LLR Pages

Thursday, July 26, 2007

U.S. Federal Farm Subsidies Now Immune to Congressional Reform

Collectivistic policymakers in the Beltway really have no idea how economics truly work: when you subsidize a business, you create more products and services than what the free market demands, thus undermining their value. When you eliminate subsidies to businesses and let the free market decide whether that business should continue, more than likely the net result will be that there will less of that business' products and services, thereby increasing their value. Although the initial downside to that is that prices will go up, that's only sustainable in the short term, not in the long term, because other unsubsidized businesses will compete and prices will go down due to supply and demand.

This simply isn't the case when it comes to U.S. farmers in the agricultural industry. According to the New York Times, congressional critics of past farm subsidies, including Democratic legislators, who have been opposed to such hand-outs and the new farm subsidies bill pending in Congress, are now supporting the bill because, as the Times reports, it "draws a veto threat" from Bush.

Here's more from the farm bill subsidy claptrap that the Times reports:

WASHINGTON, July 25 — For the many critics of farm subsidies, including President Bush and Speaker Nancy Pelosi, this seemed like the ideal year for Congress to tackle the federal payments long criticized as enriching big farm interests, violating trade agreements and neglecting small family farms.

Many crop prices are at or near record highs. Concern over the country’s dependence on foreign oil has sent demand for corn-based ethanol soaring. European wheat fields have been battered by too much rain. And market analysts are projecting continued boom years for American farmers into the foreseeable future.

But as the latest farm bill heads to the House floor on Thursday, farm-state lawmakers seem likely to prevail in keeping the old subsidies largely in place, drawing a veto threat on Wednesday from the White House.

“The bill put forth by the committee misses a major opportunity,” Agriculture Secretary Mike Johanns said Wednesday. “The time really is right for reform in farm policy.”

Faced with fierce opposition from the House Agriculture Committee, Ms. Pelosi and other Democratic leaders lowered their sights and are now backing the committee’s bill, in part to protect freshman lawmakers from rural areas who may be vulnerable in the 2008 elections.

Instead, Ms. Pelosi helped to secure more modest changes, pushing the committee to provide $1.8 billion for programs that aid fruit and vegetable growers, generating support from lawmakers in states like Florida and California, Ms. Pelosi’s home, and deflating some traditional opposition to the farm bill.

All this talk about "protecting freshman lawmakers from rural areas" is just political speak for immunizing newly-elected lawmakers from political accountability, which is pretty much non-existent in the world of Congress. But Pelosi, a Democrat who has always voted for farm subsidies when they merely served her political interests, thinks by making a political trade-off with her lobbyists by going after the so-called "rich farmers" and allowing farmers to dry up their subsidy caps in the name of protecting corporate farms will somehow level the playing field.

This is what the Times wrote in part:

At the same time, she pronounced the bill a “good first step to reform” by ending subsidies for the richest farmers — those earning more than $1 million a year — and closing a loophole that let some farmers exceed subsidy limits by owning partnerships in multiple farms.

Both Pelosi, the Democrats, and the Republicans have no idea how destructive farm subsidies are, given that, for decades, they've only encouraged waste of crops and ensured a protectionistic safety net for long, established corporate farms while insulating them from new start-ups in the process. It's nothing more than a sick, corrupt protection racket for the corporate farm machine.

Democrats who say they are opposed to farm subsidies are only for them when they work to their advantage. The same goes for the Republicans. And they continue to misuse our tax monies and abuse their congressional power at the expense of their constituencies about whom they claim to care.