The New Republic Inc. 1993
March 15, 1993
SECTION: Vol. 208 ; No. 11 ; Pg. 18
LENGTH: 1024 words
HEADLINE: Wheat and chaff; Agricultural subsidy programs not cut by President
BYLINE: Bovard, James
BODY: When President Clinton announced a sweeping agenda to reduce the deficit
by almost $ 500 billion, the slashing of farm subsidies one of the most blatant
ways the government wastes money was touted as an integral part of the effort.
But once again the farm lobby has prevailed. For all of Clinton's tough talk,
existing farm program subsidies will almost double this year, from $ 9 billion
to $ 17 billion, primarily in response to falling market prices for crops. Other
farm programs such as the Farmers Home Administration, which provides cheap loans
to uncredit worthy farmers will cost taxpayers another $ 10 billion to $ 15 billion.
Clinton's paltry cuts do not begin to make serious inroads in what is universally
regarded as an entitlements swamp.
At the top of the administration's list of agricultural spending cuts is a proposal
to end direct farm subsidies to individuals who earn more than $ 100,000 per year
off the farm. Sounds dandy, and it may have some slight impact on absentee farm
owners and hobby farmers. But the new subsidy cap will be largely a mirage. Under
current law, farmers are eligible to receive up to $ 50,000 in direct subsidies
from the government, regardless of how profitable their farms are or how much
money they make off the farm. And because of a series of complex loopholes, many
farmers are able to rake in thousands more in additional subsidies above the limit.
The same practices are likely to foil the current changes, as they have done to
similar changes in farm payments since the early 1970s. The General Accounting
Office perennially reports a flock of abuses of the payment limitations law, yet
Congress has refused to rewrite the law to achieve its purported goal. Unfortunately,
Clinton hasn't shown any inclination to do so either. As a result, his proposed
major change is likely to save taxpayers at most $ 75 million in 1994 less than
one half of 1 percent of federal farm subsidies.
In a New York speech two days after the economic address, Clinton declared he
would also cut back on subsidies to wool and mohair growers, who are currently
entitled to a maximum of $ 150,000 a year in federal handouts, at a cost of $
183 million this year. "We had sheep on the farm when I was a boy, so I'm
more sensitive to this than some are. But when I got to studying this, we started
a subsidy to sheep growers in World War I because we needed plenty of wool for
uniforms . . . So I recommended cutting it back." And what is Clinton's radical
wool proposal? To trim the maximum handout for wool and mohair growers to $ 50,000.
Again, it sounds like a major cut, but in reality, the vast majority of wool and
mohair farmers already receive less than $ 50,000; so in 1994 the actual net saving
to the taxpayer will be a mere $ 12 million out of $ 191
The New Republic, March 15, 1993
million. The gao has repeatedly recommended that the wool program be abolished,
but New Democrat Clinton cannot bring himself to do that much. By his own estimation,
he will save only $ 682 million (out of more than $ 40 billion) from payment limitations
to farmers over the next four years.
Elsewhere, Clinton plays smoke and mirrors with the numbers. For example, he is
claiming as a $ 208 million cut a proposal not to increase the current budget
for the Market Promotion Program, a slush fund that pays for foreign advertising
for favored private companies. This year mpp will lavish $ 3.47 million on whiskey
producers, $ 260,000 on the Vodka Producers Association, $ 11.6 million on the
Wine Institute and $ 1.1 million on the Mink Export Development Council. Congress
slashed the mpp budget in 1992, and there is bipartisan support to abolish it.
Yet Clinton demurs from further cuts.
Other sections of Clinton's program are equally disingenuous. For example, the
majority of what Clinton calls "cuts" take effect in 1996 and 1997.
By then, a new five year program of farm subsidies, due to begin in late 1995,
will be in force. In all likelihood, the new payments will be considerably lower
than they are now. So Clinton's tough figures might even be increases in subsidies
on the likely 1996 and 1997 figures. Far from wresting agricultural spending cuts
from a reluctant Congress, Congress may actually be wresting spending cuts from
an overly pandering president.
Clinton's proposals for increased Agriculture Department spending are even more
disappointing than his phantom budget cuts. The administration will actually increase
the usda food stamp program by $ 9 billion, terming it an "investment."
The increase is intended partly to compensate low income Americans for higher
energy taxes. Clinton also plans to "stimulate" rural America by increasing
a favorite farm state congressional pork program Farmers Home Administration and
Rural Development Administration loans for businesses, housing and local governments
by almost $ 10 billion over four years. But the default rate on this easy money
is notoriously high: the gao estimates that as much as 70 percent of the fmha's
current farm loan portfolio could eventually default, costing taxpayers up to
$ 14 billion. Rather than digging the federal government out of debt, Clinton
may actually be digging it further in.
Clinton does propose some respectable budget reforms, such as ending the interest
rate subsidy on Rural Electrification Administration loans, reducing low priority
agricultural research, reforming the subsidized federal crop insurance program
and consolidating many of the 12,000 local office buildings that usda agencies
have scattered across the country. But most of these reforms are mild mannered,
"good government" type changes that should have been made long ago.
The only commodity program Clinton proposes to abolish, in fact, is the honey
program one of the smallest of all subsidies, which will cost only $ 17 million
this year. Not exactly "reinventing government." More like nipping at
the edges of a scandal. James Bovard James Bovard is the author of The Fair Trade
Fraud (St. Martin's Press) and The Farm Fiasco (ics Press).