The Bush administration is set to take on one of the great scandals of American governance: a system of farm subsidies so perverse that it should get whatever the equivalent of an NC-17 rating is for a federal program. Decent people everywhere should want to avert their eyes. In seeking to cut and reform the subsidies, President Bush will provoke a fight every bit as fierce, in its own way, as that over Social Security, prompting opposition from the forces of greed and political cowardice.
Farm subsidies as we know them grew up around the Great Depression, when they didn't work particularly well, and they have maintained their tradition of not working for more than seven decades now. As The New York Times recently reported, farm income doubled during the past two years, and -- holy soybean! -- farm subsidies still went up 40 percent. Farmers game the commodity markets to get both high prices for their products and high federal subsidies. It goes to show that few things are as addictive and distorting as a government handout.
The system is supposed to help family farms -- but if this is a family-farm-friendly government program, what would a hostile one look like? Family farms aren't big enough to garner the largest subsidies and are squeezed by the way the federal payments increase land values and stimulate overproduction. "The subsidies reward the guy who gets higher yields with higher subsidies, and he's able to buy out his neighbor and get even bigger," says Dennis Avery, an agriculture expert at the Hudson Institute.
Ten percent of farms -- i.e., the biggest ones -- receive 60 percent of the subsidies. According to Brian Riedl of the Heritage Foundation, giant Riceland Foods got $110 million in federal largess alone last year. By his calculation, the feds could guarantee every full-time farmer an income of $35,000 a year at a cost of "merely" $4 billion. Subsidies now run roughly $15.7 billion annually.
American agriculture has its share not just of welfare queens, but welfare cheats. Federal subsidies are technically designated only for those who actually work in farming. But that restriction is evaded, sometimes by people occasionally participating in farm-related telephone conference calls. Dubious partnerships are a way to get around restrictions on how much any one operation is supposed to get in federal payments. As a result, some agriculture businesses are little better than Enrons with tractors.
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