WASHINGTON (July 11, 2012) — Ahead of today’s House Agriculture Committee mark-up of the $957 billion Federal Agriculture Reform and Risk Management Act, the R Street Institute has joined with ten other free-market and taxpayer watchdog groups to call on U.S. House members to rein in the legislation’s tens of billions in wasteful agricultural subsidies.

In a letter to House members, the groups note that while the legislation is estimated to reduce projected spending by $35 billion over the next decade, that total is actually $10 billion less than the $45 billion that would be saved if Congress simply ended the long-discredited program of direct payments to agricultural producers, with no other changes.

“FARRM does eliminate direct payments –- which have virtually no defenders -– but then plows those savings into three new ‘shallow loss’ entitlement programs designed to make Washington responsible for ensuring profits for agriculture businesses,” the groups wrote. “The federal government should not be in the business of guaranteeing profits for anyone, and certainly not locking in the boom times for American agriculture.”

The House measure is in some respects even worse than the already-bad Senate Farm Bill, which eliminates counter-cyclical payments, in that it creates a new counter-cyclical program called Price Loss Coverage. For six of the eight eligible commodities, the floors set by the new PLC program are higher than the average prices from 2005 to 2010. Under PLC, as well as the new “shallow loss” programs, taxpayers would be on the hook for potentially huge payouts if commodity prices drop even slightly from their recent record highs.

The House bill also expands federal crop insurance subsidies by $10 billion over the next decade, $5 billion more than in the Senate bill. Under the crop insurance program, which cost taxpayers $11 billion last year, the government subsidizes 62 percent of farmers’ premiums, while also paying for crop insurers’ administration and overhead costs.

The groups urged House leadership to allow a full debate on the House floor once the bill is moved out of committee, to allow non-committee members the opportunity to introduce amendments that could bring real reform and fiscal sanity to federal agricultural programs.

“The House of Representatives must lead a full and open legislative debate on the Farm Bill reauthorization. Taxpayers can afford nothing less,” the groups wrote.

In addition to R Street, the letter was signed by American Commitment, Americans for Prosperity, Americans for Tax Reform, the Competitive Enterprise Institute, the Council for Citizens Against Government Waste, FreedomWorks, Heritage Action for America, the National Taxpayers Union, Taxpayers for Common Sense and the Taxpayer Protection Alliance.

The full text of the letter can be found here: http://rstreet.org/wp-content/uploads/2012/07/Joint_Letter_House_Draft_Farm_Bill_7-10-2012.pdf

R Street is a non-profit public policy research organization that supports free markets; limited, effective government; and responsible environmental stewardship. It has headquarters in Washington, D.C. and branch offices in Tallahassee, Fla.; Austin,Texas; and Columbus, Ohio. R Street’s co-founders previously were the staff of the Heartland Institute’s Center on Finance, Insurance and Real Estate. Its website is www.rstreet.org.


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