Mon, May 28, 2012, 6:27 PM EDT - U.S. Markets closed for Memorial Day

Spending cuts trump farm subsidies for many voters

In a shift from previous years, spending cuts trump farm subsidies on the rural campaign trail

WASHINGTON (AP) -- Promoting farm subsidies was once a no-brainer for rural members of Congress seeking re-election. This year, it's a bit trickier.

As lawmakers wade cautiously into writing the next five-year farm bill, agribusiness and farmers' lobbyists are preparing for the worst. With little appetite for spending on Capitol Hill, subsidy cuts in the billions of dollars are on the table as rural voters also cry out for less government.

It doesn't help that farm business is booming.

"What's different this time is we have very strong commodity prices," says Roger Johnson, president of the National Farmers Union. "And that is generally not a really good time to write a farm bill because everyone who is projecting the future says, 'Oh, this is going to last forever.'"

Farm bills in 2002 and 2008 also were driven by rural election-year politics. Lawmakers, particularly in the Senate, curried favor with farm interests in their states by slipping their priorities into the bills. Taking care of everyone's needs ensured passage and subsidies remained almost untouched.

But this year, many of farmers' traditional allies are just as concerned, if not more concerned, about voters' calls for less spending.

Sen. Pat Roberts, senior Republican on the Senate Agriculture Committee and a veteran of many farm bills, says his constituents aren't asking about farm subsidies as much as they used to. He says he gets more questions about government regulations that farmers see as burdensome. Traditional farm issues and the impact of farm policy have gotten somewhat lost.

"I don't think most people who run for office realize there is still a significant farm vote," he says.

Nowhere was that more clear than in Iowa, where presidential candidates have wooed farm country for decades. Several of the contenders in the Iowa caucuses actually spoke out against subsidies for corn-based ethanol, a position unthinkable in the past.

Farm-state members have already said they will support eliminating some subsidies. Last fall, the heads of the House and Senate agriculture committees — Republican Rep. Frank Lucas of Oklahoma and Democratic Sen. Debbie Stabenow of Michigan — negotiated a farm bill that cut $23 billion from agriculture and nutrition programs, hoping to piggyback it on the budget-cutting supercommittee's bill. When the supercommittee fizzled, so did their hopes for a speedy farm bill.

This year, they are starting over with more input from other agriculture committee members. But direct payments, a type of subsidy paid without regard to crop price or crop yield and costing taxpayers about $5 billion a year, are still a top target as the Senate Agriculture Committee opened hearings on the legislation Wednesday. That was cemented by President Barack Obama's call to eliminate them in his budget proposal Monday, which put forth a $32 billion cut in farm programs.

That's a strong contrast from 2008, when Obama supported the last farm bill while he was campaigning for president. That legislation was far more generous — even raising some subsidies — than the bill Congress is weighing this year.

Former President George W. Bush also played both sides. He signed a robust farm bill before the 2002 midterm election year but later called for cuts. In 2008, when he wasn't up for re-election, he vetoed the next farm bill. Republicans up for re-election in the House and Senate joined Democrats in overriding the veto.

Since then, farm country has seen much of that GOP support fade away. Many farm-state Democrats were swept out of Congress in the 2010 midterm elections, and several Republicans who eventually filled their seats on the House Agriculture Committee are more affiliated with the anti-spending tea party than they are with farm interests.

Unclear is how aggressively those conservatives will support farm subsidies — and, if they do, whether they will be able to persuade party leaders and other congressional conservatives to go along. House opposition is seen as the biggest obstacle to getting a farm bill done this year.

Rep. Tim Huelskamp, R-Kan., one of the tea party conservatives on the agriculture panel, says he is telling constituents that direct payments will have to go. "Some folks say we want you to defend it to the end of the day, and I say that's not what's going to happen."

Huelskamp believes there should still be some sort of safety net for farmers when prices drop or crops are destroyed. But he says frustration over government regulation — labor and environmental laws in particular — is the top issue on farm voters' minds. People understand they will have to take a cut, he says.

No one envisions a farm bill that eliminates subsidies entirely. The compromise Stabenow and Lucas reached last year would have cut spending while creating a whole new subsidy to protect farmers when their revenue drops.

As they try to satisfy all sides, lawmakers and the Obama administration have also looked beyond subsidies to find savings. The Obama administration has appealed to the budget-conscious by trying to cut administrative costs at USDA and consolidating rural offices. At the hearing Wednesday, Agriculture Secretary Tom Vilsack asked the senators to "consider two key themes — streamlining and flexibility."

"There are a lot of land mines and we just have to see how it plays out," says Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee. He warns that Congress shouldn't get too confident about cutting farm programs.

