The "Bloated" Farm Bill

The irony is inescapable. Food riots are breaking out in many parts of the world and last week President Bush ordered $200 million in immediate aid to the poorest nations through the United States Agency for International Development.

At the same time, Congressional leaders are putting the finishing touches on the Farm Bill that has been the subject of so much controversy in recent months.

Details are expected to be released this week, but at an estimated cost of $300 billion over five years, the bill is expected to retain most of the subsidies to US farmers. Taking only a small step away from the Bush administration's "Food for Fuel" strategy, the bill is also expected to reduce the tax credit for ethanol producers from 51 cents per gallon to 45 cents, a 12% reduction.

The International Food Policy Research Institute estimates that biofuel production accounts for between one-quarter and one-third of the recent spike in global commodity prices, and the head of the UN World Food Program has said that an additional 100 million people, who did not need assistance six months ago, are now unable to purchase food.

I don't know how to calculate the impact of the 12% reduction in the ethanol subsidy, but it doesn't seem like this will do much for the 100 million people in need of assistance. Iowa State University economist Bruce Babcock has estimated that the reduced subsidy for conventional grain-based ethanol will lower the price of corn by less than 3 cents a bushel (less than 1%)

This isn't too surprising: spending 12% less on a bad idea doesn't make it a good idea.

On a positive note, although the bill under discussion is over budget by $10 billion, this is due to additional funding for national food aid programs in the U.S. The extra $10 billion would be offset mostly by additional fees on imports rather than additional taxes (Under federal budget rules Customs user fees do not count as taxes). So this will only affect Americans who buy imports, which is nearly everybody.

So, how much of the $10 billion will be paid by reducing payments to high-income farm operators and landlords? As things now stand, it appears that the final bill will have very little impact on subisdies that are now provided with few limitations. The current "soft" cap of $2.5 million doesn't even apply if 75 percent or more of the applicant's income derives from farming.

Last December, Sen. Byron Dorgan (D-N.D.) and Sen. Charles Grassley (R-IA) proposed an amendment to the House version (H.R.2419) that would have included payment limitations and a "hard" cap of $250,000 in adjusted gross income. Unfortunately, the Dorgan-Grassley amendment failed to achieve the 60% supermajority required for passage. Once again, 99 of 100 Senators voted, and only Sen. John McCain failed to vote. If McCain wanted to "take a stand" on this issue, he would have had to show up.

Even a "hard" cap of $500,000 would have reduced payments in 2006 by an estimated $230 million, and would have had an impact on less than 1 percent of farm operators who exceeded this level of income. These 10,000 farmers would still receive $30 million more than the $200 million we're contributing on a global basis to nations facing serious food shortages.

In a press conference today, President Bush criticized Congress for "considering a massive, bloated farm bill that would do little to solve the problem" of escalating costs for consumers, and he's right.

Still, it looks like a compromise Farm Bill being worked out in the House and Senate will make only minor changes in individual subsidies. Expect to see a soft cap of $500,000 on non-farm income, so large multi-million dollar farm operations can continue to receive payments. This will produce only minimal savings, but provides political cover for a Congress that is unwilling to face into the issue.

"Everybody took some cuts," according to Iowa Sen. Tom Harkin, chairman of the Senate Agriculture Committee.

Well, almost everybody.

An $18 Billion Drop in the Bucket

In a time when the world is facing massive food shortages, increasing controversy over the administration's failing "food for fuel" energy policy, oil reaching $120 a barrel, and a skyrocketing national debt, you would think it would be a simple matter to put an end to tax subsidies for the Big Oil companies.

After all, Exxon Mobil recently reported the largest profit of any American corporation in history, and their stock has tripled in the last 3 years. All the Big Oil companies seem to be doing pretty well (actually, they're doing very well), so you wouldn't think they really need the money. Maybe we could even use the $18 billion in subsidies to Big Oil for something more productive... like subsidizing the development of wind, solar, or other renewable energy sources.

Well Congress is considering doing just that. The Renewable Energy and Energy Conservation Tax Act (HR 5351) passed by the House of Representatives in late February has been sent on to the Senate and is in now being reviewed by the Senate Finance Committee. If passed, it will go on to President Bush for his signature and be enacted into law.

Seems fairly obvious, right? This won't solve the energy crisis, but at least it's a step in the right direction. Who (apart from Big Oil) would oppose such legislation? Well....let's slow down and take a look at how the process really works, and how good ideas get lost in political machinery that runs on the "fuel" of special interests and big campaign contributions.

Congress took a run at the issue last year with legislation re-titled as the Energy Independence and Security Act of 2007, which was passed into law last December. The original bill, which passed the House in January 2007, did include a cut in subsidies to Big Oil. Even under pressure from President Bush who made it clear that he would veto any bill that removed the Big Oil subsidies, the Senate had a majority.

But with the bill being filibustered, they were only one vote shy of the 60 votes needed to invoke cloture, and this provision (along with several others) was removed before passage of the final bill.
A total of 59 Senators from both parties agreed that Big Oil subsidies should be laid to rest, and voted in favor of cloture. Hillary Clinton voted to end the filibuster and move forward with the original bill. So did Barack Obama. Our own Republican Senator Chuck Grassley also voted to end the filibuster, as did Iowa Democratic Senator Tom Harkin.

Only one Senator chose not to stand up and be counted: John McCain.

So the final legislation did not include the cut, and Big Oil subsidies continue. It's all in the Senate records.

Keep an eye on this issue. One of McCain's advisors was asked in an interview last week if McCain will support the elimination of subsidies to Big Oil. He responded that McCain "isn’t afraid to stand up” to big business.

Maybe...but first you have to show up.
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An interesting footnote, courtesy of Wikipedia. The term 'filibuster' was first used in 1851, and was derived from the Spanish "filibustero" meaning 'pirate' or 'freebooter'. Somehow this seems especially fitting in this case.

Will the Real John McCain Please Stand Up?

In the world of politics, candidates who "flip-flop," "waffle," or simply "change their mind" are hardly a rarity. This can be a legitimate change in personal philosophy, but more often it is in response to the latest political poll.

In the case of John McCain, the cause of his many "changes" is more complex. Because of McCain's reputation as something of a maverick within his own party, Republicans have been slow to embrace his candidacy. Many still don't, other than as the only alternative to a worse fate: a Democrat in the White House. But to get the nod from the Republican National Committee he's had to make a lot of changes. The list is lengthy, but to include just a few:

• McCain was vocal in his opposition to the Bush tax cuts for the wealthy, but now says he will support extending these when they expire in 2010.
• His initial opposition to Bush's policy on interrogation of military detainees (which he is uniquely qualified to offer) has now changed to fall in line with the President's view.
• He was initially opposed to Bush's plan to privatize Social Security, he now says he supports this as an alternative.

The list goes on and on, and can be found on numerous websites. One site that includes links to source documents is "The Carpetbagger Report" at:

http://www.thecarpetbaggerreport.com/archives/15227.html

So, McCain's made more than his fair share of "changes," but that's not my real objection.

As an independent, I'll vote based on my view of what each candidate believes. My dilemma is that I'm more inclined to agree with his positions on most of these issues before he changed them to fit conservative party dogma. I'm almost tempted to support McCain on the premise that, if elected, he would govern based on what he truly believes. But I shouldn't have to make this choice, and I have to take what he says today at face value (at least until he says something different).

Unfortunately, all this makes McCain look like a clone of the current administration and diminishes his image as a person of strong character and personal integrity (which I believe he truly is). This may play well with the Republican Party, but it won't get him elected.

And it's the last thing we need.

[Originally posted on 4/26/08 at desmoinesregister.com]