In a comment to a Mark Thoma post regarding U.S. farm subsidies, Brad Setser gently reminds me not to fall for the Cato and Heritage spin on the Federal Agricultural Improvement and Reform (FAIR) Act of 1996 – also known as “Freedom to Farm”. It seems the zeal of the Bush Administration to impose future tax burdens on our kids in order to provide current giveaways to special interests has really lowered my standards. As Won Koo and Marvin Duncan note, this 1996 act “decouples government farm subsidy payments from both price and production and provides farmers with nearly complete planting flexibility”. However, it did not end subsidies.
James Bovard called this act “one of the clearest examples of the hypocrisy of Gingrich and many other Republican congressmen” noting:
Conservative and free-market forces brought little intellectual artillery to the farm-bill battle. Instead, many conservatives were content to rhapsodize over the wonders of the 1996 so-called Freedom to Farm Act (the last major previous farm legislation). Such praise vivifies how few people in Washington look beyond the deceptive label congressmen attached to legislation. Back in 1996, House Speaker Newt Gingrich hyped the farm bill as a triumph of his Republican Revolution, bragging, “We passed the Freedom to Farm Act, which includes ending the [farm] subsidies after 60 years” of government handouts. In reality, the “Freedom to Farm Act” was one of the clearest examples of the hypocrisy of Gingrich and many other Republican congressmen. The 1996 farm act gave subsidized farmers more than 3 times as much in cash handouts in 1996 and 1997 as they would have received under the previous five-year farm bill. Wheat farmers got 50 times more in subsidies for their 1996 crop than they would have gotten if Congress had merely extended existing farm programs. And when crop prices went south, Congress scrambled to appropriate more billions for farmers in 1998 and every year thereafter. And with each new bucket of handouts thrown at farmers, Republicans repeated their praise of “freedom to farm.”
The Enviromental Working Group was even harder on “Freedom to Farm” back in 1996 – noting that much of the continued subsidies would go to the “big boys” and would squeeze “the little guy out”. Welfare for the rich does seem to be the GOP approach to fiscal policy.
In defense of the Gingrich Republicans, however, they were neither as willing to defer taxation in the same mode as the Bush Administration nor pursue the more recent forms of farm policy that Bovard notes here:
The Republican congressional leadership never made a vigorous attempt – either in 1996 or this year – to abolish farm programs. While GOP congressional leaders proudly voted against the latest bill, they did little or nothing to attempt to frame the debate in a way that would end the waste. But responsibility for the farm bill debacle rests first and foremost with George Bush. Historically, congressmen run wild with promises of lavish subsidies and it is only the veto threats of a dutiful president that limit the fiscal damage. On farm policy, as in other domestic areas, Bush has been AWOL. When Bush signed the bill, he bragged that the farm bill was “generous” aid from “a compassionate government.” Buying votes is the only farm policy that most politicians understand. But politicians do not have the right to be generous with other people’s paychecks. While Bush and other administration officials sought to justify the various buckets of dollars in the bill, they never addressed the issue of why Uncle Sam should be in the aid business. The Bush administration — like its predecessors going back to Herbert Hoover – appears to have learned nothing and forgotten nothing about farm policy. The main effect of farm programs is to force farmers to do inefficiently what they would have done efficiently without subsidies, to force Americans to pay more for food, to drive up the price of farmland (thereby undermining American farmers’ competitiveness), and to squander pointlessly tens of billions of dollars a year. Every subsidized crop (except sugar cane) would still be grown in America even if the USDA never handed out another bushel of greenbacks. The issue is not whether the United States will have ample food in the future, but whether politicians will continue controlling American agriculture.