the state'staxpayers are being presented with a multimillion-dollar repair bill. . .
And an excerpted comment by Nebraska farmer Larry Reynolds:
Irrigation Empire Part 6: Nebraska's Water Barons
He acknowledged that many Nebraska farmers irrigated marginal land that probably shouldn't have been developed. But he said they were encouraged by government incentives.

"The government said produce food for the world," he said. "And there was a financial incentive. You took ground worth $100 an acre and made it worth $1,000 an acre without violating any laws. What was wrong with that?"

Finally . . . and more incidentally, I see that Amity Shlaes will be doing a live broadcast from the FEE website on Friday, July 27 at 7:45 PM, presumably Eastern Time, or 6:45 PM Central Time. The subject will be the Great Depression. From the FEE link above (and the link there to the broadcast), I see you can also view it later from their video library. Here is a recent op-ed of hers from the Wall Street Journal: The Real Deal.
 
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Clone83

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I know, I know . . . . more links. :biggrin9gp:

But seeing that the House is going to debate this tomorrow, I was curious. I didn’t know what was in the bill. There is a lot of information out there. Pelosi obviously is going to try to prevent any amendments. Democrats have new members in districts with constituents who benefit from current law.

Don’t let the excerpts prevent you from visiting the links. There is a lot more substance I didn't excerpt.


Editorial from National Review Online:
Broken Down Farm
She might still succeed, but she will have to overcome an assault on the bill that fellow Democrat Ron Kind of Wisconsin is preparing to mount. Earlier this year Kind teamed up with conservative stalwart Jeff Flake of Arizona and proposed a plan called FARM21, which would divert a portion of farm-subsidy payments to tax-free risk-management accounts for farmers. The plan would have yielded substantial savings, but, after Pelosi announced her support for the status quo bill, Kind and Flake realized that they would have to offer a more modest proposal if they were to have a chance at success. . . .

For now, we think almost any reform along the lines of what Kind and Flake have proposed is a step in the right direction. But it is a little disheartening to see so few Republicans standing up against such a profoundly unconservative, intrusive, and wasteful government program. Republicans can’t rebuild their brand as the party of fiscal responsibility by voting right only on the easy issues. Every now and then they’re going to have to do what’s right even when it’s hard.

Editorial from the Washington Times:
Pelosi's Farm Boondoggle
That's not all. The bill would also increase by 50 percent the annual maximum direct payment to qualifying farmers from $40,000 to $60,000. This, mind you, is in a country where the median household income in 2005 was $46,376, which is 3 percent below its 1999 inflation-adjusted level. The direct payment would double if the farmer's wife also tilled the soil.

To ensure Mrs. Pelosi's embrace of its flawed bill, the House Agriculture Committee approved $1.8 billion in new payments over the next five years for the fruit and vegetable industry. Particularly galling is the continuation of the direct payments, which were introduced in 1996 under the revolutionary free-market-oriented Freedom to Farm Act. To wean the major-commodity farmers off the welfare dole to which they had become addicted since the New Deal era, the 1996 bill sought to replace traditional farm subsidies with a system of fixed, declining annual direct payments. These "transition payments" would cease after seven years.

However, "emergency" supplemental appropriations during the late 1990s routinely raised the welfare payments to farmers. The 2002 farm reauthorization bill reinstated the traditional subsidies and also renewed the direct payments, which had been established in 1996 to wean farmers from their subsidies. In this era of "Democratic reform," the new bill would retain both forms of welfare.

From the Los Angeles Times:
Lines in the Dirt Drawn for Farm Bill
Lawmakers are set to debate a farm bill Thursday that would cut subsidies to wealthy farmers, expand a healthful snack program to all 50 states, and make an unprecedented investment in fruits and vegetables. . .

Rep. Ron Kind (R-Wis.), the amendment's lead sponsor, said the bill "virtually had no reforms" on crop subsidies. Kind pointed out that direct payments originally intended to be phased out would be increased from $40,000 to $60,000.

Op-ed from the Waco Tribune:
Nethaway: Farm Policy Reform Needed
If the Democrats are really serious about living up to their promise to be reformers, they should show it by ending the wasteful subsidy handouts embedded in the current farm bill. . .

From McClatchy Newspapers:
House Prepares for Farm Bill Showdown
The House farm bill would cost an estimated $286 billion during the next five years, according to the Congressional Budget Office. The money would pay for subsidies, food stamps, block grants and more.

