Congress’ ‘cotton fix’ just another corporate welfare handout
However, none of these events compare to Congress’ favorite perennial tradition: trying not to shut down the government. After a two-week spring break, Congress is back, ready to work and horse-trading for votes to prevent a government shutdown. One of the items for “trade” currently being kicked around is a massive expansion of two corporate welfare programs. Referred to as the “cotton fix,” Congress is poised to expand the U.S. Department of Agriculture’s Agriculture Risk Coverage and Price Loss Coverage programs to include cotton as a covered crop.
The ARC and PLC programs already are hardly the gold standard of fiscal responsibly. When Congress created the programs in the 2014 farm bill, the projected costs were $18 billion over five years. They now are projected actually to cost $32 billion over that same time frame. If Congress is successful in adding cotton into the mix, the projected costs easily could be topped up by an additional $1 billion a year.
This might be understandable if there were some crisis in the domestic cotton industry that needed to be averted, but Big Cotton already a pretty cozy deal with Washington. Between subsidized marketing loans, trade promotion programs and economic assistance to cotton mills, the industry is well taken care of by American taxpayers.
And that’s not all the federal government does for them. Unlike many other crops, cotton growers can participate in the Federal Crop Insurance Program and get to ask taxpayers to cover 62 percent of their premiums. Furthermore, during negotiations that produced the last farm bill in 2014, the cotton lobby was able convince Congress to create a special program just for them called the Stacked Income Protection Plan (STAX). This cotton-only program has taxpayers covering 80 percent of the cost for policies that protect against “shallow losses” too minor to be covered under traditional crop insurance.
The cotton industry’s costs to American taxpayers don’t end there. The federal government is in the process of paying out $300 million to the Brazilian cotton industry as part of a 2014 settlement agreement with the World Trade Organization. The settlement was a way to resolve a longstanding trade dispute with Brazil over U.S. domestic cotton subsidies that violated WTO rules. The $300 million payment comes on top of about $500 million the United States paid Brazil from 2010 to 2013 over the same set of issues.
The STAX program was created in hopes that it would stave off future disputes with Brazil, but whether STAX meets WTO rules is itself still an open question among experts. What is certain is that adding cotton to the ARC and PLC programs would only raise the odds of more trade disputes that ultimately cost Americans more money.
Let’s be clear, cotton is still king in Texas and some other parts of the country and Congress knows it. Adding cotton to ARC and PLC isn’t a noble gesture to a struggling industry. It’s about more about making sure multimillion-dollar companies maintain their profit levels at U.S. taxpayers’ expense.
Congress made a deliberate decision to exclude cotton from these two program when they were created in 2014. For Congress to sneak more cotton in the back door of a must-pass bill would amount to yet another corporate welfare payoff, with taxpayers once again left holding the bag.
Image by Kent Weakley