Farm Subsidies to be Cut?

It’s shaping up to being another good year for farm incomes. As a result, policymakers looking for spending cuts are finally turning an eye toward farm subsidies. An emerging target is the $5 billion in annual payments made to farmers…for basically just being farmers.

From the Wall Street Journal:

With the farm economy booming and Washington on a diet, a program set up in the 1990s that cuts checks to farmers could be trimmed or eliminated next year when Congress writes a new five-year farm bill.

A group of conservative lawmakers has set its sights on these direct payments, and even farm-state Democrats who like the program say high crop prices make the outlays of about $5 billion a year harder to justify. Recently, the National Corn Growers Association, an industry lobby group, urged Congress to revamp the program, fearing it would be eliminated altogether.

As the Journal notes, the 1996 farm bill created these payments as a temporary handout to help “transition” farmers toward greater reliance on supply and demand. Instead, Congress and the Bush administration turned it into a permanent handout in 2002. If ever there was a symbol of Washington’s inability to get farmers off the taxpayer teat, this was it.

However, even the corn lobby seems to recognize that the gig might finally be up for one of Washington’s more indefensible programs:

‘Our members of Congress are telling us that they just can’t support this program anymore,’ said Anthony Bush, a policy expert with the National Corn Growers Association.

‘In times of record-high prices [the government is] still handing out money like this, it’s just politically not possible, feasible or popular these days,’ he said.

Mr. Bush said corn farmers have the most to lose if direct payments are eliminated altogether. He said $2.1 billion of the roughly $5 billion in direct payments go to such farmers.

Corn futures Wednesday settled at $7.63 a bushel, down slightly after reaching an all-time high above $7.70 Tuesday. Prices have more than doubled since last summer on strong export demand, record ethanol output and steady buying by domestic livestock producers.

The National Corn Growers Association voted earlier this month to ‘investigate transitioning direct payments’ into a more politically acceptable form of subsidy.

“Investigate transitioning direct payments”? That’s ironic terminology considering that these payments were originally intended to transition farmers away from reliance on taxpayers. Now the corn lobby wants to transition the transition payments into a “more politically acceptable” handout. Only in Washington.

See this Cato essay for more on farm subsidies.