The Farm Bill
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KWAME HOLMAN: Congress adopted a controversial free market approach to farm policy in 1996.
Today the Senate prepared to abandon that philosophy, and return to the decades-old system of direct subsidies for American farming. The reversal was lamented by the chief architect of the free market policy known as Freedom to Farm, Kansas Republican Pat Roberts.
SEN. PAT ROBERTS (R-Kan.): I had hoped that as we wrote this bill and looked in the rearview mirror of the past, we would resist the temptation to return to those policies. Sadly we seem to have done a u- turn.
KWAME HOLMAN: Since the hard days of the Great Depression, farmers could rely on the federal government to provide a guaranteed minimum payment for their wheat, corn, and other crops when volatile market prices fell.
But in 1996, facing a tight federal budget, lawmakers tried to save billions by ending the major crop subsidy programs, slowly weaning farmers off with a few years of limited payments.
Pat Roberts then was Chairman of the House Agriculture Committee.
REP. PAT ROBERTS (R-Kan.): This bill establishes hopefully a market transition from the command-and-control style of government support to the free market through a series of fixed and declining payments, declining payments.
KWAME HOLMAN: But government payments to farmers did not decline after the Freedom to Farm Act. Crop prices continued to stagnate.
With what their crops brought in the marketplace, farmers were unable to make ends meet. Rather than allow another wave of farm failures, Congress stepped in each year to shore up American agriculture.
SPOKESMAN: This chart shows the spending by crop year from 1996 on through 2002.
KWAME HOLMAN: Pointing to the yearly bailouts, Iowa’s Tom Harkin lauded members’ work on the new farm bill that reinstates formal farm subsidies.
SEN. TOM HARKIN (D-Iowa): The bill is truly a product of cooperation and collaboration across party lines and across the capitol between the two houses. It is a solid, balanced piece of legislation, a product of the crucible of rigorous debate, hard work and tough negotiating.
KWAME HOLMAN: The House passed the new farm bill by a wide margin last week. But critics say the bill has become a free-spending catch-all designed to help both parties this election year in key farm states.
President Bush endorsed the farm bill while campaigning for the Republican Senate candidate in South Dakota last month. Senate Democratic leader Tom Daschle of South Dakota greeted the president there. Daschle helped write the new farm bill.
The bill would spend $180 billion over ten years, a 70 percent increase over current levels of farm spending. Most would go to subsidize traditional wheat, corn, and rice crops. But new subsidies would be created for milk, lentils, and wool producers.
Payments to individual farming operations would be capped at $360,000 a year, but critics say the bill allows some large producers to collect multiples of that amount. The bill also would restore food stamp eligibility to legal immigrants who lost that right in the welfare reform law, and fund new nutrition and land and water conservation programs.
SPOKESMAN: The Senator from Indiana is recognized.
KWAME HOLMAN: Indiana’s Dick Lugar is one of several farm state Senators who oppose the bill. He said however well-intentioned the guarantee of help for farmers may be, the bill spends too much.
SEN. DICK LUGAR (R-Tenn.): Whatever may be the desire for some certainty that a farmer can get two dollars a bushel for corn, the certainty for all other Americans is that we’re going to have a larger deficit, that the prospects for solving Social Security and Medicare are setback, that we as trustees for the American people either do not understand that farm bills cannot be discussed in a vacuum, divorced from the rest of the world, or that we are so deliberate about our intent to spend this money, come hell or high water, that we plunge ahead.
KWAME HOLMAN: Mike Enzi of Wyoming worried the new farm subsidies will violate U.S. trade agreements.
SEN. MIKE ENZI (R-Wyo.): There are repercussions to this bill that move beyond our borders to other countries and our trading partners.
We have a WTO, World Trade Organization, responsibility to our trading partners to keep our agricultural subsidies below $19.1 billion.
In the past years we’ve stayed far below this level, but this bill threatens to send us over the top. It will be very difficult to convince our trading partners to lower their own subsidy levels — and they’re starting to talk about that — and increase our access into their markets if we so boldly ramp up our own subsidy levels. They are watching. KWAME HOLMAN: But the wide breadth of the farm bill also helped to draw wide support. Minnesota’s Paul Wellstone likes a provision aimed at creating jobs in rural communities.
SEN. PAUL WELLSTONE (D-Minn.): I am so pleased the telework provision’s in there. Again it’s my work and I’m bragging about it. You know what?
I’m telling you something and setting up a telework institute, I’m telling you something. These information technology companies, I’ve heard it from many of them. They’ve said, listen, you know, we know the work ethic of people in rural America and we want to make sure that if you all are willing to do the grants and willing to get this going– and I think Minnesota can be a leader with Iowa and other states– then you know what? Again, we’ve got a real opportunity for people to be able out of their homes and out of a satellite office to work for companies halfway across the world, much less halfway across our own country.
KWAME HOLMAN: In the end most Senators concluded the farm bill did more good than harm. The Senate voted 64-35 to approve it and sent it on to President Bush for his expected signature.
GWEN IFILL: Today’s Senate debate touched a number of exposed nerves on trade policy, deficit spending, and the role of the government in private industry. All that, and it’s an election year, too. So why did the farm bill pass, and why has the president pledged to sign it?
For answers, we turn to Gebe Martinez, staff writer for CQ Weekly, a magazine that covers Congress; and Robert Young, co-director of the nonpartisan Food and Agricultural Policy Research Institute at the University of Missouri.
Gebe, 64-35. We just heard a lot of Senators line up today and say why this bill shouldn’t be law. Why did it pass by such a lopsided amount?
GEBE MARTINEZ: Because neither the Democrats nor the Republicans wanted to be seen as anti-farm particularly in this election year.
