Porky Iowa, Texas Lead the Farm Subsidy Pig Out: Amity Shlaes

Commentary by Amity Shlaes

July 12 (Bloomberg) -- Meet Senator Tom Harkin, (D-Pork).

Well, actually he is Senator Harkin, (D-Iowa).

It is the pork part that comes to mind in the Senate Agriculture Committee chairman's briefings this week about the new farm bill. Harkin promises to ``ensure the vitality and prosperity of America's farms.''

The word ``pork'' nowadays has a generic meaning, referring to all goodies that lawmakers give to constituent groups. But the term applies especially well to agriculture, where the subsidy recipients are particularly piggy. Harkin's Iowa received about $15 billion in farm subsidies from 1995 to 2005.

And Iowa isn't alone among the swinish. The state ranks second in the nation behind Texas when it comes to agricultural subsidies. Farm subsidies in the U.S. cost about $37 billion annually in taxes and higher prices, or about $322 per household, according to Brian Riedl, who studies farm subsidies for the Heritage Foundation.

Perhaps the country is ready for change? People in Washington this week are saying the new agriculture bill faces a series of obstacles before passage. But a look back at the tradition, which includes both actual swine and the state of Iowa, suggests that agriculture spending will always be with us.

Washington's involvement in agriculture dates to the Homestead Act of 1862, which gave title to settlers of plots of 160 acres. This led to intense farming.

Further government involvement came in the 1920s, when farm prices plunged after World War I. Lawmakers from farm states began trying different devices to help the farmers, who, the New York Times reported, sought ``relief in whatever form.'' Maybe taxes could be lowered to offset the price drop? Freight rate reductions might compensate.

`Take Cabbage'

``Take cabbage,'' argued William Fitzwater, the head of the Farm Labor Union, in one typical 1924 discussion. ``The best Rio Grande cabbage sells for about $7 a ton. The cost of freight to Chicago and icing brings it up to $42.''

Democrats fought a tariff on calcium arsenate, the substance used to combat the boll weevil. The McNary-Haugen plan supplied export subsidies to raise farm revenues at home.

All these helping hands ensured overfarming of the Great Plains -- with disastrous consequences. As Timothy Egan writes in ``The Worst Hard Time,'' a book about the Dust Bowl, topsoil erosion from overplowing readied the landscape for the dust storms of the 1930s, which turned state capitals black in daytime and filled the lungs of small children with deadly sand.

Dust Bowl

Both low prices, and then, the Dust Bowl, inspired New Dealers to push Washington deeper into the business of managing the agricultural economy.

Franklin D. Roosevelt led the country in passing the Agricultural Administration Act, which taxed middlemen in order to give a greater share of revenue to farmers. The Act also restricted production and sent subsidies to those on the farm. Six million young pigs were killed early to drive up pork prices; farmers were instructed to plow crops under.

Even the proudest of New Dealers doubted the process at times. Henry A. Wallace, FDR's agriculture secretary and a man born in Iowa, received many letters asking about the purpose of the pig slaughter. Perhaps, he mused aloud in a moment of doubt, every ``little pig has the right to attain before slaughter the full pigginess of his pigness.''

But that doubt was brief. As scholars E.C. Pasour and Randall Rucker report in ``Plowshares & Pork Barrels,'' a wondrous history of farm pork, employment at the U.S. Agriculture Department had tripled to 85,000 by 1935 compared with 1920s levels.

More Subsidies

Roosevelt opponents deplored the taxes of the Act, which they labeled ``another weird measure.'' The Supreme Court ruled that it was unconstitutional, temporarily slowing the growth of subsidies. The New Dealers soon passed another agriculture law that also fiddled with production, prices and income.

And so the subsidies accumulated, like slop in the trough, on through Dwight Eisenhower, John F. Kennedy, Richard Nixon and even Ronald Reagan, who reportedly kept a bottle of corn gluten in his desk to feed the squirrels and remind him of the farm lobby. In the 1990s, Congress passed, and President Bill Clinton signed, the Freedom to Farm Law, aimed at phasing out subsidies by 2002. Two years later, lawmakers and the same president turned tail and went back to subsidies.

Even before ethanol surged back, yet other lobbyists were updating the arguments for subsidies with an environmental twist.

One could hope that the new Democratic leadership in Congress might lead a subsidy cutback. After all, two-thirds of farmers receive no subsidy.

`Prove It'

As Chris Edwards of the Cato Institute points out, the Democrats won the House promising to help average families. ``Now they have a chance to prove it,'' he says, by ``ending benefits for wealthy corporate farmers.''

President George W. Bush proposed restricting farm-subsidy eligibility to individuals earning less than $200,000 annually, and Senator Harkin has spoken in favor of the concept of such payment limits.

But Congressman Collin Peterson of Minnesota, his counterpart at the House Agriculture Committee, has not, which means, as Harkin knows, such limits aren't likely to become law.

The Environmental Working Group, a green nonprofit that monitors subsidies, recently made public an enticing database of 1.5 million names at mulchblog.com. The site allows visitors to search for the biggest subsidy recipients by name or zip code, which makes it fun to root around.

Given the weak will of both parties, the best we all can do is get comfortable in the pen.

(Amity Shlaes, a senior fellow at the Council on Foreign Relations, is a Bloomberg News columnist and author of the New York Times bestseller ``The Forgotten Man.'' The opinions expressed are her own.)

To contact the writer of this column: Amity Shlaes in New York at amityshlaes@hotmail.com

Last Updated: July 12, 2007 07:28 EDT

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