June 29 (Bloomberg) -- To make sense of the long quarrel in Congress over the five-year, $500 billion bill to overhaul agricultural policy, look back in time, way before red and blue became the colors that define U.S. politics.
Instead, think the Blue and the Gray. It’s North versus South, big state against small -- rivalries that date to the earliest days of the Republic. Lawmakers from Georgia and Arkansas demand price protections for rice and peanuts. Midwesterners hold out for generous crop insurance for corn. Meanwhile, members from Northern cities stand guard over money for food stamps.
“The Constitution was set up as a series of compromises among regions,” says former Kansas Representative Dan Glickman, who was secretary of agriculture under President Bill Clinton. “You still see that in the farm bill.”
A massive, twice-a-decade undertaking, the farm bill runs more than 1,000 pages, detailing the budget for the U.S. Department of Agriculture, Bloomberg Businessweek reports in its July 2 issue. It spells out which crops and products will get special treatment and which won’t; how far the government will go to protect farmers against losses; and how to divvy up billions of dollars for research, rural development, conservation, trade, and agricultural promotion abroad. Most of the money doesn’t even go to farmers: Four-fifths of the total is spent on food aid for children and the poor.
The farm bill’s roots extend to the Great Depression, when the government paid farmers suffering from low prices and overproduction to dump milk and plow under cotton. Over the decades, as surpluses disappeared and exports boomed, the system evolved into a safety net that protected farmers when prices were low and disasters struck. Since 2002, direct subsidies, loans, and payments based on crop prices have continued despite record profits. This year the current farm bill, set to expire in September, will send $11 billion in subsidies to farmers who are already expecting profits of $91.7 billion, according to the USDA.
In better times, wrapping up a farm bill was a matter of throwing money at everyone. Deficit fears won’t allow that this year. Federal payments to farmers who don’t need them are an especially tempting target.
“Frankly, this is an opportunity to make radical changes to the way farm policy is conducted in America,” says Ken Cook, head of the Environmental Working Group, which tracks agriculture subsidies. “When farmers are so profitable, when is the time if not now?”
In the Senate, Republicans joined with Democrats to easily pass the bill 64-35 on June 21. Don’t expect similar harmony in the House when it gets to work on its version in July. House members from Southern states that produce rice and peanuts complain their Senate colleagues gave too much away.
The Senate’s plan saves $24 billion over 10 years, in part by replacing $5 billion in yearly crop subsidies with less costly crop insurance to protect farmers against bad weather or unexpected price drops. Southerners in the House say this concession favors profitable Midwestern corn and soybean growers, who no longer depend on the subsidies. Corn farmers, who raise a crop worth $76 billion last year, would lose $6 billion in payments over a decade under the Senate bill, while growers of rice, a $2.6 billion crop, would lose $2.9 billion.
One possible solution -- adding southern-friendly subsidies to the House bill -- has run straight into funding for food stamps. The Senate bill would reduce the program by $4.5 billion. House Republicans want larger cuts, which may be necessary to fund bigger crop payments. That could crash any deal between the Senate and House. Senate Agriculture Committee Chairwoman Debbie Stabenow, a Michigan Democrat, says deeper cuts to food stamps are “absolutely unacceptable.”
Congressional leaders say they’d like to reach a deal before the end of September. That’ll be tough to do in the middle of presidential and congressional elections. With all of Washington waging the war between the parties, there isn’t much time left for the war between the states.
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