After failing on the House floor by a wide margin a month ago, the chamber last week managed to pass H.R. 2, the farm bill, by a slim two-vote margin. Chock-full of misguided subsidies and projected to cost close to $900 billion over 10 years, the measure is a triumph of logrolling and crony capitalism over common sense and free-market principles.
With the fight over agriculture policy now shifting to the Senate, it’s time for conservatives to demand serious reforms to the antiquated farm safety net.
The Senate should start by capping and limiting subsidies for crop insurance. The federal crop insurance program currently has no means test, which allows it to subsidize an average of 60 percent of even the wealthiest farmers’ premiums. Simple reforms like capping the amount of assistance at $125,000 per year or reducing subsidies for those with adjusted gross incomes above $700,000 would make sense. These reforms would save taxpayers money with little impact on those who genuinely need the safety net.
Likewise, Congress should tighten restrictions on who can qualify for farm subsidies. Under a current loophole, a designation known as “Active Personal Management Only,” people who do not work on farms can receive farm subsidies of $125,000 or $250,000 for married couples if they contributed to the “capital, land, or equipment as well as a significant contribution of services of active personal management or personal labor.” This loophole can be satisfied in a number of ways, which has led to the top 50 largest recipients hiring an estimated 200 extra “managers” so they can collect more subsidies. As farms become increasingly owned by corporations or other legal entities, it becomes less likely that subsidy recipients are actively engaged in farming.
Congress can and should close this egregious loophole. Sen. Chuck Grassley, R-Iowa, inserted a provision to close the loophole during the 2014 farm bill debate, but it didn’t make it into the final version of the bill. Grassley has once again proposed to reform this loophole, though it was not included in the version passed by the Senate Agriculture Committee a few weeks back. The amendment should be adopted on the floor and insisted upon by Senate conferees in the unified bill submitted to both chambers for ultimate passage.
Finally, the Senate should reform our broken sugar program. A relic of the New Deal, it is the only commodity subsidy program that has thus far escaped any reform over the last 80 years. A complicated mix of domestic subsidies and import restrictions, the sugar program inflates domestic prices to about twice that of the rest of the world. It is the U.S. equivalent to Canada’s much-maligned dairy trade practices that the president laments.
This toxic mix hurts consumers (families, bakeries and confectioneries) that use sugar, while benefiting a tiny number of domestic sugar producers. Likewise, as phosphorous used in fertilizer used by sugar cane producers makes its way into the Everglades, the status quo contributes to further environmental degradation of a national treasure. The Senate should insist on modest reforms that allow more competition and shield consumers and taxpayers from unnecessary expenses.
Under the guise of “welfare reform,” the House inserted a provision into the farm bill that requires able-bodied adults receiving Supplemental Nutrition Assistance Program benefits, or food stamps, to work or participate in work training for 20 hours a week. Perhaps this is a worthwhile proposal, but conservatives in the Senate should go further in attacking one of the more abhorrent examples of welfare in the United States — the corporate welfare that plagues the rest of the farm bill.
Clark Packard (@clark_packard) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is trade policy counsel for the R Street Institute.
