They are not even sworn in yet, but some of the newly elected members of Congress are raising questions among agricultural economists.
Incoming Missouri Congresswoman Vicki Hartzler, for example, defended continued farm subsidies on the grounds of ‘national security.’ A friend of mine asked, ‘Is she so dumb that she really believes that, or so cynical that she thinks the American people will believe it?’
That is a bit harsh, but given that Hartzler and her husband have received some $770,000 in federal farm payments over the past 15 years and that she courted “tea party” support and ran on a program of smaller government and lower taxes, considerable skepticism is warranted.
Hartzler’s argument seems to be that without subsidies, U.S. farmers would cut back production and the U.S. would have to import food, making it vulnerable to enemies. Since subsidies no longer are tied to production, as they once were, and since we are large net exporters of most major crops and some livestock products, this is far from credible. No respected agricultural economist endorses this view.
Farm subsidies pose a knotty and immediate dilemma for Republicans, especially those aligned with the tea party. If you campaign on a platform of lower taxes, smaller government, no budget deficits and ending government redistribution of income to small interest groups, how on Earth can you vote for continued spending on federal commodity programs?
The old-timers who dominate congressional agriculture committees apparently feel they once again can ward off any efforts to end farm subsidies. While outgoing House Ag chair Collin Peterson, D-Minn., favored revamping payments to serve at least nominal goals of environmental protection, his replacement, Frank Lucas, R-Okla., has made it clear that he wants no changes to the current system of direct handouts for the major commodities. Perhaps he will succeed. History certainly is on his side.
However, the tea party movement may be a greater force in U.S. society than the old bulls realize.
The public face of the tea party often is that of retirees who want to ensure that “their” Social Security and Medicare are not touched even as taxes are miraculously lowered, spending cut and deficits ended.
As new histories of the tea party detail, however, the movement was initiated by highly educated, 30-something, urban libertarians. Such people aren’t going to swallow new slogans about “national security” any more than old ones about “saving the family farm.” And they realize that if every interest group, little or big, is allowed to keep sucking on the public udder, their movement quickly will turn into a farce. Don’t count on core movement members letting that happen.
The stakes really are not very large, about $15 billion to $20 billion per year for the U.S. as a whole. Some $10 billion to $15 billion is in cash payments to farmers, including land rental under the Conservation Reserve Program. Another $5 billion or more goes into subsidized crop insurance.
For Minnesota, direct payments in 2009 came to $852 million, of which $114 million was for CRP acres. Overall, our state came fifth in national rankings. Neighboring states also placed high, with Iowa second, North Dakota sixth, South Dakota ninth and Wisconsin 11th.
Murray County in southwest Minnesota, where I grew up and own farmland, got $15 million, a typical amount for the uniform rectangular counties across the southern part of the state. (Comprehensive data on payments by state, county, ZIP code, congressional district or individuals, including the $2,405 I get annually for 19 acres of CRP land, is available at farm.ewg.org.)
These sound like big sums, but relative to total cash flows in farming, especially with growth in Asia propelling crop prices higher, they no longer are that important. The tragedy is that relative to the cost to the Treasury, they do little good for anyone.
Compared with an annual budget deficit of $1 trillion, $15 billion or $20 billion saved by complete elimination of farm payments is a drop in the bucket. But so are many other programs dear to the heart of one interest group or another.
That is the point. If the tea party adherents in the new Congress are not able to completely chop out entire programs like this, their movement will quickly become a debacle, economically and politically. Committed tea party members will be bitterly disappointed by the realities of Washington, just as true believers in Supply Side economics like Reagan Budget Director David Stockman were back in 1982.
Republicans are riding the crest of an electoral triumph, but they have a great deal at stake. If they have the courage to make a symbolic move like zeroing out ag subsidies for 2011, they will send a message that they are serious about cutting wasteful spending and the overall size of government. But if farm payments get through unscathed, tea party stalwarts rightfully will read it as a bad omen.
© 2010 Edward Lotterman
Chanarambie Consulting, Inc.