1 Action Lawmakers Could Take to Make Food Stamp Reform Much More Likely

Congressional Republicans could imperil both the welfare-reform and the farm-bill reform efforts by failing to learn from history and making the same unforced errors they did three years ago.

Next year, Congress is set to consider a comprehensive agriculture bill (aka “farm bill”), as well as reforms to the Supplemental Nutrition Assistance Program (SNAP, aka food stamps), the nation’s largest food-assistance program.

Farm bills have long combined agricultural policy with welfare programs that provide food assistance to lower-income Americans.

But conflating two separate policy questions prevents real reform from occurring to either.

Combining agriculture and welfare issues in the farm bill is a classic example of “logrolling,” in which legislators secure support for their programs that would not pass without significant reforms if they were considered separately.

Legislators who support unreformed food-assistance programs and those who support wasteful farm subsidies thus have an incentive to work together to maintain, if not expand, their favored programs.

The process also helps legislators avoid accountability. For example, legislators who would otherwise oppose food stamp legislation without meaningful reform can point to unrelated agricultural programs as the reason for voting for the farm bill.

This allows legislators to pass “status quo” bills, in which food assistance and farm programs do not receive in-depth evaluations.

Furthermore, the current process hurts welfare recipients and taxpayers.

Under the current process, the food stamp program is reauthorized periodically. Reauthorization occurs too infrequently for legislators to ensure that the program is meeting the needs of its beneficiaries.

Additionally, the current process leaves little room for reforms that would put able-bodied welfare recipients on a path to self-sufficiency.

Taxpayers are also regularly expected to shoulder the high costs of the farm bill. Food stamp spending alone is close to double what it was in 2008, which itself doubled from the early 2000s.

In 2013, the last time the farm bill was due for reauthorization, the House nearly succeeded in separating food stamps and agricultural programs. The lower chamber passed two separate bills: an agriculture-only bill and another bill primarily focused on food stamps.

That makes sense, because the name “farm bill” is misleading at best. A vast majority of spending in the agriculture budget goes to food-assistance programs.

According to its most recent budget summary, the U.S. Department of Agriculture (USDA) is estimated to have spent close to 80 percent of its fiscal year 2017 budget on food-assistance programs administered through the Food and Nutrition Service.

A casual observer could simply “follow the money” to conclude that the USDA is primarily a welfare agency that also handles some farm programs.

Now, the time is ripe for Congress to revisit this problem and ensure that both agriculture and welfare programs get the attention they need, beginning with splitting the two into different bills. Moreover, it should take certain steps to make that split permanent.

First, Congress should revive the 2013 effort to place agricultural programs and food stamps on separate reauthorization schedules. This would circumvent legislators’ temptation to combine the programs by ensuring that their reauthorizations are considered at separate times.

Second, Congress should move food-assistance programs from the USDA to the Department of Health and Human Services.

The USDA’s expertise is in agriculture, not welfare. By contrast, Health and Human Services administers many of the nation’s welfare programs and is better suited to administer the food-assistance programs.

Third, congressional oversight over food-assistance programs should be moved out of the agriculture committee to avoid the anti-reform incentives ingrained in the current farm-bill process.

Making these commonsense changes would pave the way for real reform in our nation’s food-assistance programs.

For example, Rep. Garret Graves, R-La., introduced a bill that would require work-capable adults without children to work or prepare for work, through education, job training, or some other work activity, in exchange for food-stamp benefits.

In the long term, this reform would reduce poverty and increase self-sufficiency among these recipients and save taxpayers billions of dollars.

If Congress considers food assistance and agricultural programs separately, it will be empowered to thoughtfully discuss this and other potential reforms. It should do so for the sake of all Americans—from farmers to taxpayers to welfare recipients.

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House Shouldn’t Use Disaster Aid Bill to Funnel More Handouts to Cotton Interests

The House’s disaster aid bill, at $81 billion, is nearly double the Trump administration’s request of $44 billion. These costs are not offset by spending cuts elsewhere.  So much for fiscal responsibility.

Contained within this bill is an expansion of already excessive handouts to the cotton industry.  Using the cover of a disaster bill to funnel more money to cronies at the expense of taxpayers is precisely the type of action that leads Americans to have such a low opinion of Congress.

Besides that, the provision has absolutely nothing to do with disasters.

Specifically, it would make cotton eligible for another farm handout scheme known as the Price Loss Coverage program, which primarily helps large farm businesses meet their financial bottom lines.

This subsidy expansion has been a desire of the cotton lobbyists and the “swamp” for over a year. To date, such a major policy change hasn’t become law.

Cotton growers already participate in the federal crop insurance program. This is a program in which taxpayers pay for 62 percent of the premium costs for participating farmers.

