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Fact Sheet: Congress' Farm Bill Is Bad for American Taxpayers

May 09, 2008

Congress Should Propose Real Reform, As President Bush Did, Or Extend Current Law For At Least One Year

Today, Congressional negotiators announced the completion of a farm bill that fails to include much-needed farm program reforms proposed by President Bush and increases spending by nearly $20 billion. At a time of record farm income, Congress chose to further increase farm subsidy rates, require the American taxpayers to subsidize the incomes of married farmers already earning up to $1.5 million per year, and expand government control over farm programs. This bill also adds a number of provisions never considered by the full Congress such as numerous trade-related provisions and expansion of the Davis-Bacon Act. Congress should reconsider increasing by $20 billion the current spending level of $596 billion over 10 years.

This Farm Bill Asks American Taxpayers To Support Still Higher Subsidies During A Time Of Record Farm Income

The United States' booming farm economy makes it impossible to justify further increasing subsidy rates and establishing additional subsidies for some crops. With rising food prices and farm income at an all-time high, Congress should not be looking to increase the burden on taxpayers by forcing them to further subsidize the part of our economy that is setting records.

  • Congress wants to increase farm bill spending, even though America's net farm income is projected to be $92.3 billion this year – 51 percent greater than the 10-year average. Additionally, farm equity is expected to increase $280 billion this year.
  • Congress also wants to increase the subsidy level for crops, even though crop receipts are valued at $174 billion – a 21 percent increase from last year.

The actual increase in spending under the proposed farm bill is nearly $20 billion, not the $10 billion that Congress is claiming. The additional spending not being acknowledged by Congress includes:

  • $4.5 billion not counted as a result of a budget gimmick to shift the timing of payments;
  • $4 billion in illusionary savings created by cutting off funding for certain programs, including disaster assistance; and
  • $1.4 billion in new tax provisions.

Congress Should Not Jeopardize America's Support For The Farm Bill By Increasing Subsidies Without Real Reform

The lack of reform in this bill puts future farm bills in jeopardy by eroding overall support for farm programs.

  • The farm bill fails to adequately reform payment limitations and instead allows for excessively high limits on the level of allowable income for receiving farm subsidies. The Administration originally proposed to lower to $200,000 the Adjusted Gross Income (AGI) limit for receiving farm program subsidies. Congress wants to allow subsidies to continue for married couples who farm and have adjusted gross income of $1.5 million and for people with AGI of $500,000 who are not full-time farmers.

  • The farm bill fails to reform crop subsidies by increasing instead of decreasing the subsidy level for many crops at a time of record crop prices and record farm income. This legislation would establish additional subsidies for dry peas, lentils, small chickpeas, and large chickpeas. This amounts to adding crops to more subsidy programs.

  • The farm bill not only fails to reform the sugar program but actually increases government intervention to drive up sugar prices. This law would support sugar at nearly double the world market price and control supplies to assure that domestic growers meet 85 percent of domestic consumption. Any excess supply, which could be available for food production, would be owned by the government only to be auctioned to ethanol facilities at a huge loss.

  • The farm bill fails to reform the marketing loan program by refusing to eliminate provisions that allow producers to lock in large subsidies when prices are low but then wait to sell their product when prices are high – collecting both the subsidy and the high market price.

  • The farm bill fails to include an important reform that would save lives by allowing up to a quarter of our largest food aid program to be available to purchase food near the crisis area.

In Addition To Lacking Reform, The Bill Would Also Roll Back Previous Progress

Under current law, crop subsidies kick in only when the price drops below a certain level, but the conferees want to remove that limitation and allow unprecedented and uncapped subsidies at any price. Subsidies would kick in if the price lowers as little as 10 percent below the two-year average, which could result in billions of dollars of additional subsidies.

The bill also restricts international emergency food aid, putting millions of people at risk and undermining our ability to save lives. This provision would alter current law by restricting the ability to redirect food aid dollars for emergency use, limiting the government's ability to respond to emergencies.

The bill walks away from conservation. The Administration is disappointed that the Conservation Title is nearly $4 billion less than the Administration's proposal. It reduces enrollment in Wetlands Reserve Program WRP by thousands of acres, falling short of the President's goal of 250,000 acres enrolled per year. The bill dismantles the sodsaver proposal that would protect native grasslands from being cultivated to capture subsidies.

The Administration Worked Continually With Congress In An Effort To Develop A Better Farm Bill

More than a year ago, President Bush put forth a reform-minded, fiscally responsible farm bill proposal that provides a strong safety net and funds emerging priorities. It includes:

  • A strong but targeted safety net for farmers. It would reduce the AGI limit for receiving farm subsidies to $200,000, which would end subsidies for wealthy people living in Manhattan and elsewhere. It would end the pick-your-price phenomenon that allowed large subsidies even when crops are sold at high prices. It would provide gap crop insurance coverage and revenue-based countercyclical payments to better support farmers when they really need it.
  • Nearly $8 billion to protect our natural resources through conservation programs.
  • Nearly $5 billion to improve nutrition assistance programs and increase support of fruit and vegetable producers.
  • More than $1.6 billion to advance renewable energy research – targeted to advancing cellulosic ethanol.

Unfortunately, conferees wrote a bill that fails to implement any meaningful reform, exceeds the spending baseline by nearly $20 billion, and uses budget gimmicks to pay for much of this increased spending. Moreover, conferees inserted unrelated trade provisions outside the scope of the farm bill.

The Administration also agreed in principle to increased spending as long as acceptable offsets are provided, and even submitted to Congress a list of acceptable spending offsets. Unfortunately, Congress exceeded an acceptable increase and failed to adequately offset it.

The Administration made clear that any agreement to spend $10 billion or more on farm programs must include real program reform. Instead, the Congress added new crops to subsidy mechanisms, increased crop subsidy levels, and included nearly $20 billion in additional spending, without significant reform.

Congress should extend the current farm bill for a least one year. President Bush last week made clear that this is not the time to ask American families who are already paying more in the check-out line to pay more in subsidies to support a record-setting farm economy.

George W. Bush, Fact Sheet: Congress' Farm Bill Is Bad for American Taxpayers Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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