Federal budget's weight problem

Posted: Nov 01, 2001 12:00 AM
One of the problems that people like me have in controlling our weight is that once it has risen above some threshold level, there is a tendency to just let oneself go completely. In other words, if someone believes they are grossly overweight to begin with, what's another pound or two? The same thing happens with the federal budget. Once the budget deficit went beyond a controllable level, Congress often took the attitude that a few more billion wouldn't matter much. But as the late Sen. Everett M. Dirksen, Illinois Republican, once observed, "A billion here, a billion there, and pretty soon you're talking about real money." It is tempting in times like these to let fiscal discipline slide. There are obviously legitimate needs for additional spending on defense, airport security, public health and other critical programs. For such things, the national checkbook is, and should be, open. But there is a tendency as well for lesser programs to piggyback on essential ones and get more than they would otherwise get under normal circumstances. That is the case with the farm bill moving through Congress. Such bills are passed in 5-year cycles, the last one coming in 1996. It is just serendipity for farmers that their quinquennial request for government aid just happened to come when the federal checkbook was open for other purposes. They have reacted like children whose siblings just got an increase in their allowance and want one, too. The principal bill is the "Farm Security Act of 2001," authored by Rep. Larry Combest, Republican of Texas and chairman of the House Agriculture Committee. This legislation passed the Republican-controlled House of Representatives on Oct. 5 by an overwhelming 291 to 120 vote and is now pending in the Senate. It would continue the tradition of virtually open-ended handouts to farmers based primarily on what type of commodity they produce. The alternative bill in the Senate has been put forward by Richard Lugar, Republican of Indiana. It would replace the commodity-based method of the Combest bill with a broader, more flexible approach to farm aid. It would provide about the same level of support for farmers in general, but in a way that is less distorting to prices, more in compliance with international trade rules, and more economically and fiscally responsible. The House and Senate have always looked at agricultural issues from a different perspective. The House has tended to see them in a more commodity-specific way. Indeed, it used to have subcommittees devoted exclusively to particular commodities such as rice and wheat. The Senate, on the other hand, has usually taken a broader view. This follows from the fact that congressmen from agricultural districts tend to represent farmers growing one main crop, while senators have to be concerned with a wider variety of agricultural production. One of the problems with the House approach is that aid goes to some products and not others, and those that get aid tend to be those that were dominant when the original farm legislation was enacted back in 1933. The result is that farm production decisions are distorted in favor of some products, such as corn and soybeans, and against others, such as livestock and vegetables. This is economically inefficient. We are producing too much of some commodities and too little of others. It also creates problems in international trade negotiations, where the United States has been trying for years to phase-out all government subsidies. It would be in the interest of U.S. farmers to have total free trade in agricultural products because, in general, they are the low-cost producers. Thus, if every country abolished all its farm subsidies, U.S. farmers would gain market share. This is not really a debate about whether farmers should get aid. It is politically unrealistic to think that farm aid will ever completely be abolished. Congress tried to do that a couple of times, most recently in 1996, and it always reinstated it the first time agricultural prices took a dive. So the real question is how to provide such aid. Instead of providing price supports for specific commodities, economists prefer general support for farm incomes that is not tied to production. The idea would be to increase agricultural efficiency while still providing the same overall level of support to farmers. That is what Canada does and what Lugar is trying to do. His bill would give farmers about the same total amount of aid as Combest, but in a way that is less economically distortionary. The Lugar approach would also be fairer, giving less to rich farmers and more to those who need it. Right now, almost three-fourths of farm aid goes to less than 20 percent of farms. The Combest approach would not only preserve the status quo, but make the distribution of farm aid even more unequal. The Lugar approach would be "progressive," spreading farm aid around to more farmers while improving agricultural efficiency. Ideally, farm aid should disappear. We have successfully reformed welfare for those who live in inner cities and should do the same for farmers. In the meantime, the Combest bill would be a step backward. The Lugar approach makes more sense.