Tag: Farm Subsidies

The Farm Follies Continue

The latest CBO report shows that the FY2013 deficit will come in at around $642 billion, a dramatic reduction. Naturally, the usual suspects are calling for more “stimulus” spending now that the deficit problem is “solved”. But they should read some critical points raised by Peter Suderman. The “small” deficit is a result of tax hikes, spending cuts and about $200 billion in one-time revenues (Fannie/Freddie dividends and tax adjustments). The “small” deficit will only last a few years before entitlements and Obamacare began to raise it again even under optimistic budget scenarios. And even under optimistic scenarios, interest payments will reach historic highs.

(As an aside: what’s really hilarious is to watch the Left scramble to explain why “austerity” hasn’t crashed the economy. Most of them are simply going the Krugmann route and ignoring everything they’ve been saying for the last five years.)

So now is not the time to open the spending or tax cut floodgates. Now is the time to keep to build on the budget momentum and reign in entitlements. Now is the time to … oh, shit:

House and Senate farm subsidy supporters are pushing to enact the first big farm bill since 2008. Democratic and Republican supporters say that this year’s legislation will be a reform bill that cuts spending. Hogwash.

Last year, House farm subsidy supporters proposed a bill that would spend $950 billion over the next 10 years, while the Senate proposed a bill that would spend $963 billion. By contrast, when the 2008 farm bill passed, it was projected to spend $640 billion over 10 years. Thus, the proposed House bill would represent a 48 percent spending increase over the last farm bill, while the Senate bill would represent a 50 percent increase.

Congress is bizarrely claiming that they have “cut” the farm bill because it’s 3% less than the original proposal. But not only is this their usual “cut spending growth” trick, it runs into the problem that the farm bill is usually much larger than originally budgeted. Next year’s farm bill be almost 50% more than originally proposed.

The spending “discipline” of the last two years is already eroding in the face of temporary unsustainable deficit reduction. And even worse, it’s opening on one of the many places it shouldn’t: the massive pile of corporate welfare euphemistically called the “farm bill”. Now is not the time to be shoveling more money into this hole. Now is the time to follow the advice P.J. O’Rourke gave twenty years ago: “drag the Omnibus Farm Bill out behind the barn and kill it with an axe.”

The Next Shutdown

As I blogged last week, we are facing another government shutdown. This time, the issue is disaster relief. The GOP wants to pay for it by cutting green car subsidies (known to sensible people the world over as corporate welfare). The Democrats are opposed, partly because they like the corporate welfare but mostly because they don’t want to set a “precedent” for offsetting disaster relief.

I really don’t follow that logic at all. Disaster relief counts toward the deficit just like everything else does. In fact, I would argue that a substantial part of our deficit has been created by a refusal to offset unexpected expenses like wars, recession relief and disaster relief. The entire reason for having PAYGO is to stop the bullshittery of Congress declaring a crisis and engaging in an orgy of unfunded spending. It’s not like the Democrats are in any kind of hurry to get the relief money out. If they were, they would’t be threatening a shutdown.

Offsetting disaster relief serves another purpose: forcing Congress to figure out how much relief is actually needed. We have gotten far too used to legislators just naming a figure and rushing the funds out the door, sometimes throwing in some pork for good measure. Does anyone expect spending discipline to be followed in a “We must pass it now! NOW NOW NOW!” situation? Force people to prioritize and we’ll get the relief we need … and only the relief we need.

It’s not like Congress is fumbling desperately for spending to cut. Here is a story from the Chicago Tribune about the explosion in farm income over the last few years:

They’re enjoying the fattest times in memory. The money pouring into Corn Belt bank accounts isn’t just setting a record. The latest government figures show farm income blowing past the previous high of $84.7 billion in 2004 to top $100 billion this year. Land values have soared and debt is being paid down aggressively.

There’s no end in sight to the boom times. A small crop this year and continued strong demand set the stage for another bonanza next year, and probably the year after that.

Depending on your accounting, we’re talking about $25 billion a year, at least, ten times the amount in dispute.

Then there’s this:

A shutdown wouldn’t be a good thing for the economy, but it wouldn’t be a fiasco on the scale of defaulting on the national debt. Similarly, a shutdown wouldn’t make any politicians in Washington look particularly good, but at this point, there might be more upside for the two parties in confrontation than there is in continued unsatisfying compromises.

That’s a particularly popular interpretation among Democrats, who worry that Republicans have become too accustomed to legislating through fiscal brinksmanship, and the only way to reset the budget process and end these constant threats of shutdowns and defaults is to let a shutdown actually happen and show Republicans what that means for them, both economically and politically. This shutdown, because it’s over relatively little money, and because Democrats feel comfortable saying “we shouldn’t be cutting jobs spending to pay for disaster aid” over and over again, offers a way to carry that strategy out in a relatively controlled fashion.

Remember when the Democrats were the party of grown-ups? When the GOP threatened shut-downs to cut spending, it was called reckless partisanship. Now it’s just “resetting the budget process”.