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Thread: Republicans: We Were Too Nice to the Hungry, But We’ve Fixed That

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    Republicans: We Were Too Nice to the Hungry, But We’ve Fixed That

    Republicans: We Were Too Nice to the Hungry, But We’ve Fixed That


    By Jonathan Chait
    New York Magazine
    http://nymag.com/daily/intelligencer...he-hungry.html




    Republicans hate domestic spending, but their hatred is not completely indiscriminate. Some programs offend them more, and others less. The general pattern is that social programs offend Republicans to the degree that they benefit the poor, sick, or otherwise unfortunate. The struggle over the farm bill is not the biggest policy dispute in American politics, but it is the one that most clearly reveals the priorities and ideological identity of the contemporary GOP.The farm bill traditionally combines agriculture subsidies (which hands out subsidies to people on the arbitrary basis that the business they own produces food as opposed to some other goods or services) with food stamps (which hands out subsidies to people on the highly nonarbitrary basis that they’re poor enough to likely have trouble scraping together regular meals). Conservative Republicans revolted against the normally automatic passage, insisting that the cuts to food stamps — $20 billion — did not slice deeply enough. Last night the House rectified its failure by cutting food stamps by $40 billion.

    The putative rationale for the food-stamp cuts is that eligibility standards have loosened, or that it encourages sloth. Jonathan Cohn makes quick work of these claims, and the Center on Budget and Policy Priorities makes long, detailed work of them. Click on those links if you want a blow-by-blow refutation. The upshot is that food stamps are a meager subsidy, of less than $1.40 per meal, for people either stuck in very low paid jobs or unable to find work at all. Their cost has increased because the recession has increased the supply of poor, desperate people. Republicans have offered specious comparisons to welfare reform, but that law both offered funds for job training and was passed in a full-employment economy. Neither of these conditions holds true of the GOP’s food-stamp cuts, whose only significant result would be the first-order effect of making very poor people hungrier.

    CNN reported last night that Agriculture Committee Chairman Frank Lucas, a Republican supporter of the bill, received a daily meal allowance of $127.41, or 91 times the average daily food-stamp benefit. Lucas is also notable as a recipient of the agriculture subsidies his committee doles out: He and his wife have collected more than $40,000 worth.

    It’s the juxtaposition of the two programs that so clearly exposes the party’s agenda. Anti-government ideology can justify even the most vicious cuts to the safety net. It can’t justify the massive socialist scheme that is agriculture policy. And, to be fair, conservative intellectuals generally don’t justify agriculture socialism. But the Republican Party certainly does. The ultraconservative Republican Study Committee recently banned the Heritage Foundation from its meetings because Heritage denounced the GOP’s farm subsidies. There is a grim hilarity here: Republicans punished Heritage for its one technocratically sane position.

    Henry Olsen has an admirable screed in National Review assailing Republicans for their lack of interest in cutting agriculture subsidies even as they go to war on food stamps. Even so, Olsen understates the case in crucial ways. He cites the budgetary cost of agriculture subsidies versus food stamps, but neglects to mention the non-budgetary cost of agriculture subsidies: Much of their cost comes in the form of higher food prices.

    Olsen also neglects to mention that House Republicans are not only locking in high agriculture subsidies, they are throwing more money at agriculture than Democrats want to spend. Obama has attacked the GOP farm-subsidy bill forspending too much. Here is the one chunk of social spending where Republicans are not only failing to issue hostage threats to secure the cuts they demand, they are also refusing to cut spending as much as Barack Obama asks. And the program they pick to defend is, on the substantive merits, the most unjustifiable program of any significant scale in the federal budget.

    It is also one that accrues to disproportionately wealthy and overwhelmingly white recipients. (As opposed to Obamacare, whose beneficiaries are disproportionately poor and non-white.) Olsen, as he no doubt has to do to publish in National Review, presents the contrast as an unfortunate coincidence:

    The conservative war on food stamps is the most baffling political move of the year. Conservatives have suffered for years from the stereotype that they are heartless Scrooge McDucks more concerned with our money than other people’s lives. Yet in this case, conservatives make the taking of food from the mouths of the genuinely hungry a top priority. What gives? And why are conservatives overlooking a far more egregious abuse of taxpayer dollars in the farm bill?

    It’s not baffling, nor is the notion that the Republican Party protects the class interests of the rich a “stereotype.” It’s an analysis that persuasively explains the facts.

    Indeed, it’s the only analysis that persuasively explains the facts. I’d prefer to abolish agriculture subsidies completely while keeping in place (or boosting) food rations for the poor. A libertarian might want to abolish both programs, a socialist might want to keep both. I’d disagree but attribute the disagreement to philosophical differences. What possible basis can be found to justify preserving subsidies for affluent farmers while cutting them for the poor? What explanation offers itself other than the party’s commitment to waging class war?




    Last edited by DiabloViejo; 09-22-2013 at 12:32 PM.
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    How Farm Subsidies Harm Taxpayers, Consumers, and Farmers, Too
    By Brian M. Riedl

    This year's expiration of federal agriculture policies gives Congress an important opportunity to take a fresh look at the $25 billion spent annually on farm subsidies. Current farm policies are so poorly designed that they actually worsen the conditions they claim to solve. For example:
    ■Farm subsidies are intended to alleviate farmer poverty, but the majority of subsidies go to commercial farms with average incomes of $200,000 and net worths of nearly $2 million.

    ■Farm subsidies are intended to raise farmer incomes by remedying low crop prices. Instead, they promote overproduction and therefore lower prices further.

