Friday, January 05, 2007

Rauch: Target Farm Programs for Real Reform

National Journal's Jonathan Rauch says that if Democrats want to demonstate their reformer bona fides, they can do it by rewriting our depression-era farm programs. He makes a number of good points:

No one, not anyone, would sit down today and design the current farm programs. Although much revised in their details, they remain a paradigm of New Deal heavy-handedness, distorting markets in a way that accomplishes little at high cost. Subsidies are absurdly lopsided: 93 percent of payments flow to five crops (corn, cotton, rice, soybeans, and wheat), which together account for only a fifth of U.S. farm receipts. Meanwhile, 60 percent of farmers and ranchers get nothing.

Payments flow disproportionately to large farms and wealthy farmers. Much of the subsidies' value is sopped up by higher land prices, often benefiting absentee landowners instead of working farmers. Worst of all, the steepest price is paid by desperately poor farmers in the developing world, who must compete not only with American farmers but also with the U.S. Treasury.

Expert opinion has in recent years converged on an alternative approach, called revenue assurance. If the goal is to give farmers more income stability than volatile agricultural markets provide -- and that, these days, is the only goal that most people agree has a public-policy justification -- then revenue assurance is, in principle, a fairer and more efficient way to do it. The government and subsidized private insurers could indemnify farmers against sharp declines in earnings; government-supported "farm savings accounts" could provide further protection...

Environmentalists, anti-hunger groups, and international development organizations are also lobbying for change. Environmentalists want a shift toward conservation, and some, such as the American Farmland Trust, call for replacing crop-specific subsidies with revenue insurance. Bread for the World (motto: "Seeking Justice. Ending Hunger") likewise calls for a subsidy phaseout and an emphasis on mitigating farmers' financial risk. Development organizations want to curtail subsidies that hammer poor farmers in developing countries.

Something else: "Latino groups are rallying around the farm bill," says Rick Swartz, a Washington consultant who is organizing an alliance of reformist groups. Latinos, many of them former field laborers, are the fastest-growing demographic cohort of new farmers, Swartz says, and most of them grow unsubsidized specialty crops. In September, the National Latino Congreso passed a resolution calling for reform -- a first, Swartz says.

Democrats will not have failed to notice that many of these change advocates are core Democratic constituencies.

Nor, probably, will they have missed that today's subsidies flow in vast disproportion to deep-red Republican states in the South and Midwest. Hmm. Then there is the fact that the farm bill is must-pass legislation. Congress will have to send something to President Bush, and he will have to sign something. That is an advantage that welfare reformers never had.

To realize all of this reform potential, two things must happen. First, the Democrats' leaders must seize the issue from the back-room farm interests, elevate it to national prominence, and demand a transformational farm bill instead of a transactional one. Second, Bush must join the effort, as former President Bill Clinton did with welfare. One party can't overhaul a bipartisan program, and only Bush's threat to veto a business-as-usual bill can prevent backsliding.

There are several other reasons Rauch fails to note that this approach makes sense for Democrats.

First, the promise by the Democratic leadership to effectively bring war spending back within the unified budget, to implement 'pay-go' rules, and to expand spending on their own priorities means that they need to find savings elsewhere. Reform of farm subsidies offers a way to save billions of dollars annually.

Second, Democrats are at great risk of being painted as know-nothing protectionists - not without reason. Reduction of US farm subsidies is perhaps the first target of our developed trading partners in negotiations with the US. If Democrats linked the reduction of farm subsidies with an effort to restart world trade talks, they could kill a whole range of birds with a single stone.

Hopefully they have the good sense to take advantage of this opportunity.

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