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Latest farm bill still plagued by million-dollar subsidies at taxpayer expense

By Phillip Swarts

Thursday - 5/16/2013, 6:14pm  ET

Despite all the promises of frugality in Washington, the newest version of the farm bill passed by the House boasts a pricetag near $1 trillion and manages to send plenty of subsidies back to influential special interests in lawmakers' home states.

It includes millions of dollars to peanut, cotton and milk producers, plus improved crop insurance to protect farmers, creating new fodder for critics who believe such direct aid to farmers keeps food prices artifically high at taxpayer expense.

Sen. Debbie Stabenow, D-Mich., the chairwoman of the Agriculture, Nutrition and Forestry Committee, said the bill will both help farmers and improve the economy.

"Reforming agriculture programs will save taxpayers billions of dollars while helping Michigan farmers, ranchers and small businesses create jobs," she said.

But the Congressional Budget Office said in March it believes the current farm bill will save considerably less money than first thought.  Last year, the CBO estimated that the Senate version of the bill could have reduced spending by $23.1 billion.  Now that number has been reduced to $13.1 billion.  Likewise, the House version was expected to save $35.1 billion, but that estimate has been rounded down to $26.6 billion.

In addition, the bill provides increases in crop insurance, designed to help maintain farmers’ wages against weather, plagues and other acts-of-God that can destroy the source of their income.  But the insurance rates have been on the rise, according to information from the Environmental Working Group, a non-profit organization that tracks agricultural data.

Some farms are receiving almost $1 million in subsidies to purchase insurance, EWG said, but the bounty isn’t being shared by everyone.  Just 20 percent of farms are getting roughly 75 percent of insurance subsidies, data shows.

That exposes a common misconception, said Daren Bakst, an agricultural expert at the Heritage Foundation, a conservative Washington think-tank.

“The agriculture sector is not this kind of vision of the small family farmer who’s’ struggling to make ends meet,” Bakst said.  “It is high tech, it’s cutting edge, it’s innovative and people that are getting the benefits of subsidies are not the small family farmer.  The winners are the large agricultural enterprises.”

For creating a new farm bill that keeps special interests happy at taxpayer expense, Congress wins this week's Golden Hammer, a weekly distinction awarded by the Washington Guardian to highlight excessive spending and special interest giveaways.

A report by the Government Accountability Office last year – when the Senate passed its most recent version of the bill – pointed out there are no limits on how much the government can send to farms to subsidize crop insurance.

If the federal government had placed a cap of $40,000 in subsidies to each farm - inline with similar Agriculture Department programs - the GAO said taxpayers could have been saved $1 billion in 2011.

Taxpayers have also been covering an increased amount of farmers' insurance.  In 2000, subsidies for crop insurance meant taxpayers were footing the bill for just 37 percent of the cost.  Now, the federal government is covering rougly 62 percent of insurance costs.

A second GAO report was very critical of some of the direct payments made to farms.

“Direct payments generally do not align with the principles significant to integrity, effectiveness, and efficiency in farm bill programs,” the report said.

Opponents have also opposed the government regulations dictating a set price for many commodities, including milk.

“The harm is the government’s not capable of determining what the proper supply should be,” Bakst said.  “It might be noble in a sense to help the farmer, but I don’t consider it noble when you’re certainly hurting the consumers.”