If the agriculture economy crashes, he says, "there isn't going to be any money to bail anybody out."

 

18 comments

  • Terry  •  Cincinnati, Ohio  •  3 months ago
    end all subsidies...corporate welfare
  • JohnK  •  3 months ago
    With Midwest land prices going through the ceiling, and auctioneers getting rich selling it at auction, it is difficult for me to see why we are still subsidizing both corn and ethanol. Land prices are in a bubble, no doubt, but until this bubble bursts, there is no need for these kinds of subsidies to some very, very rich Midwest land owners, IMHO. If the need is there in the future, we can always bring them back, but until then, these subsidy programs should be significantly reduced.
  • bo  •  Washington, District of Columbia  •  3 months ago
    Farm subsidies, like most programs are a way for politicians to buy votes. All forms of subsidy, including tax breaks are net negative to the long term health of an economy.
  • Andrew  •  Tampa, Florida  •  3 months ago
    If you don't grow it, you don't sell it, you don't make money, no free hand outs!
  • Andrew  •  Tampa, Florida  •  3 months ago
    Work for your money No free hand outs
  • Who's_Your_Froggy  •  3 months ago
    Most farm subsidies don't even go to REAL farmers!
  • KIP  •  Lafayette, Louisiana  •  3 months ago
    Borrowed taxpayer money(China lends it) subsidizes corn for ethanol. Dollar devalues,price of corn increases. Meat and groceries increase. Farmer then sells commodities to China.(While your children pay the interest on the borrowed money). Farmer wins, China wins, rural politician wins. We lose (assuming you eat), and our children lose.
  • blkdragon128  •  Warren, Ohio  •  3 months ago
    Many farmers I know also have full-time jobs on the side...I'd say lower the "hobby" farm size to 750 acres or less, that way the little guys that buy supposedly "tax free items" for their house will have to actually buy them instead of us tax payers paying them back!
    …And when a son takes over the family farm, make them pay taxes on daddy’s equipment that he is also depreciating and did not pay taxes on.
  • Wolfpackengnr  •  3 months ago
    Farm Subsidies: Historically, the Democrats pushed through legislation, since the Civil War, mostly your Southern congressmen (looking after their own) which created this huge entitlement program. Today most of the money ends up in the hands of wealthy farmers. Look at the program drivers:

    Morrill Act of 1862 established the land-grant colleges - Democrat, Justin Morrill (Vermont)
    The Hatch Act of 1887 funded agricultural research - Democrat, WIlliam Hatch (Missouri)
    Smith-Lever Act of 1914 funded agricultural education- Democrat , Hoke Smith- Georgia, Frank Lever, SC
    Federal Farm Loan Act 1916 - aimed at increasing credit to rural, family farmers - Democrats (Hollis, N.H. , Lever, SC)

