Issues of concern to people who live in the west: property rights, water rights, endangered species, livestock grazing, energy production, wilderness and western agriculture. Plus a few items on western history, western literature and the sport of rodeo... Frank DuBois served as the NM Secretary of Agriculture from 1988 to 2003. DuBois is a former legislative assistant to a U.S. Senator, a Deputy Assistant Secretary of Interior, and is the founder of the DuBois Rodeo Scholarship.
Friday, November 10, 2017
New Farm Subsidy Programs Were Supposed to Save Money; Instead They've Cost Billions More Than Predicted
The government tends to be terrible at pruning back spending. For evidence, consider the new form of farm subsidies it adopted in 2014—a reform that was supposed to save taxpayers' money but instead is costing us billions more than projected.
According to new analysis by the Environmental Working Group, the government spent $8.8 billion last year on commodity subsidies, paid to the growers of corn, wheat, soy, and other crops. That's about twice the $4.8 billion the feds had anticipated its commodity programs would cost.
As with past subsidy schemes the bulk of these billions are going not to small family farms but to the largest, most prosperous agribusinesses. In 2016, the top 1 percent of subsidy recipients were getting a minimum $116,501 payout, while the median recipient was recieving only $2,479. The 2014 Farm Bill eliminated the government's system of direct payments to farmers, a change that was supposed to scale back spending and spread the subsidy benefits around more evenly. At the time, those direct payments had become a national embarrassment: A 2012 report by the Government Accountability Office found that a quarter of payments were going to producers who were not even growing the crops the program was supposed to subsidize, while another 2,300 farms were getting subsidies while growing no crops at all. They settled on the new Agricultural Risk Coverage (ARC) program, which would pay farmers a subsidy whenever the revenue for their crops fell below a five-year average revenue set by Congress. They also created a smaller Price Loss Coverage (PLC), which pays out if prices fell below a particular point. This, proponents argued, would save taxpayers money by only funding farmers when their revenue saw a sudden drop.
The Congressional Budget Office (CBO), working with revenue and price projections provided by Congress, estimated that these new subsidy schemes would cost $2.5 billion in 2015 and then only about $4.8 billion in 2016—almost a $1 billion less than what the direct payments would have cost.
Instead, the new programs paid out $5.7 billion in 2015 and a staggering $8.82 billion in 2016, a combined cost overrun of $7.2 billion. "It has cost us a lot more money than if we had just kept paying farmers to be farmers," says Sewel...more