R Street urges fiscal responsibility in House Farm Bill
WASHINGTON (June 19, 2013) – As the U.S. House begins deliberations today on H.R. 1947, the Federal Agriculture Reform and Risk Management Act, the R Street Institute encourages members to consider amendments that would bring greater transparency, accountability and fiscal responsibility to America’s farm programs.
Of the 102 amendments that will be brought to the floor over the next few days, most crucial is Amendment No. 149, introduced by Reps. Tom Petri, R-Wis., Ron Kind, D-Wis. and 10 bipartisan co-sponsors, according to R Street Senior Fellow Andrew Moylan.
Also known as the AFFIRM Act, the amendment would make public which agricultural producers receive federal premium subsidies for crop insurance. It also would bar premium subsidies to producers with adjusted gross income of more than $250,000 and cap the per-person subsidy at $50,000.
The amendment also would reduce the rate of return for the 16 private insurers that provide federal crop insurance to 12 percent from the current 14 percent and cap insurers’ reimbursements for administrative and operating expenses, which were $1.4 billion in Fiscal Year 2012, at no more than $900 million annually.
“The AFFIRM Act offers a bipartisan approach to reforming crop insurance, which is now the largest federal subsidy to farmers,” Moylan said. “There is much in the Farm Bill that deeply divides members, but Republicans and Democrats should be able to agree on these targeted reforms to limit the program and make it more transparent and accountable to taxpayers.”
R Street also supports the approach to environmental accountability taken in Amendment No. 28, which ties taxpayer subsidies to certain conservation requirements for planting in wetlands and highly erodible lands. Sponsored by Reps. Jeff Fortenberry, R-Neb., and Mike Thompson, D-Calif., the amendment is intended to curb subsidies to environmentally destructive practices. It is similar to requirements that long had been tied to the “direct payments” program, which is set for elimination under both the House and Senate bills.
R Street also is supportive of Amendment No. 3, introduced by Kind and Rep. Bob Gibbs, R-Ohio, which attempts to control some of the more onerous aspects of the program that would replace direct payments: the price loss coverage option, also known as “shallow loss.”
As proposed in the House bill, the program would establish fixed price targets and tie payments to current levels of production, both changes that are likely to violate World Trade Organization commitments. The Gibbs-Kind amendment limits the acreage available for target price support to 85 percent of the farmer’s historical base acres and sets the target price at a more reasonable 55 percent of the five-year rolling Olympic average, rather than locking in current record commodity prices.
“The introduction of shallow loss programs in both the House and Senate bills is easily the worst aspect of this year’s Farm Bill debate. They will eat up most and potentially all of the savings taxpayers otherwise would realize from ending direct payments,” Moylan said. “While it is truly unfortunate the House will not vote on any amendments to kill the program altogether, the Gibbs amendment is a reasonable first step to ensure that it does not distort prices and cost taxpayers as much as it otherwise would.”
