Let’s talk about welfare. Neither the kind that was “reformed” a few years ago in this state, nor the corporate kind that keeps big business from having to pay its fair share in taxes. No, I’m talking about the most pernicious kind of welfare of all — farmer welfare.
Probably not what you expected.
If Social Security is the “third rail of American politics” (touch it, you die), then farm subsidies are the sacred cow of Midwestern, Southern and Great Plains politics.
In his most recent State of the Union speech, President Bush made a bold statement. He said he would cut or eliminate 150 government programs that were underperforming or redundant. This drew great cheers. If they were watching at home, America’s farmers probably didn’t think they had much to fear. But they do.
Two forces are at work in eliminating farm subsidies.
First is the domestic budget crisis. The $19 billion a year spent on farm subsidies is tough to swallow when we have a $427 billion budget deficit. With his Social Security privatization scheme at risk of never performing as planned because of the hulking budget deficit, some real, actual cuts are going to have to be made by Bush. This from a president who has never passed on a spending bill in his career.
As a result, the White House leaked word that farm subsidies will be cut 5 percent, or $500 million for next year and $5.7 billion over 10 years.
The second force at work here is our commitment to international trade agreements. Many developing countries do not like the subsidies American farmers receive, driving global commodity prices into the cellar. Last summer, the United States lost a WTO trade negotiation with Brazil and West African nations over cotton subsidies. As a result, cuts in U.S. farm subsidies were perhaps all but inevitable.
Who gets subsidies? The majority of food grown by American farmers isn’t subsidized. The two crops that receive the majority of farm subsidies are corn and cotton. Corn is the single largest crop in America. It covers 78 million acres in area, and 1.4 million American farmers received subsidies for growing corn. In Dane County alone, farmers have received $104 million in subsidies since 1995.
Yet, on average, 80 percent of corn producers receive around $50 a month from the federal government. The largest producers are those who receive the most subsidies. In corn, that’s the top 4 percent who have taken in $65 billion of U.S. taxpayers’ dollars, averaging $59,000 a year in support.
In one category, farm subsidies have thrown the market entirely out of whack. Cotton is the highest-subsidized crop in this country. It’s why we lost our WTO negotiations. The top 3 percent of cotton producers in this country receive half of all cotton subsidies, averaging $1 million a year in subsidies.
This sort of distortion of the market is done for a number of reasons. It smoothes out price volatility for the American farmer, it destroys the developing world’s ability to sell cotton on the international market, and it’s pure old-fashioned political patronage. Even the Government Accountability Office said farmers use many “schemes and devices” to obtain more subsidies than they should.
In the 1930s, farm subsidies were an important factor in keeping Americans fed and clothed. Since then, they’ve been nearly impossible to cut, and we can’t afford them.
Today, the largest producers able to best manipulate the system receive the most largesse. The small family-owned farm is pushed out by plunging commodity prices and soaring land prices.
The reality is farm subsidies are a distortion, favor the huge agri-business farms and encourage overproduction and environmental degradation. It’s laudable that Bush wants to cut them (did I just say that?), but the political reality is that this will be fought tooth and nail by Southern and Plains states senators and congressional representatives.
What program won’t be getting the chop? The Milk Income Loss Compensation subsidy, which does just what it says, was praised by Bush in the 2004 campaign right here in Wisconsin. It didn’t deliver the state as hoped, but Bush won’t be cutting it.
Not all sacred cows get put on the chopping block.
Rob Deters ([email protected]) is a third-year law student.