From an editorial Thursday on Bloomberg View:
When does a $23 billion spending cut result in no savings at all? When it’s part of the U.S. farm bill.
Just a few weeks ago, the newest bill – a grab bag of subsidies for farmers and federal nutrition programs – went into effect. It was meant to save money by swapping $5 billion in annual direct payments to farmers with a new kind of crop insurance. But this insurance subsidy is even more bloated and wasteful than the old cash giveaways.
The new crop-insurance program, known as price-loss coverage, pays farmers when they suffer so-called shallow losses. So when prices fall somewhat, as they have this summer, farmers come in for a payout. That wouldn’t necessarily cost taxpayers so much, except that Congress, under pressure from Big Ag, pegged the price floors that trigger payouts to the record-breaking commodities prices of recent years.
The average price that results in payouts to corn producers, for instance, is $3.70 a bushel. Thanks to a crop that may be the biggest on record, corn now fetches only $3.40 a bushel.
The farm bill also contains subsidies for the farmers’ insurance premiums that are so large and inefficient, the government might save money by giving coverage away for free.
The cost run-up was predictable. It’s small consolation that the $23 million in expected savings this time wasn’t that much to begin with. It works out to a puny $2.3 billion over the 10-year life of the $956 billion program. The greater loss is to public confidence that Congress can ever stop wasting money on the farm bill.