Farming pay dirt

What excuse does Senate Majority Leader Harry Reid, Democrat from Nevada, have for allowing the Senate Agriculture Committee to introduce an anti-reform farm bill today? In the first place, Democrats are likely to gain several Senate seats in next year’s elections. In the second place, with the ethanol- and trade-fueled farm economy enjoying a boom that will send farm income and many commodity prices to record levels this year and farmland prices through the roof, when can taxpayers and consumers expect the costly, unfair farm-subsidy programs to be reformed?

Not that there isn’t bipartisan pressure on the agriculture committees, which are populated by farm-state senators and representatives who want to keep the self-serving subsidy programs in place. About two-thirds of crop subsidies are collected by the wealthiest 10 percent of farmers, who, for the most part, are located in states whose members of Congress are disproportionately represented on the agriculture committees. Indeed, for the 2003-05 period, more than 50 percent of all farm subsidies were collected by farmers in eight states, where much of the subsidy-laden commodity crops (corn, cotton, rice, soybeans and wheat) were produced. The subsidy system is so out of kilter that the Senate bill reportedly will allow part-time farmers with adjusted gross incomes as high as $750,000 to receive farm payments. That’s 12.5 times the 2005 median family income of about $60,000.

“Direct payments,” which were initiated in the 1996 Freedom to Farm reform bill as temporary, transitional subsidies to help wean farmers from the public payroll, probably represent the most egregious subsidy of all. The 2002 farm bill shamefully extended direct payments even as it eviscerated the historic reforms enacted in 1996. Because direct payments are based on past production, farmers receive these taxpayer-funded subsidies even when they are earning record profits. Direct payments over the next five years will likely exceed $25 billion.

These handouts are being made while Social Security payroll taxes paid by low- and middle-income workers are contributing to the current (and soon-to-end) Social Security cash-flow surplus. The federal government is using that surplus to finance other programs, including subsidies to wealthy farmers whose income dwarfs the income of low- and middle-income workers, millions of whom will be clobbered by Social Security’s 75-year unfunded liability of $6.7 trillion.

The question for the Republican and Democratic leadership regarding reforming costly farm subsidies is one and the same: If not now, when?