Lugar, who proposes capping annual farm assistance at $30,000 per recipient, is attempting reform at a time when federal energy policy is making matters worse. By subsidizing corn-based ethanol, the government is making the "crop specific" approach to subsidies increasingly irrational: Ethanol enthusiasm has produced a one-year increase of 12 percent in acres planted in corn, the price of which has risen 20 percent in a year. So farmers are planting fewer acres in soybeans, which therefore also are being made more expensive by federal policy. Furthermore, U.S. agriculture subsidies, which have the World Trade Organization properly frowning, are becoming major impediments to further liberalization of global trade, and hence to the huge potential growth of U.S. farmers' incomes from exports.
Lugar understands farming's timeless hazards -- weather and foreign trade. He does not want to remove, he wants to reweave the safety net for agriculture. He would abandon the "crop specific" approach for one that responds to "whole farm income" by providing an income insurance program for all farms.
On the conservative principle that the way to reduce the supply of government is to reduce the demand for it, Lugar would help to make farmers financially secure, but not with market-distorting entitlements keyed to particular commodities. Rather, he would make all farmers eligible for Risk Management Accounts. Farmers would put up to $8,000 a year into RMAs, to which government also would contribute some of the money saved by sunsetting subsidies.
Agriculture policy -- another manifestation of the welfare state, another contributor to another faction's entitlement mentality -- involves a perennial conundrum of welfare, corporate as well as individual: How do you break an addiction to government without breaking the addicted? If Lugar and like-minded legislators can accomplish their aims, their achievement will be comparable to the welfare reform of 1996 -- the fecund year of the short-lived Freedom to Farm Act. As Lugar again puts his hand to the plow, attempting to plow under a New Deal remnant, wish him well.
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