A Stitch in Haste

Another quick example of the out-of-control, fiscally irresponsible, economy-crippling, tax-and-spend Republicans:

After two months of fierce resistance from farmers and Congress, the Bush administration has dropped an effort to cut government payments to farmers.
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Cuts in payments would be felt most keenly by cotton and rice farmers in the South and California, but across the country, growers oppose any cuts.

Bush asked Congress in February to slash billions of dollars from payments to large farm operations, dropping the maximum farmers are allowed to collect from $360,000 to $250,000 and closing loopholes allowing some growers to obtain millions of dollars. He also proposed to cut all farm payments by 5 percent.

On Tuesday, Agriculture Secretary Mike Johanns told key senators that while spending must be reduced to hold down the federal deficit, he is willing to look elsewhere in agriculture programs for cuts.
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Johanns has argued that bigger operations collect too big a share of government payments. According to his department, 8 percent of producers receive 78 percent of subsidies.

Sheer madness -- thirty billion dollars worth. A measly five percent reduction was too much for this Congress -- this Republican Congress?

Remind me again why there’s a “libertarian” wing of this party?

POST SCRIPT: On the other hand, the House voted to make permanent the repeal of the death tax, the worst example of pure Rawlsian evil ever contrived. Good. Let's hope the Senate doesn't drop the ball on this one. Question: If my intended beneficiaries aren't entitled to my fortune, then what makes you think you are? That is the Great Blank-Out that I have never heard a Rawlsian adequately address. Because, of course, it can't be adequately addressed.

The White House is considering taking another stab at curtailing what may be the single dumbest idea in all of government:

President Bush is asking Congress to halt farm subsidies to anyone making more than $200,000 in adjusted gross income. The current income cap is $2.5 million.
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"Farm subsidies are America's largest corporate welfare program," said Brian Riedl, a budget expert at the conservative Heritage Foundation think tank. "They are promoted as saving small family farmers in a Norman Rockwell vision of the world. The reality is, the majority of farm subsidies go to corporate farms."
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The income limit is a new approach to an old problem. The ceiling on farm payments is $360,000, but loopholes allow some people to collect millions of dollars above the limit.

Two hasty stitches:

1. It bears emphasizing that the proposed $200,000 limit, let alone the current $2.5 million ceiling, is a profit figure, despite being called "adjusted gross income." It is not a revenue figure. It is comparable to an employee's salary or a small businessman's gross margin.

Which means that farmers are making -- netting -- as much as $2.5 million per year and still receiving taxpayer subsidies. Even the Administration's reform proposal would allow a farmer to clear up to $200,000 per year and still receive agricultural welfare.

Could you imagine, say, a New York City investment banker who makes $200,000 a year crying poverty and asking for a welfare check? Or how about the owner of a gay bar in the Castro who clears that much annually -- should he get an extra check courtesy of taxpayers? Are such people "poor"?

But if you're a farmer -- a millionaire farmer -- then the indignation somehow vanishes and too much subsidization is never enough. Because food is -- somehow -- "different."

It boggles the mind.

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2. There is a simple reason why farm subsidies never die: The United States Senate. All the sparsely populated agricultural states have wildly disproportionate representation in the Senate -- which is reflected in the size, scope and seeming permanence of farm welfare. It simply has too many bodyguards in the World's Greatest Deliberative Body to come to any real harm.

Which is not to say that we should abolish the Senate. But as current demographic trends continue, the composition of the two chambers of Congress will diverge even more. Which may be good for gridlock when it comes to preventing new bad programs, but will also be an impediment to scrapping existing bad programs.

Two reasons: First, as I've mentioned before, is the over-representation of the agricultural states (qua underpopulated states) in the Senate. When North Dakota has the same representation as New Jersey, national policy is going to equate a few North Dakota farmers with many New Jersey non-farmers. Which augurs well for North Dakotans and bodes ill for New Jerseyites.

Second is, perhaps surprisingly, the exact same phenomenon in the House:

A group of dissident lawmakers led by Representatives Ron Kind, Democrat of Wisconsin, and Jeff Flake, Republican of Arizona, is still pushing a plan to curtail the subsidies sharply.

But they have been largely outmuscled by the Agriculture Committee. It 46 members are slightly more than 10 percent of the House but their districts received more than 40 percent of all farm subsidies from 2003 to 2005, according to a database compiled by the Environmental Working Group, which opposes the subsidies.

Talk about the politician foxes guarding the henhouse subsidies.

Theoretically, in a world where politicians were not, by definition, moral defectives, it would make perfect sense for the Agriculture Committee to consist exclusively of members from agricultural states. Each to his legislative comparative advantage.

But in the real world -- where almost every action by Congress is driven by rent seeking, where every vote is sold either to lobbyists or the leadership, and where the question is never, ever, "How little can we tax and spend?" but always "How much can we tax and spend?" -- such a paradigm is a guarantee that reform is doomed from the outset.

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More:

In the fall of 2005, grain prices plunged temporarily because of a bumper corn harvest and transportation problems resulting from Hurricane Katrina. Thousands of farmers locked in huge LDP profits, storing their grain and selling it for much more later when prices recovered. Farmers pocketed an estimated $3.8 billion more than was needed to give them the guaranteed price.

Could you imagine a government program in which an investment bank were eligible to apply for a taxpayer bailout whenever its portfolio fell, without actually being required to sell the investments? And later, when stocks rose again, the Wall Streeters could sell the investments and book the profits anyway, in addition to the taxpayer-subsidized compensation for the paper losses that never materialized?

Absurd? Yet that is exactly how the loan deficiency payment -- "LDP" -- program works for our "noble" Americans farmers, thanks to their "dedicated public servants" in Congress.

The mind reels.

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More thoughts at no third solution, Cato Daily Dispatch.

Despite ever-increasing crop prices -- and with them ever-increasing farm incomes and ever-increasing farmland values -- the Senate has concluded that farmers need ever-increasing taxpayer subsidies:

Tapping savings resulting from tighter tax rules on business, the Senate Finance Committee yesterday approved the creation of a $5 billion fund that would compensate farmers hit by weather-related losses over the next five years.

The proposed Agricultural Disaster Trust Fund is part of a nearly $14 billion package of tax incentives for rural conservation programs, bioenergy development and young farmers, outside the existing farm subsidy program.

Of course, why farmers can't be expected to buy their own property insurance -- like everyone else in the country -- is left unexplained.

More:

Sen. Kent Conrad (D-N.D.), who has led the fight for the disaster program, said that "an awful lot of people around this country are going to benefit."

An awful lot more -- every single taxpayer in the country -- will not. What more need be said?

And remind me again how the Democrats -- such as Senator Conrad and his co-conspirators on this bill, Tom Harkin (D-Farmland) and Max Baucus (D-Ranchland) -- will be the party of fiscal responsibility after the 2008 election?