If the last seven years have proved anything on Capitol Hill, it is that there are no fiscal conservatives in Washington. The bipartisan desire to spend is overwhelming.
Consider the Farm Bill. It’s not obvious why farmers–and not, say writers or engineers–deserve to be subsidized by Uncle Sam. But it’s crazy to raise crop supports when prices are rising. Yet that’s what our spendthrift legislators are doing.
Since the last farm bill in 2002, the price of cotton is up 105%, soybeans 164%, corn 169% and wheat 256%. Yet when Mr. Bush proposed the genuine change of limiting farm welfare to those earning less than $200,000 a year, he was laughed out of town. The bill purports to limit subsidies to those earning a mere $750,000, but loopholes and spousal qualifications make it closer to $2.5 million. As Barack Obama likes to say, it’s time Washington worked for “the middle class,” which apparently includes millionaire corn and sugar farmers.
Another purported change is the arrival of “fiscal discipline,” in Nancy Pelosi’s favorite phrase from the 2006 campaign. Yet it turns out this farm extravaganza may bust federal budget targets even more than we thought a week ago. That’s because the new price supports — the guaranteed floor payments farmers receive for their crops — have been raised to match this year’s record prices.
The USDA reports that if crop prices fall from these highs to their norm over the next five years, farm payments will surge. For example, if corn prices return to $3.25 a bushel from today’s $6, farmers would get $10 billion a year in support payments. If bean prices fall to their norm, they’d get $4 billion. Thus, if farm prices stay high, consumers face higher grocery bills and farmers get rich. If farm prices fall, taxpayers kick in the difference and farmers still get rich.
Sugar producers also make out like Beltway bandits, receiving the difference between the world price of sugar, which is now $12 per pound, and the guaranteed price of about $21 per pound. That’s a roughly 75% subsidy for already wealthy cane growers and a nice payoff for the $3 million they contribute to House candidates each year.
It’s not clear why Congress even bothers debating legislation like this. Why not simply give the keys to the Treasury to farmers and let them cart off as much money as they can carry? Cut out the legislative middlemen!