WASHINGTON (Jan. 28, 2014) – The R Street Institute expressed deep disappointment at the five-year conference committee farm bill that cuts just 0.11 percent in projected federal spending over the next decade.
While the 949-page conference agreement does include some positive developments – such as ending the $5 billion a year “direct payments” program and requiring recipients of crop insurance subsidies to avoid depleting prairies and wetlands – it leaves on the table a host of thoughtful reforms, even as it authorizes $1 trillion in spending on food stamps and corporate welfare for big agri-business.
Particularly disappointing, according to R Street Senior Fellow and Outreach Director Andrew Moylan, is that the conference report drops language from the Senate-passed bill that would reduce federal crop insurance premium support by 15 percentage points for recipients with adjusted gross incomes of more than $750,000. Though the change would have affected less than 1 percent of farmers nationwide and would still have left taxpayers on the hook for 47 percent of wealthy farmers’ insurance premiums, it was projected to save taxpayers more than $900 million over ten years.
“In addition to its inclusion in the Senate farm bill, this sort of means test also was endorsed in a ‘sense of the House’ resolution passed in October 2013,” Moylan said. “Thus, even when both chambers agreed that something must be done to scale back these wasteful subsidies, the conference report ignores that sentiment to keep the taps of corporate welfare flowing.”
While the federal government subsidizes roughly 62 percent of farmers’ crop insurance premiums, at a cost of $9 billion annually, small farmers receive only about 27 percent of the subsidies.
The conference report, which the House is expected to vote on as early as Jan. 29, also replaces the direct payments program with several new “shallow loss” insurance programs that look to lock in record commodity prices. In fact, given recent drops in the price of corn, the shallow loss program would be triggered on day one for the nation’s largest commodity crop.
“Given the Congressional Budget Office’s history of underestimating the cost of prior farm bills, we take it as given that much, if not all, of the $23 billion in projected savings in this bill will never materialize,” Moylan said. “The shallow loss programs alone could prove catastrophically expensive, and no one should be surprised if, five years from now, this farm bill ends up proving more expensive than if Congress simply extended existing law.”