    So, understand times change. There were likely a lot of good reasons for much of these governmenttal acts. But rest assured, today these combined programs cost the US Govt somewhere in the neighborhood of $35 Billion per year. Every Federal Program must be examined for its validity and necessity. It is not different at my house. When times get tough, we have to ask the questions ... Can we really afford to spend money on that ? How important is that ? Priorities must be set at my house, and we expect the Federal Government (and States) to do the same thing !
    • Kimberly 3 months ago
      Wolfpackengnr: Thank you for staying civil...but your most recent citation is the Federal Farm Loan Act of 1916 - make no mistake...BOTH sides are guilty of extending this program - Republicans and Democrats, equally. Texas is one of the reddest states...and it's governor, Rick Perry, campaigned on a platform promising to end corporate bailouts, reign in welfare costs, etc. - yet Texas has historically one of the top three recipients of farm subsidies (literally, hundreds of millions of dollars, annually). I've never understood farm subsidies...but you are right...this program was established by Democrats, and at the time, it had good intentions - safety nets for farmers who lost crops due to natural causes...It was NOT intended to be a welfare hand out on a yearly basis. And again...I don't get it - if you can't farm your land, then you get out of the farming business. Some of these families depend on the subsidy annually as their source of income - that's just wrong. I read somewhere a couple who couldn't farm their land (agriculturally) recently started leasing their land to alternative energy groups - on their land now sits big wind turbines to create electricity - how awesome is that? And their getting paid a HUGE amount of money! Anyway...thanks for the civil tone. Someday, someone is going to explain the hypocrisy of all this...
    • Wolfpackengnr 3 months ago
      Yes. My problem is and has never been with helping those in need. My problem is our overgrown government's inability to efficiently run/manage these long term programs. They grow out of control and ultimately end up wasteful. They never seem to do a very good job of going back after time a evaluating their effectiveness. I shutter to think how much true waste and corruption would be found if we really examined things closely.
  • Billy M  •  Oklahoma City, Oklahoma  •  3 months ago
    Remove food stamps and other welfare items from the AG budget, it's 50% of it. Make farmer safety nets as needed, not yearly income.
  • Fred  •  Conroe, Texas  •  3 months ago
    this is one of the welfare for the rich that we dont talk about any farmer that makes over 100000 should not get a penny. we have all read about millionaires getting money for not growing crops
    • bo 3 months ago
      Farming is a 365 day per year, 16 hour a day job. In a good year you may make a lot of money, followed by a lot of years where you don't even make expenses. I'm not in favor of farm subsidies, but to arbitrarily limit a farmer's opportunity is bad policy.
  • me  •  Richardson, Texas  •  3 months ago
    Fed is the end all you people need to understand they are killing the dollar value by printing all of this money and for what so the bankers can line thier pockets at the citizens expense. Shut down the Fed they have not a clue of the damage they have done or don't care about anyone other than the corporate buddies.
  • Kimberly  •  3 months ago
    Can a Republican explain to me...in a civil tone, please...how you can support farm subsidies, but call every other form of welfare "entitlement," and even campaign against it? One candidiate even referred to our current president as the "food stamp president," or something like that. Texas is one of the reddest states...but yet, Texas is one of the top three recipients in farm subsidies - despite the fact Rick Perry vehemently campaign against corporate bail outs. Explain?
    • bo 3 months ago
      Republicans and Democrats both get tongue-tied on this subject. It's one of those things where emotion trumps common sense. The 91% of small family farms produce only 27% of farm produce. Who benefits most from farm subsidies - small farmers or corporations? Less than 2% of the U.S. population lives on farms. Does that make them a "special interest group?"
  • Gary  •  Little Rock, Arkansas  •  3 months ago
    We don't subsidize ethanol anymore, JohnK. We just make oil companies use it.
  • Bryon  •  Cincinnati, Ohio  •  3 months ago
    Other than in the military, there are no spending cuts.
  • Deepsix  •  Norwalk, Connecticut  •  3 months ago
    Obama's Entitlement Nation will die a firey death ! Entitlement disease is terminal.
    • Dan 3 months ago
      Before or after the re-election?
    • Kimberly 3 months ago
      @ Deepsix: You're a #$%$ Texas is (and always has been) one of the top three recipients of farm subsidies...also one of the reddest states in the nation. Care to roll that around in your tiny brain and justify?
  • D Watkins  •  Richardson, Texas  •  3 months ago
    Let us go back several (many) years and determine WHY WAS THERE FARM SUBSIDIES? There was a loss of the family-owned and operated farms as LAWYERS, DOCTORS, TEACHERS and MANY OTHERS needed a way to decrese their taxes. To do this they could purchase a family farm which would not support the family any longer due to rising costs of fuel, equipment, government regulations and low prices for farm products. This allowed them to use any farming loses or minimal gains to cut their taxes by a big percentage. The government saw fit to AID THE FAMILY FARMER with subsidies.to put a stop to this. One thing in the late 1950s was to pay farmer for not raising certain crops. Great Idea as this decreased availability if farm products and increasd profit. EXCEPT people learned early HOW TO BEAT THE SYSTEM. A man who own several hundred acres of farm land got government subsidies to NOT PLANT a percentage of his land. He SOLD (?) parts of his land to his wife and each of his children thus when each got paid for NOT PLANTING, it was equal to about 40 percent of the original farm NOT THE ORGINAL 10 PERCENT the government did not want planted. Also the BIG (no longer family-owned farms) were able to get millions in farm subsidies.

    THE SOLUTION TO TODAYS FARM SUBSIDIES SPENDING CUTS IS SIMPLE. Revert back to the original purpose of the farm subsidies legislation to help the small family-owned farm stay in busness.. HOW? See that subsidies go ONLY TO FAMILY-OWNED FARMS. If 60% of your incomes is DIRECTLY FROM FARMING, you qualify for farm subsidies as shown on your income tax return. IF NOT, you are no longer a family-owned farmer and thus not eligible for any subsidies. This removes corporate welfare from agriculure. It also stops the HIGH PAID PART-TIME FARMER (they work on the farm using some of their PAID DAYS OFF, SICK TIME ETC.,-- no more than 20 day a years actually working on the farm while making $50.00 an hour or more at another job or pay someone $10 an hour to do their farming for them).from getting farm subsidies.
  • me  •  Richardson, Texas  •  3 months ago
    Ron Paul 2012 end the Fed at least it is a start in the right direction............
 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

Trading Center

Yahoo! Finance on Facebook

  YAHOO! FINANCE ON TWITTER