    ■Farm subsidies are intended to help struggling family farmers. Instead, they harm them by excluding them from most subsidies, financing the consolidation of family farms, and raising land values to levels that prevent young people from entering farming.

    ■Farm subsidies are intended to be consumer-friendly and taxpayer-friendly. Instead, they cost Americans billions each year in higher taxes and higher food costs.

    Lawmakers would be hard-pressed to enact a set of policies that are more destructive to farmers, taxpayers, and consumers than the current farm policies. For these and other reasons, organizations representing taxpayers, consumers, environmentalists, international trade, Third World countries, and even farmers themselves have united around the shared conclusion that the current farm subsidy system is failing and in dire need of reform during this year's reauthorization.

    A Solution Seeking a Problem

    Before delving into the minutiae of farm policy, lawmakers should first determine what subsidies are intended to accomplish. When President Franklin D. Roosevelt introduced farm subsidies in the 1930s, Secretary of agriculture Henry Wallace called them "a temporary solution to deal with an emergency."[1] That emergency was the collapsing farm incomes that afflicted the 25 percent of the population living on farms.

    Today, farmers account for just 1 percent of the population, and farm household incomes are well above the national average, making the original justification irrelevant. What modern market failure or social problem is solved by farm programs today? Subsidy advocates offer five flawed justifications.
    Last edited by cushioncrawler; 09-22-2013 at 03:20 PM.

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    Myth #1: Farmer poverty.

    This is the most common-and provably incorrect-justification. The average farm household earns $81,420 annually (29 percent above the national average); has a net worth of $838,875 (more than eight times the national average); and is located in a rural area with a low cost of living.[2] The farm industry's current 11.4 percent debt-to-asset ratio is the lowest ever measured and helps to explain why farms fail at only one-sixth the rate of non-farm businesses.[3]

    Overall, net farm income totaled $279 billion between 2003 and 2006-the highest four-year total ever.[4] The farm economy is thriving, and farmer incomes are soaring.



    Furthermore, farm subsidy formulas are designed to benefit large agribusinesses rather than family farmers. Most farm subsidies are distributed to commercial farmers, who have an average income of $199,975 and an average net worth of just under $2 million.[5] If farm subsidies were really about alleviating farmer poverty, lawmakers could guarantee every full-time farmer an income of 185 percent of the federal level ($38,203 for a family of four) for just over $4 billion annually-one-sixth of the current cost of farm subsidies.[6]

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    Myth #2: Crop disaster compensation.

    While farming can be very profitable, farmers are always one weather disaster away from losing their crops, but this risk can be handled with basic crop insurance rather than with expensive annual government subsidies. Washington does not address homeowners' risks by writing each family an annual check regardless of whether or not their homes have been damaged.

    Giving farmers $25 billion in annual subsidies regardless of whether or not their crops have been damaged is no more logical. Crop insurance markets, as well as futures and options markets, can balance good and bad years in a way that is cost-neutral over the long run.

    Myth #3: Maintaining a cheap and stable food supply.

    Some contend that food markets would fluctuate wildly without farm subsidies. In reality, food prices of both subsidized and unsubsidized crops are relatively stable. Given that the percentage of family budgets spent on food has dropped from 25 percent to 10 percent since 1933, any potential price instability would have an increasingly small impact on family budgets.[7] Even if price stabilization was necessary, price support programs have largely been replaced by commodity subsidies that stimulate overproduction rather than stabilize prices.

    Nor do farm subsidies contribute to lower food costs. Two-thirds of food production is unsubsidized and thus relatively unaffected by subsidies. Of the remaining one-third, price reductions caused by crop subsidies are balanced by conservation programs that raise prices. Furthermore, food prices are based not only on crop prices, but also on food processing, transportation, and marketing costs. Bruce Babcock, professor of economics at Iowa State University, has calculated that eliminating farm subsidies would have virtually no effect on food prices.[8]

    Myth #4: National security.

    Proponents contend that without subsidies, American farm products would be replaced by imports, leaving the United States dangerously dependent on foreigners for food. However, the United States currently grows more food than it needs to feed itself and exports a quarter of its production.[9] The lack of subsidies has not driven all beef, poultry, pork, fruit, and vegetable production out of America, nor would it drive away production of currently subsidized crops.

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    Myth #5: Other countries' agricultural policies.

    Europe and Japan's farm subsidies bring American consumers food at below-market prices. Rather than enact trade barriers to prevent this, Americans should welcome the cheap imports and allow farmers to focus on producing the crops in which the United States has a comparative advantage. Responding with U.S. subsidies and trade barriers has the net effect of raising prices for American consumers and thereby limiting any progress in free-trade negotiations. Australia largely eliminated its farm subsidies in the 1970s, and after a brief adjustment, its farm economy flourished. New Zealand implemented a similar policy in the 1980s with the same result.[10]

    Two-thirds of all farm production-including fruit, vegetables, beef, and poultry-thrives despite being ineligible for farm subsidies.[11] If any of the five justifications were valid, these farmers would be impoverished, near bankruptcy, or replaced by imports, and both the supplies and prices of fruit, vegetables, beef, and poultry would fluctuate wildly. Clearly, this has not happened. In this controlled experiment comparing subsidized and unsubsidized crops, the doomsday scenarios described above have not occurred for unsubsidized crops.

    The most logical explanation for the persistence of farm subsidies is simple politics. Eliminating a government program is nearly impossible because recipients form interest groups that relentlessly defend their handouts. The public paying the costs is too busy going about their lives to challenge each wasteful program. Furthermore, supporters of farm subsidies often repeat the five justifications, especially the myth that these policies aid struggling family farmers. The difference between perception and reality in farm policy is large.

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