and those “temporary” farm subsidies live on, accounting for about $15 billion in federal spending annually. About a third of the money comes in “direct payments,” no-strings-attached checks that the government sends farmers.
Like many other benefit programs, farm subsidies are hard to unravel—a maze of payments, loans, and insurance that bewilders everyone except those who benefit from them, those who attack them, and those in Congress who craft them. Farm bills also include a unique mechanism that forces Congress to act: if it doesn’t pass the bills that arise every four or five years on time, or extend the last one temporarily, the clock is turned back and government payments to farms are based on the unusually high crop prices of 1910 and 1914, adjusted for all the inflation that’s occurred since then. Not surprisingly, the farm bill is one that Congress
always
finishes on time, or at least extends temporarily.
Despite their political support, these subsidies have occasionally come under fire. “When Republicans seized Congress in 1994, promising a revolutionary age of fiscal conservatism and free-market capitalism,”
Time
magazine’s Michael Grunwald wrote, “they vowed to gut command-and-coddle farm policies that they compared to Soviet communism. They wanted the government to treat agriculture like any other business, and they said they’d offer farmers a deal … farmers could plant what they wanted, but no more subsidies.”
To that end, the 1996 Freedom to Farm Act severed some long-standing links between the subsidies farmers receive, the crops they grow, and the prices they get for them. For what was supposed be a five-year transition, the bill offered farmers $5 billion a year in direct payments.
The revolution didn’t last but the new “temporary” payouts did. Sixteen years later, about $5 billion in direct-payment checks are still being written annually even as the farm economy booms. These payments are based on an arcane formula tied to what was grown on the land years ago, no matter what crops—if any—are grown on the land now. Because the payment rights transfer with these specific plots, real estate prices are boosted—even on land that has never been cultivated by the current owners. Journalist Dan Morgan calls the payments “an entitlement tied to ownership of land—a construct that some would associate more with 19th-century Prussia than 21st-century America.”Half of the direct payments go to farmers with incomes above $100,000.
An example:the first congressional district in western Kansas has received more money in direct payments over the years than any other, $250 million in 2010, most of that to wheat, corn, and sorghum growers. As is true nationally, most of the money goes to a small set of big farmers:half of the money went to 5,000 of the district’s 675,000 residents, according to a database cultivated by the Environmental Working Group. The top ten farms got more than $200,000 apiece. Obama’s latest budget proposes to eliminate direct payments altogether, describing them as “no longer defensible.” Even Tim Huelskamp, a Tea Party Republican and fifth-generation farmer who represents the district, isn’t defending direct payments any longer. “Everybody needs to share,” Huelskamp told a few dozen townsfolk gathered at the Graham County Courthouse recently. “If you’re a farmer like me, you’re going to expect less. Something’s going to go away. The direct payments are going to go away.”
But even if they do, the farmers in Huelskamp’s district aren’t worried about being cut off entirely. Many figure what they lose in direct payments they’ll make up in increased federal subsidies for crop insurance, which covers losses caused by drought, floods, pests, and low market prices or yields. The government pays private insurers to run the program and pays about 60 percent of premium cost. The annualtab to the taxpayer: $10 billion, and
Like many other benefit programs, farm subsidies are hard to unravel—a maze of payments, loans, and insurance that bewilders everyone except those who benefit from them, those who attack them, and those in Congress who craft them. Farm bills also include a unique mechanism that forces Congress to act: if it doesn’t pass the bills that arise every four or five years on time, or extend the last one temporarily, the clock is turned back and government payments to farms are based on the unusually high crop prices of 1910 and 1914, adjusted for all the inflation that’s occurred since then. Not surprisingly, the farm bill is one that Congress
always
finishes on time, or at least extends temporarily.
Despite their political support, these subsidies have occasionally come under fire. “When Republicans seized Congress in 1994, promising a revolutionary age of fiscal conservatism and free-market capitalism,”
Time
magazine’s Michael Grunwald wrote, “they vowed to gut command-and-coddle farm policies that they compared to Soviet communism. They wanted the government to treat agriculture like any other business, and they said they’d offer farmers a deal … farmers could plant what they wanted, but no more subsidies.”
To that end, the 1996 Freedom to Farm Act severed some long-standing links between the subsidies farmers receive, the crops they grow, and the prices they get for them. For what was supposed be a five-year transition, the bill offered farmers $5 billion a year in direct payments.
The revolution didn’t last but the new “temporary” payouts did. Sixteen years later, about $5 billion in direct-payment checks are still being written annually even as the farm economy booms. These payments are based on an arcane formula tied to what was grown on the land years ago, no matter what crops—if any—are grown on the land now. Because the payment rights transfer with these specific plots, real estate prices are boosted—even on land that has never been cultivated by the current owners. Journalist Dan Morgan calls the payments “an entitlement tied to ownership of land—a construct that some would associate more with 19th-century Prussia than 21st-century America.”Half of the direct payments go to farmers with incomes above $100,000.
An example:the first congressional district in western Kansas has received more money in direct payments over the years than any other, $250 million in 2010, most of that to wheat, corn, and sorghum growers. As is true nationally, most of the money goes to a small set of big farmers:half of the money went to 5,000 of the district’s 675,000 residents, according to a database cultivated by the Environmental Working Group. The top ten farms got more than $200,000 apiece. Obama’s latest budget proposes to eliminate direct payments altogether, describing them as “no longer defensible.” Even Tim Huelskamp, a Tea Party Republican and fifth-generation farmer who represents the district, isn’t defending direct payments any longer. “Everybody needs to share,” Huelskamp told a few dozen townsfolk gathered at the Graham County Courthouse recently. “If you’re a farmer like me, you’re going to expect less. Something’s going to go away. The direct payments are going to go away.”
But even if they do, the farmers in Huelskamp’s district aren’t worried about being cut off entirely. Many figure what they lose in direct payments they’ll make up in increased federal subsidies for crop insurance, which covers losses caused by drought, floods, pests, and low market prices or yields. The government pays private insurers to run the program and pays about 60 percent of premium cost. The annualtab to the taxpayer: $10 billion, and
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