Lawmakers Could Look to Farm Bill for $100 Billion in Additional Budget Savings
Yesterday EWG’s Scott Faber joined representatives of several fiscally conservative organizations in calling on Congress not to slip a full farm bill reauthorization into any legislative package they cobble together to avoid the imminent “fiscal cliff.” They urged lawmakers instead to pass a responsible one-year extension of current farm and food policies and give members of the House time for full consideration and debate of the farm bill next year.
Simple good governance and due process are reason enough to demand open deliberation on the farm bill, but there are significant budgetary reasons to insist on it as well, and lawmakers should take note of them.
Rather than pocketing the modest $23 billion to $35 billion in 10-year savings the current Senate and House versions of the farm bill would yield, Congress could easily make changes that would save $100 billion or more. That would be a meaningful contribution to the budget trimming that would be needed to address the federal deficit.
Here is how the math could work:
Eliminating the direct payments subsidies would save $49.58 billion over 10 years. Both the House and Senate versions of the farm bill would do this, but they both plow a large portion of the savings back into other subsidies – a cynical bait and switch. By not creating new subsidy entitlements and revenue guarantees, Congress could hang onto the full savings.
Both current versions of the new farm bill would actually increase spending on federal crop insurance, making it more generous and more highly subsidized for farmers. This program is ripe for reforms that could yield large savings. At a minimum, Congress could eliminate the subsidies that currently go to crop insurance companies and save $13.8 billion.
There are also large additional savings available in the very generous subsidies the government hands out to encourage farmers to buy crop insurance. On average, taxpayers pick up more than 60 percent of the tab for crop insurance premiums. By cutting these subsidies – particularly for the most gold-plated policies – taxpayers could save as much as $20-to-$30 billion. Placing a cap on the total premium subsidy any one person could collect and reducing subsidies going to very wealthy individuals could save an additional $15 billion.
Finally, cuts to a number of unnecessary or wasteful farm bill programs could easily yield another $1-to-$2 billion.
These changes could save as much as $100 billion and still provide enough money to extend all other current farm bill programs at their current levels, including the roughly $5 billion needed to extend programs that do not currently have baseline funding in the farm bill. That would leave plenty of room for the House and Senate to make changes in other areas of the bill or juggle the amounts of these proposed cuts to achieve the best bill for taxpayers, eaters and farmers.
Congressional leaders and the President have been talking about “going big” in their quest for a tax and budget deal. They should also aim to “go big” next year with a farm bill that makes real contributions to deficit reduction while still funding important farm, food, conservation and research needs.