The White House’s position on farm subsidies has been a bit schizophrenic. Just a few months ago, President Donald Trump endorsed and signed into law a $900 billion farm bill that dramatically expands corporate welfare and waste in our farm-support system. Not only that, he has showered farmers hurt by his ill-conceived trade war with additional subsidies as a payoff.
But the president’s FY 2020 budget resolution, unveiled earlier this week, sings a much different tune. In contrast to the 2018 Farm Bill, which made no cost-saving reforms to the crop insurance or commodity titles whatsoever, the president’s budget request proposes several modest cuts that would better target funds toward farms most in need of assistance.
First, it proposes reducing the average premium subsidy for crop insurance from 62 percent to 48 percent across the board. It also proposes enacting a means test that would limit crop insurance, conservation and commodity subsidies to producers with an adjusted gross income (AGI) of less than $500,000. The budget proposal also would enact modest and much-needed reforms to the crop insurance delivery side of the equation, by reducing insurance companies’ guaranteed rate of returns from around 14 percent to 12 percent.
Finally, the budget tightens payment limits for commodity farmers by limiting eligibility for subsidies to one manager per farm. Together, the crop insurance and commodity reforms in Trump’s budget request would save taxpayers $28 billion over 10 years.
House and Senate Agriculture Committee leadership have been quick  to blast  the budget request as a betrayal of the 2018 farm bill and of rural America. However, it’s worth noting that these ideas are not new. They are virtually identical to the proposals put forth in President Trump’s last budget for FY 2019. President Barack Obama’s budget requests also contained similar reforms to crop insurance.
These reforms continue appear year after year in budget requests, regardless of which party is in the White House, because they offer commonsense solutions to trim waste while still protecting the farm safety net. Unfortunately, although many of these reforms were offered as amendments during the farm bill debate, virtually all of them were blocked  from floor consideration as a result of closed-door negotiations.
In the end, America can feed the world, but our farmers and ranchers need more access to foreign markets. Overly generous domestic subsidies and payoffs to an agriculture industry harmed by misguided trade policy inhibit our ability to expand foreign markets. Policymakers should work to curb domestic subsidies and push aggressively for new opportunities for trade liberalization. The president’s budget is a step in the right direction.
- “ ”: https://agriculture.house.gov/press/PRArticle.aspx?NewsID=1374
- “quick”: https://agriculture.house.gov/press/PRArticle.aspx?NewsID=1374
- “ ”: https://www.agriculture.senate.gov/newsroom/dem/press/release/ranking-member-stabenow-trump-administration-budget-undermines-the-bipartisan-farm-bill
- “blast”: https://www.agriculture.senate.gov/newsroom/dem/press/release/ranking-member-stabenow-trump-administration-budget-undermines-the-bipartisan-farm-bill
- “ ”: https://www.rstreet.org/2018/05/17/r-street-disappointed-by-house-rules-committees-decision-to-block-key-reform-amendments-to-h-r-2-the-house-farm-bill/
- “blocked”: https://www.rstreet.org/2018/05/17/r-street-disappointed-by-house-rules-committees-decision-to-block-key-reform-amendments-to-h-r-2-the-house-farm-bill/