Sprawling across 744 pages, the House bill will face multiple amendments during debate Thursday. The most important and closely watched alternative would cut subsidies and impose much tighter payment limits than those written by the House Agriculture Committee.

From Bloomberg News:
Bush Signals a Veto on the Farm Subsidy Bill
Despite the president's threats, a veto "is very, very unlikely to happen," said Dan Glickman, a former Democratic congressman who was agriculture secretary under President Bill Clinton. "There are a lot of potentially vulnerable Republican members in the House right now. The numbers don't look great for their party anyway, and this is part of their base."

While most farm-bill spending goes toward food-aid programs for the needy, the crop subsidies are by far the most contentious part. The administration says the legislation will leave the United States vulnerable to challenges at the World Trade Organization by India, Brazil and other countries that say the subsidies give American farmers an unfair advantage. . . .

From the Daily Oklahoman:
Bipartisan Group to Offer Option to Farm Bill
Kind's alternative proposal would:
• Prohibit subsidies to those whose adjusted gross income is $250,000 or more. The income limit in the bill approved by the Agriculture Committee is $1 million.
• Gradually reduce the guaranteed annual payments that are linked to historical acreage and yields. The committee's farm bill would keep the payments mostly at the same rates as in the 2002 bill.
• Limit annual subsidies to $250,000 per person. The committee's farm bill effectively has no limits if prices drop below certain thresholds.
• Create voluntary risk-management accounts that would be funded with farmer contributions and government matching money that could be tapped for a variety of purposes, including investing in a rural enterprise or retirement.

Editorial from The Rocky Mountain News:
An Opportunity to End Corporate Ag Subsidies
Another opportunity to bring U.S. agriculture policy kicking and screaming into the 21st century will arrive on Thursday, in the form of a bipartisan House proposal that would start phasing out direct payments to many farmers.

The Fairness in Farm and Food Policy Amendment by Reps. Jeff Flake, R-Ariz., and Ron Kind, D-Wis., would amend the House farm bill and eventually end much of the Depression-vintage regime of price supports for commodities such as corn and rice. The farm programs may have become the nation's most egregious form of corporate welfare, and any credible attempt to rein them in deserves to move forward.

Editorial from the Arizona Republic:
Seeds of Sanity
But the version that's headed for a vote in the U.S. House of Representatives this week is another grossly oversized helping of pork. These massive expenditures are worse than a waste of money. The subsidies are distorting prices, skewing land use, diverting funds from other needs and undermining America's ability to export agricultural products.

And the struggling farmers? They often end up worse off, out-competed and bought out by larger operations.

Op-Ed from Forbes:
Dead Men Farming
Farm Bills are a special breed of legislation. They rarely draw opposition among party lines because both Democrats and Republicans farm, and lawmakers are keen to secure funds for their farmers back home. In a presidential election season, they become especially tricky--no White House contender wants to march into Iowa in January to be accused of trimming corn subsidies.

From the Milwaukee Journal Sentinel:
Kind, Ryan Offer Farm Plan
Direct subsidy payments to farmers would be gradually reduced over a five-year period in an amendment unveiled Tuesday by Wisconsin Reps. Ron Kind and Paul Ryan and a coalition of lawmakers who want to reform the farm bill.

Also under the measure, the amount of subsidy money that farmers receive annually would be limited to $250,000 a person, and the "counter-cyclical" system would be replaced by a safety net that protects farmers against drops in income rather than drops in crop prices. Counter-cyclical subsidy programs provide special payments to farmers when commodity prices are below target levels.

Editorial from the Milwaukee Journal Sentinel:
Farm Bill: Let’s Define Reform
Surely, the House Democratic leadership can do better than this.

Elected as reformers, they now flinch when faced with the prospect of real reform of the nation's wasteful farm subsidy programs.

From Brownfield Network (Ag News for America):
House Ag Committee Leaders Urge Support for Farm Bill
But House Ag Committee leaders from both parties, flanked by the leaders of numerous commodity, conservation and nutrition groups, held a press conference Tuesday to urge their colleagues to vote for the measure as is. Ag Committee Chairman Collin Peterson noted the farm bill represented a carefully crafted compromise between various commodities and a range of regional interests. And he said that compromise could fall apart if the farm bill were to be amended.

From CNNMoney.com:
Farm Bill Planting Energy Seeds
"This bill represents reform. We have made changes that nobody thought we could ever do," committee chairman Rep. Collin C. Peterson, D-Minn., said during a congratulatory news conference that officially released the bill to the House floor. "Frankly this is more than we ever expected out of the Agriculture Committee."

