Roar From the Heartland?

April 2005

The cuts to agricultural subsidies that were a part of the Bush budget don’t look like they will survive. The cuts would have saved $8 billion over 10 years, according to the CBO, by lowering the maximum subsidy a farmer could get from $360,000 to $250,000 and by cutting all subsidies by 5%. However, the cuts for the Department of Agriculture as a whole will still probably be between $2.8 billion and $5.3 billion, so something is going to have to go on the chopping block.

According to Senator Lincoln, a Democrat from Arkansas, lawmakers have heard the “roar from the heartland” and are responding to it. It “unfairly rests the deficit reduction burden on the backs of working families” according to her statement on the issue. The obvious counter to this is that if your income is more than $250,000 annually, most people don’t think of that as the “back of a working family.” However, there is a counter to this in that as I understand it, the limit is for a farm as a whole, so eliminating the subsidy for a big farm would narrow profit margins and lead the farm to reduce its wages for lower class employees or lay them off. The much BIGGER argument here, though, is one that I made on February 6th, after the budget came out, so in the spirit of transferring select posts, here is the 2.6.05 post, shortened:

The president’s fiscal year 2006 budget is out, or at least the most “newsworthy” bits have already been leaked, since I think it comes out tomorrow officially. The biggest item that I have seen so far is the reduction in the subsidies for farmers. Right now it’s a $15 billion dollar/year subsidy, according to the LA Times, which in my mind is fairly excessive; the maximum subsidy per farmer, which was $360,000 will be trimmed all the way down to $250,000 if the budget is passed. This is a good step toward the US actually practicing what it preaches in terms of free trade. It’s hard to get angry at cheap imports coming into the country when things like rice get subsidized here and then shipped to other countries, interfering with the economy there. Tim Johnson, chief executive of the California Rice Commission, said, in what I think was supposed to be an argument for keeping the subsidies in place, that “about 40% of what’s produced in the state is exported to Japan, Korea, Taiwan, and other countries.” He’s really shooting himself in the foot there. There is a very logical line of thinking that links agricultural subsidies to terrorism and/or general dislike for the US. It’s basically what I just outlined, but as the US government pays for rice production and other things, and those products get shipped abroad, the price of those commodities plummets, debilitating everyone else’s economy. This really gets everyone mad (think how mad the US gets when cheap foreign steel gets sent to the US, and multiply by several times over).

This is very irritating. An actual good idea in the president’s budget gets slashed by Democrats for special interest groups.