That apparently isn’t enough. So Congress created a special crop insurance program just for cotton called the Stacked Income Protection Plan, known as STAX. Taxpayers pay a whopping 80 percent of the premiums for the new cotton-only program, which covers minor losses for cotton growers.

It gets even worse. In recent years, taxpayers haven’t just subsidized American cotton growers. They also paid $300 million to the Brazilian cotton industry as part of a 2014 settlement agreement.

That agreement was struck in order to resolve a longstanding trade dispute with Brazil in response to past U.S. domestic cotton subsidies, which violated World Trade Organization rules. The $300 million payment is in addition to about $500 million the U.S. paid to Brazil from 2010 to 2013.

Lawmakers intentionally excluded cotton from the Price Loss Coverage program in the last farm bill because of trade-related concerns. By adding cotton to the program, Congress very well could be jeopardizing the settlement agreement and risk trade retaliation.

If the past is any indication, Congress would expect the U.S. to pay off Brazil with even more taxpayer dollars to maintain indefensible cotton subsidies.

A recent report  from the Congressional Research Service provides even more compelling information on just how generous Congress (using taxpayer money) is to the cotton industry.  From 2014-2016, cotton:

  • Was the fourth-largest recipient of farm program support.
  • Received the third-largest amount of farm program support by planted acre.
  • At a cost of $104.56 per acre was more than double the average amount per acre ($48.52) among program crops analyzed.

This proposed expansion of cotton subsidies is fiscal malpractice and completely thumbs its nose at American taxpayers.

Such a major, substantive change to farm policy is also completely inappropriate for a disaster aid bill, especially given the fact that lawmakers will debate the next farm bill in this upcoming year.

The House should immediately remove this additional cotton handout from the disaster aid bill.  It is shocking that lawmakers included it in the disaster aid bill in the first place.

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The ‘Reverse Robin Hood Effect’ of Farm Handouts

The federal government takes the hard-earned money of taxpayers and gives handouts to farm households that generally make a lot more money than they do.

This wealth transfer subsidizes the $15 billion “safety net” for agricultural producers, which ostensibly exists to help these businesses address agricultural risk.

The U.S. Department of Agriculture recently released a report that shed light on this reverse Robin Hood effect.

The numbers are staggering. According to the Agriculture Department, the median income for farm households that received commodity subsidies and crop insurance indemnities were both about $145,000 in 2015. That’s far more than double the median income of all U.S. households (about $56,000).

“In 1991, half of commodity-program payments went to farms operated by households with incomes over $60,717 (in constant 2015 dollars),” the USDA explained. “However, in 2015, half went to households with incomes over $146,126.”

There are similar trends when looking at the distribution of handouts in terms of the gross cash farm income of farming operations. For example, in 1991 and based on 2015 dollars, family farms with gross cash farm income greater than $500,000 received 25.5 percent of commodity payments. In 2015, they received 56.7 percent.

When compared with the past, these subsidies, far more than before, are going to the most prosperous farm households and farm businesses. Certainly, more production does come from larger operations than in the past, but this only explains the distribution of the subsidies. It does nothing to justify the scope or reasons for this massive wealth transfer.

The claim can’t even reasonably be made that the money has to be provided to help the agricultural sector with risk, because most agricultural production receives a small amount of subsidies. The reality is that almost all subsidies go to a small number of farm businesses, primarily the largest producers, who grow a small number of commodities.

There are, in effect, two farm safety nets in the United States. One safety net applies to most agricultural production. Based on a Congressional Research Service report, about 75 percent of agricultural production receives little in the way of subsidies. Further, any assistance that is provided generally helps farmers when they experience disasters and crop losses.

Then there’s the “crony safety net.” The Congressional Research Service points out that almost all of the farm program support (94 percent) goes to just six commodities (corn, wheat, soybeans, cotton, rice, and peanuts).

These six commodities account for just 28 percent of all agricultural production. In other words, almost all of the farm handouts are going to a small subset of agricultural producers for no logical reason.

It gets worse, though. The crony safety net isn’t focused on crop losses and disasters. Instead, it is primarily focused on helping these favored farm businesses with meeting revenue targets and making sure they don’t have to compete in the marketplace like other businesses—including most other farm businesses who also face agricultural risks.

If this weren’t bad enough, the crony safety net is duplicative, providing these farm businesses with more than one way to get taxpayer subsidies when they don’t make as much as they hoped.

Congress should put an end to this crony safety net. If there’s to be any safety net, it should at most provide assistance when there are major crop losses and disasters.

Such a system would minimize the reverse Robin Hood problem. The costs to taxpayers would be far less than they are today, and taxpayers wouldn’t be handing over their money just to help large farm businesses meet their financial bottom lines.

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