The bill reauthorizes $2.17 billion for the Renewable Energy and Energy Efficiency loan guarantee program and throws in another $500 million in grants under the same program. There's $100 million to help share the cost of developing crops for ethanol production other than corn - switchgrass, corn stalks, woodchips and other materials - and $18 million toward expanding markets for those products.

From Twin-Cities.com
In the Fight Over Farm Aid, This is a Front Line
West of the Twin Cities, the land is flat, the soil is rich, and the farms are big: They use big machines, produce big harvests - and collect big subsidies.

To the east, the land in western Wisconsin is rolling and hilly. Beyond the subdivisions are dairy farms and sloping pastures, suited for farming on a smaller scale. Crop subsidies are smaller, too.

This summer, this divide straddling the Twin Cities will take on national significance as Congress debates two very different views of what America's farm policy should become.

Rep. Collin Peterson, a Democrat from the big-farming territory of western Minnesota, is pushing a farm bill that continues big crop subsidies, while Rep. Ron Kind, a Democrat from western Wisconsin, is leading a revolt to focus the farm bill more on topics like clean water, nutrition and global trade.

George Will Op-Ed from the Washington Post:
The Farmer to Fix Farm Policy
Time was, Riley Webster Lugar, a Hoosier farmer, vociferously disapproved of the New Deal policy of killing baby pigs to control supply in the hope of raising prices. When his son Marvin ran the family farm, if a cashier giving him change included a Franklin Roosevelt dime, he would slap the offending coin on the counter and denounce the New Deal policy of supporting commodity prices by controlling supply -- by limiting the freedom to plant.

Today, Marvin's son **** is carrying on two family traditions -- running the farm and resenting the remarkable continuity connecting today's farm policies with the New Deal's penchant for economic planning. The grandson, now 75, is again trying to reform what Franklin Roosevelt wrought. . . .

. . . Under the continuing New Deal approach, five commodities -- corn, soybeans, cotton, rice and wheat -- got about 90 percent of last year's $19 billion in subsidies. This is a perverse incentive for overproduction of the five, which depresses prices, which triggers federal supports. . . .

Agriculture policy -- another manifestation of the welfare state, another contributor to another faction's entitlement mentality -- involves a perennial conundrum of welfare, corporate as well as individual: How do you break an addiction to government without breaking the addicted?

From the Des Moines Register
White House Threatens Veto of Farm Bill
“I find it unacceptable to raise taxes to pay for a farm bill that contains virtually no reform,” Johanns said. . . .

The full House is scheduled to debate the bill Thursday. All five of Iowa’s House members planned to support the legislation.

Iowans used to be among the nation's leaders on such issues. Secretary of Agriculture and former Nebraska Governor Mike Johanns is a native of Iowa, but instead of leading, it is interesting how Iowa's congressional delegation anymore are essentially sheep. Pathetic. Instead of scaling back current programs, the direction is to expand them to previously unsubsidized commodities and activities.
 

Incyte

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Aren't they predicting a cattle "boom" in Iowa due to all the DDGs on the market?
 

Clone83

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Aren't they predicting a cattle "boom" in Iowa due to all the DDGs on the market?
What does DDG stand for?

If that is distiller's grain, I would think cattle expansion in Iowa would be limited - due to the fact the corn and ethanol program encourages maximum corn production. That land isn't being used for pasture.

Why not let market forces make the call?
 

Cyclonepride

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A pineapple under the sea
www.oldschoolradical.com
Market forces should be making the call across the board in our economy. Our government has shown itself likely to continue subsidies long after the reasons for them are gone. So we are using tax payer dollars to prop up industries that couldn't make it on their own without it, and handing out cash to those who no longer need it.

I am not just against farm subsidies. It should be every single stinking one of them. Our government is spending money it doesn't have. It is time for fiscal responsibility before we bankrupt ourselves. Slash spending, lower taxes. That will create wealth, and then more revenue.
 

Clone83

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Agreed. It isn’t just farm subsidies. But they are among the most egregious wastes. The problem with expanding the argument is that the recipients then use the waste, fraud, and abuse in other programs to justify their own.

Control is perceived to rest in the balance, so Congress is poised to pass yet another pork-laden bill. Give me a break.

Where can I get a job handing out other people’s money for fun and profit?

My biggest problem with all of this is that it is bad for the state. Iowa politicians for generations have fostered a culture of government dependency.
 

Incyte

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What does DDG stand for?

