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Cutting farm subsidies — barely

Published: May 5 2008, 5:18 PM
Category: Opinion
Topic: Editorial

Congress is still wrestling with the farm bill while everyone’s food bills keep going up. Given the glacial speed with which Congress adopts reforms of any kind, don’t expect more than marginal progress this year.

The farm bill was originally a product of the Great Depression of the 1930s, with the intention of providing price supports in bad years. With the decline of small family farms and the rise of large farms owned and operated by large companies, the need for subsidies is much less compelling. Nevertheless, the self-interests of producers of various commodities are best served by keeping things as they are.

A few months ago, when debate on the bill began, attention focused on the names of “farmers” in Manhattan, Palm Beach and Beverly Hills who regularly received subsidy checks. Members of both parties agreed that something needed to be done about it. President Bush complained about “multimillionaire” farmers and was joined by a diverse group of supporters, including Oxfam and Citizens Against Government Waste.

The best the Senate Budget Committee could come up with is to phase out subsidies for farmers with annual incomes above $950,000. There would be an initial 10 percent cut, then gradual reductions to eliminate support for this group. This would be on top of an across-the-board cut of 2 percent in all direct payments — a drop in the bucket that has sloshed out more than $5 billion a year in subsidies since 2004.

Meanwhile, speaking of incremental reform, Congress is losing some of its infatuation with corn ethanol. The Senate Budge Committee proposes cutting the current 51-cents-a-gallon tax credit for making the stuff to 45 cents. It would also create a new credit for cellulosic ethanol, made from switch grass, wood chips and other non-food produce. This credit would be $1.01 a gallon; however, this type of ethanol has yet to be produced commercially, so the dollar impact would be small, despite the potential promise involved.

Meanwhile, corn has gone from $3 a bushel a year ago to $6 today. That’s one reason why any product made with corn costs more at the grocery store. The current farm bill won’t do much to solve that problem, nor will the slight reduction in subsidies to multimillionaire farmers. It could do a lot more. If you agree, let Sens. Barbara Boxer and Dianne Feinstein and U.S. Rep. Mike Thompson know.

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