Farm Subsidy Bill in Need of Reform, Heritage Foundation Says

The Heritage Foundation, a conservative think tank based in Washington, D.C., has published a new web memo analyzing farm legislation recently passed by the United States Senate. The Senate bill must now be reconciled with a version by the House of Representatives, and the White House has threatened to veto the measure. The memo, titled "Scrap the Senate Farm Bill and Start Over," was authored by Brian M. Riedl and is available on The Heritage Foundation's web site.

According to the memo, historically high revenues for American farms should serve as an opportunity for the Congress to implement reform measures to the current federal system of farm subsidies. Instead, though, legislation passed by the Senate last week fails to take advantage of that opportunity. Heritage says that enactment of the bill into law will result in taxpayers footing a $25 billion tax bill and paying more for food items to support legislation that primarily benefits wealthy American farm owners. The memo says that the bill encourages overproduction, increases prices, and hurts American exports.

While there is general agreement on the need for changes to the current farm subsidies program, the memo says, Congress is still pushing ahead with a continuation of the faulty system. To support its argument, the memo says that most of the subsidies are allocated to large farms with incomes of around $200,000, and that the vast majority of the subsidies are allocated for just a few crops, including wheat, cotton, corn, soybeans, and rice. There are six major provisions of the farm bill that the memo takes issue with: 1) it increases the rates of farm subsidy payments; 2) it continues making payments directly to farmers, no matter what the price of their crop is; 3) it increases taxes to fund a new disaster aid program; 4) it focuses subsidy payments on large farms, with no limit on income earned by the farms; 5) it maintains a legislative loophole that allows farmers to sell their crops at high prices but still receive subsidies as if they had sold at low prices; and 6) it increases the federal budget deficit by more than $20 billion.