If that is distiller's grain, I would think cattle expansion in Iowa would be limited - due to the fact the corn and ethanol program encourages maximum corn production. That land isn't being used for pasture.

Why not let market forces make the call?

Dried distillers grains with solubles. Iowa cattleman are increasingly using it in their rations. There will be a LOT more on the market soon w/ all the new plant construction.

I believe the farm subsidies are somewhat out of control but ethanol tax credits are needed to help the industry take off. Once the infrastructure is there ethanol can compete. The tax breaks get us there faster.
 

Clone83

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I believe the farm subsidies are somewhat out of control but ethanol tax credits are needed to help the industry take off. Once the infrastructure is there ethanol can compete. The tax breaks get us there faster.
Obviously, we are going to have to agree to disagree. I believe a system of decentralized control and market-determined prices are far superior at allocating resources. Economic growth would be higher.

The first question an Iowa entrepreneur must ask - instead what it is consumers want, based on relative market prices - is whether he can get a government subsidy. As Hayek is quoted at the FEE website: "The more the state “plansâ€￾ the more difficult planning becomes for the individual."

Market prices convey information about what to produce, where and when, not just once every five years, but every day, every hour, every minute. Iowa politicians, by substituting their judgment for market-determined prices and - as a result - the demands of consumers, produce a unending demand for their services, professional lobbying services, and a continuing stream of subsidies.

Furthermore, and obviously, they are never held accountable. It is other people's money they are "investing."
 

Clone83

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More links on the status of the House debate. The Kind amendment failed 309-117, as well as an amendment to strip out the tax increase, 222-202. It appears that there will be a final vote today.

Below are some related links (and brief excerpts). The link at the bottom has a good analysis of how the new $1,000,000 income limitation would work.


The Washington Post
House Rejects Farm Bill Overhaul
"Change is tough in this place," Kind said. The current subsidies to farmers, he said, raise farmland prices to the disadvantage of young farmers trying to rent or buy land, while making big farmers dependent on "a government paycheck, not the marketplace."

Forbes
Farm Bill Survives Fatal Challenge
A multibillion-dollar farm bill laden with subsidies for major U.S. crops survived a key test Thursday and Democrats reached for the votes to pass it after defeating a bid to begin weaning farmers from government payments. . .

Republicans yanked their support for the measure, which faces a White House veto threat, over a tax increase included to finance nutrition programs.

The Wall Street Journal
Farm Bill Advances, as Tax Provision Survives
A $286 billion, five-year farm bill advanced in the House after Democrats blocked a business-backed effort to strip out a tax provision affecting foreign corporations with U.S. subsidiaries.

The 222-202 vote was pivotal to Speaker Nancy Pelosi's efforts to complete the bill today. In a long night of bargaining Wednesday, the California Democrat struck deals with urban liberals to assure enough votes to offset Republican defections.

The underlying bill, which may still struggle today, extends loans and target prices for major commodities, but also reflects an increased emphasis on bio-energy programs and specialty crops like fruits and vegetables.

Brownfield Network: Ag News for America
House poised to send farm bill to Senate
But ranking Ag Committee Republican Bob Goodlatte said ending the tax exemption on foreign companies would jeopardize millions of jobs. And he complained that Republicans hadn’t been consulted on where the additional farm bill funding would come from. For those reasons, Goodlatte urged his fellow lawmakers to reject the very bill he had voted for just a week earlier.

"A bi-partisan farm bill without this tax increase would have produced a veto-proof majority and would have sent this legislation soaring into the negotiations with the Senate," Goodlatte declaimed. "Now, this farm bill will not be an effective product to move American agriculture forward and urge my colleagues to reject this legislation."

MediaCorp: Channel NewsAsia
Massive US farm bill faces Bush veto, may impact WTO talks
A massive US farm bill packed with consequences for global trade is moving through the Democratic-controlled Congress in the face of a veto threat by President George W. Bush. . .

Bush's Republican administration has been threatening to veto the legislation, partly over what it says are high subsidies, a major stumbling block in the Doha Round of global trade negotiations.

MulchBlog (Environmental Working Group)
If We're Eliminating Farm Subsidies To "Millionaires" How Is It . . .?
. . . two of the nation's leading authorities on payment limitation law and regulation told reporters on a call convened by EWG today that the House Agriculture Committee bill will not eliminate payments to millionaires. The experts were Chuck Hassebrook, Executive Director, Center for Rural Affairs, and Roger A. McEowen, Leonard Dolezal Professor in Agricultural Law, and Director of the ISU Center for Agricultural Law and Taxation, Iowa State University.​