America / Fiscal policy / Tax / U.S. Senate

The Farm Bill: Convenient Coalition or Market Manipulation?

In early June, a coalition of urban and rural politicians in the Senate banded together to pass the Farm bill, a legislative piece that distributes welfare benefits to an unlikely pair: wealthy agro-businesses and the inner-city poor. Although widely popular among constituents, a common sense look at the bill reveals serious flaws.

The Senate’s version of the bill will cost almost $955 billion dollars over the next ten years. Reflecting a growing concern for the budget, this figure represents a $24 billion cut from current spending levels, with a relatively small $4 billion cut to the Supplemental Nutrition Assistance Program (SNAP) for the poor.

Food Stamps

Food Stamps (Photo credit: NCReedplayer)

The bill has strong bipartisan support in the Senate as Republicans are in favor of cutting spending and Democrats advocate poverty alleviation through welfare programs. This divide between liberals and conservatives is to be expected, but the bill also rallies an unusual rural/urban coalition. Politicians hailing from rural districts, typically Republicans, vote to support farmers. Those from urban districts, usually Democrats, vote in favor of providing food stamps to the poor. The Farm Bill has something for every politician, creating coalitions that seem unbeatable. This strong coalition, however, is deceiving. Some constituents do benefit from the legislation, but its manipulation of the market hurts the economy.

The Senate has spoken, for now, on their version of the bill, but the House of Representatives will soon make their attempt at the Farm Bill. Because the House has a Republican majority, the outcome will likely be different from that of the Senate Farm Bill. The House is expected to vote on a bill that will cost $940 billion – a cut of $39.7 billion over the next ten years. In this version, however, food stamps will take the financial hit as $20.5 billion of these cuts will come from the SNAP program.

For Republicans hailing from rural districts, the farm bill is popular among those who make their living off the land. Price guarantees and crop insurance subsidies ensure assistance during bad years and protection from international competition. For Democrats representing urban districts, SNAP provides relief for the hungry poor and their children – guaranteeing these benefits to constituents could in turn guarantee reelection to Congress.

In the upcoming months, Democrats and Republicans will debate the details of the farm bill – whether farmers or food stamp recipients face the biggest budget cuts – but they will agree that it should pass. A dose of common sense, however, reveals the harmful ramifications of a bill saturated with nostalgia for the nearly extinct family farm. This year’s budget cut is a good sign for the economy.

When farmers struggle financially, the federal government provides relief, subsidizing products and imposing strict quotas and tariffs on imported goods. Although this ensures security for American agricultural barons, increased food prices force Americans to pay more than the food is worth. For families who cannot afford these high prices, the government provides food stamps.

It is a cycle, or rather a drain down which money pours. Unfortunately, it is funded solely by tax revenue. Basic economic models show that when a market is left without intervention, supply and demand will meet, eliminating surplus or scarcity, and artificially high or low prices. Instead of pouring money into a system that could fix itself, the federal government should focus on getting the economy back on its feet. Doing this would supply the poor with more and better jobs while reducing the agricultural industry to a size that fits market demand. Although the food stamp program would still be necessary, lower food prices would make food more accessible for many families hovering around the poverty line. A smaller food stamp program would in turn save tax dollars.

Although a majority of politicians support the farm bill, Americans should not be duped by its supposed worth. For politicians, supporting the Farm Bill gleans votes and, consequently, reelection. Ultimately, however, only politicians and the few wealthy farmers left in the U.S. benefit from this legislation. The remaining Americans are left to pay high food prices and even higher taxes.