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Reason Foundation

Ending Farm Welfare As We Know It

Why can't we get rid of agricultural subsidies?

A. Barton Hinkle
April 19, 2011

Just about everything in Wisconsin Rep. Paul Ryan's budget blueprint has caught unshirted hell from critics: the tax rates, the Medicare vouchers, the safety-net cuts. The one thing that hasn't? The cuts to farm subsidies.

If past is prologue, that means the subsidies are probably safe.

Ryan wants to trim $3 billion a year from a $15 billion annual total in farm support programs. This is a modest goal—perhaps too modest. After all, farm subsidies are one thing about which all sides can agree: George Will disdains them—and so does Paul Krugman, who calls them "grotesque." The conservative Heritage Foundation terms farm subsidies "America's largest corporate welfare program." The liberal ThinkProgress dubs them "highly regressive." President Clinton tried to rein them in. So did President Bush—both the Elder and the Younger. "Bush Attacks Farm Subsidies," reported the St. Louis Post-Dispatch in 1990. Eighteen years later Reuters reported, "House Overrides Bush Veto of U.S. Farm Bill."

That was, of course, after the 1996 passage of a measure that, noted The Wall Street Journal the other day, was designed "to wean farmers … off years of subsidies." The direct payments at issue in the story "were supposed to be temporary" but "are now a cornerstone of American farm subsidies." In 2002 Congress rolled back some of the 1996 reforms and jacked up subsidies by 74 percent over the next decade. President Obama has been no more able to roll back the tide than King Canute. "Latest Plan to Cut Farm Subsidies in Trouble," reported The Boston Globe last year.

If left, right, and center stand united in their opposition to subsidies, then why do the programs thrive? The reasons are, as psychoanalysts say, overdetermined.

Like subsidies for public radio, farm subsidies are in large part welfare for the well-off. Ten percent of recipients collect 73 percent of all benefits, and many of them are corporations with major lobbying power. (Here in Virginia the top recipients are Pilgrim's Pride and Cargill.) The benefits also are widely dispersed, doling out money in 364 of the nation's 435 congressional districts.

Moreover: Iowa, which wields grossly disproportionate influence in presidential politics, ranks second in the nation (behind Texas) for aggregate farm subsidy payments. The Environmental Working Group, a liberal watchdog outfit, reports that Iowa reaped $21 billion in subsidies from 1995 to 2009. On a per-capita basis that comes to around $7,000—nearly eight times the $920 per capita that Texans received during the same period. Such numbers help explain how people such as Newt Gingrich can keep a straight face when they term efforts to reduce subsidies a nefarious plot by urban city slickers.

Then there is the phenomenon that Jonathan Rauch labeled demosclerosis: The benefits of farm subsidies accrue to a numerically small but highly motivated cohort, which will fight ferociously to safeguard the benefits. The costs of farm subsidies, however, are spread out across a huge number of people who have only a vague sense that they exist and no sense of what they cost on an individual level.

For example: The CBO estimates the direct price of subsidies for corn-based ethanol at $1.78 per gallon. But this does not take into account indirect costs, such as the effect on food prices—this year ethanol production will consume just about as much corn as American livestock will—or other outlays, such as the $200 million the USDA is spending to help gas stations install special ethanol-blending pumps. You might be able to learn from attentive reading that sugar price supports cost American consumers more than $1 billion a year at the checkout line. But how much of that did you, personally, pay? And what price tag does one affix to the Florida Everglades lost to cane-sugar farming as a result of inflated sugar prices?

Were this phenomenon limited to farming it would be bad enough, but obviously it is not. A profusion of programs confers special benefits on a plethora of interest groups. Hungarian-born economist/philosopher Anthony de Jasay says the resultant "churning" of benefits and costs produces a situation in which government makes "every industry support every other in various, more or less opaque ways." And though each party might enjoy its own programs it feels oppressed by the crush of all the others. Result: "Deeply felt claims mount for 'rolling back the state.' ... It has in a sense become clever policy for the state to roll itself back." But—for the reasons mentioned above—it cannot.

For proof of that, just look at the budget debate. Federal expenditures rose from $2.9 trillion in 2008 to $3.8 trillion this year. Republican efforts to trim 1 percent from the current budget were described in apocalyptic terms, and Ryan's budget proposal—under which federal spending would grow 2.8 percent per year—is considered by many to be even worse. Those who fear its more controversial parts should console themselves with the knowledge that he will have a hard time rolling back even farm subsidies, a cause at which the past four presidents have failed.

A. Barton Hinkle is a columnist at the Richmond Times-Dispatch. This article originally appeared at theRichmond Times-Dispatch. This article previously appeared at Reason.com.



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