Blog note, National, Randal O'Toole

The Washington shuffle: farm bill "cuts" are actually spending increases

Members of Congress patted themselves on their collective backs for saving taxpayers’ money by passing a farm bill that cuts spending by minus 49 percent. Of course, astute arithmeticians realize that a minus 49 percent cut is equal to a 49 percent increase. The 2008 farm bill had an average cost of $64.0 billion per year; this one has an average cost of $95.6 billion per year.

icon_blog_noteThe New York Times reports that food stamps were cut, but in fact this was a cut only when compared with expected spending, not to recent actual spending. The $8 billion “cut” over ten years sounds big, but it is only 1.7 percent of what was expected under the old bill. Food stamp spending under the new bill will average $74.8 billion per year, which, even after adjusting for inflation, is more than the total annual cost of the 2008 bill.

Most of the “cut” in food stamps resulted from closing the LIEHEAP loophole, which allowed people who paid no utility bills (because utilities were included in their rent) to nevertheless qualify for extra food stamps based on their supposed utility costs. Even the Washington Post supported closing that loophole.

My mother, a social worker, always said that food stamps were more a subsidy to farmers than to poor people. But there are plenty of subsidies straight to farmers in the bill that Congress just passed. The new bill will cost taxpayers more than $20 billion a year for a variety of crop insurance subsidies, payments to farmers if prices fall below specified floors, marketing subsidies, and more.

It’s not like farmers are poor. The average farm household has an income of more than$100,000 per year, which is at least 25 percent more than the average non-farm household. Moreover, a third of farm subsidies go to the wealthiest 4 percent of farmers. Early versions of the farm bill included a provision capping subsidies to a farmer and spouse at $250,000 per year, but this was deleted from the final bill.

With roughly 400 million acres of land in crop production, the $20 billion annual crop subsidies amount to $50 an acre. Meanwhile, the 600 million acres of federal lands get about $10 billion in annual subsidies, for an average of $16.67 per acre, or one-third of the crop subsidies. Some people wonder why I don’t support privatization of all national forests and other federal lands; one reason is that privatization is no guarantee that subsidies will end.

Randal O’Toole  is director of the transportation policy center at the Independence Institute in Denver and a senior fellow at the Cato Institute in Washington, DC.  This post originally appeared at the Antiplanner blog.


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