Obama's Budget Takes Aim at Farm Subsidies

World-Herald Bureau, Joseph Morton
Published February 27, 2009

President Barack Obama is taking aim at federal farm subsidy payments. Obama unveiled the first broad outlines of his first budget proposal Thursday. Regarding agriculture, Obama said he wants to stop the subsidies known as direct payments to farms with annual sales revenues of more than $500,000. The move would save about $10 billion over 10 years. According to 2007 data from the National Agricultural Statistics Service, Iowa has 9,478 farms with sales of more than $500,000 and Nebraska has 5,921. It's not clear how many of those farms now receive the direct payments, which are not tied to crop production or prices. Obama's plan brought quick rebukes from some lawmakers, including Sen. Mike Johanns, R-Neb. When he was agriculture secretary, Johanns proposed ending commodity subsidies to farmers with more than a certain amount of adjusted gross income. He said Thursday that his approach would have taken into account a farmer's expenses. "That's what's killing farmers these days . . . the cost of production is going up exponentially while the prices are softening," Johanns said. "So literally you could have agriculture deeply in the red and yet (Obama's plan) would kick in. That makes no sense whatsoever when you think about the safety net piece of this." Johanns also said direct payments are the type of farm supports most acceptable to U.S. trading partners. Sen. Chuck Grassley, R-Iowa, issued a statement making similar points. Obama also wants to lower the overall cap on farm subsidy payments from $360,000 to $250,000. The Environmental Working Group database shows that for 2005, 13 beneficiaries in Nebraska and 20 in Iowa received commodity program payments of more than $250,000. Senate Agriculture Chairman Tom Harkin, D-Iowa, said he welcomed Obama's engagement on the issue of payment limits. Steve Ellis of Taxpayers for Common Sense noted that Congress has defeated previous attempts to aggressively tighten the limits. "That's going to be the real challenge. . . .How much political will, how much muscle does he put behind his proposals?" Ellis said.