A lot of the key battleground states in this election year are also farm states. So not only did they not want to vote against a farm bill, but they also had to prove that being pro farm wasn’t enough and they added to the programs that have been in existence for a while to try to get support across the country for this bill.
GWEN IFILL: Robert Young, what was different this time in 2002 from 1996 when the overall… overwhelming sympathy was Freedom to Farm or removing the government from the subsidy business when it comes to farms and this year where it went… the Senate went and the House went in exactly the opposite direction?
ROBERT YOUNG: Well I think two factors. One, we had a very different market situation in 1996 than we had today. We had much higher commodity prices in the market in 1996 because of tight world supplies, things of that nature. And prices are off substantially from those levels.
I’d also point out too that in 1996, we were in a deficit situation and the Agriculture Committees had actually been asked to cut spending on their farm programs, whereas this time we were operating in a surplus — don’t forget that the additional monies that were provided to the Agriculture Committee were provided last year when we were operating in a surplus situation — so I think those two factors together really explain the difference.
GWEN IFILL: Do you think that there has been an underlying shift in philosophy about whether the government should have a role in providing subsidies to farmers?
ROBERT YOUNG: Well again I think a lot of the same kinds of provisions that were in the 1996 bill are included in this one. Also don’t forget that we started in 1998 providing additional resources over and above what was provided in the Fair Act of 1996, and we made that decision in ’98 and ’99 and 2000 and 2001 as well.
So in a lot of cases I think we could say what we’ve done here is really kind of extend or codify some of those ad hoc programs that we’ve had for each of the last few years.
GWEN IFILL: Gebe, who wins and loses from a political and policy debate like this?
GEBE MARTINEZ: Well, clearly Senate Majority Leader Tom Daschle won. He had made this bill a personal priority and one of the toughest Senate races this year in November is in his home state of South Dakota. Senator Tim Johnson, a Democratic incumbent, is facing challenge from Congressman John Thune.
But the truth is, is that this was a bill that no one could vote against. As was just mentioned, this bill was the number… the dollar that was set aside for this bill was set up last year, and that was before September 11 terrorist attacks, that was before we were we knew that we were going to be increasing defense spending and homeland security spending.
And so what some of the Republicans were saying today was we need to have this bill because the farmers are counting on it, but we really don’t like it. One of the Senators I’m thinking of is Senator Conrad Burns of Montana who went through a litany of objections that he had with the policy and with the cost of this bill, but he said, you know, we’ve been in a drought in Montana for the last five years. And one of the things that the last farm bill did was remove the financial security by trying to wean farmers off of the government dole, so to speak, that financial safety net was removed.
The farmers now need the security and this bill does that.
GWEN IFILL: Robert Young, one of the litany of objections we heard today came from Senator Enzi a moment ago when he was talking about trade policy and the degree to which what seems to be an entirely domestic discussion about farms and farmers, has an effect on what happens abroad.
Could you go further with that, exactly what is the connection? ROBERT YOUNG: Well, this is really the first bill, farm bill, that we’ve written since the United States entered into the WTO agreement, and the agricultural provisions that that provided.
One of the things that the senator mentioned is that under that agreement, the United States is limited to no more than $19.1 billion dollars of domestic support on an annual basis for the agricultural sector.
It looks to us like there’s about a one-in-five chance over the course of the next couple years or so that under this bill that we may, in fact, exceed that trigger. Now exactly what happens when you do has yet to really be worked out.
But that is certainly of some concern. I will say that the bill, as it came out of the House as well as as it came out of the Senate, when they were working on their own individual bills, probably had about a one-in-three chance. So I think the conferees were aware of that and did try to take steps to try to reduce that probability.
GWEN IFILL: And does this bill also, Mr. Young, does it also address the issue that some folks have that subsidies equal overproduction or encourage overproduction?
ROBERT YOUNG: Well I would say that when you go through the specifics of the bill– and this is maybe a little more detail than you’d like– but there’s really only about 10 percent of this additional money that actually is tied to crop production that requires the producer to plant a particular crop in order to receive those monies.
So really about 90 percent of the money that goes to the crop or the crop side of the house does not require production of a particular crop or even that the producer actually plant the crop. So in large extent, I mean there were a number of ways that this support could have been provided to the farmers, but I do think to a large extent this was one of the least egregious approaches that could have been taken.
GWEN IFILL: Gebe, where was the White House in this? The president campaigned on a more market-based approach to support of farmers. Where was he?
GEBE MARTINEZ: Well, at the beginning, the White House was pretty much on the side-lines.
In fact they didn’t even contribute to the House debate of the bill until the very day that the House was going to vote on their bill in October, when they came out and said they didn’t like it because it was going to lead to overproduction from their standpoint. Then when the Senate bill came out, they saw that as even worse. So as the House and Senate negotiated their bills, the White House basically chose the course of picking… looking for a compromise that was the lesser of all evils. And when the president issued his statement last week saying that he would sign this bill, he did concede that this was not what he wanted, that there were… this did not meet all of his policy objections.
But he did stress that he believed that this would be compliant with the World Trade Organization guidelines for one, and that secondly, this was a generous bill that would provide the safety net for farmers which is something that he also supported.
GWEN IFILL: So who benefits from this bill?
GEBE MARTINEZ: Again I think Senator Daschle does.
GWEN IFILL: Not politically. I mean in terms of the farmers. Is it the big industries or is it the small family farms?
GEBE MARTINEZ: Well, you know, this bill does have an 80 percent increase in conservation spending.
And Senator Harkin, who is the chairman of the Senate Agriculture Committee said that, you know, there will be more money for small farmers, which is one of the goals but truly most of the commodities spending does go to the larger farming operations.
Critics of the bill don’t like that and they would like to have reversed that trend. But at this point, the farmers do win because they will get to continue this safety net that they’ve been looking for that they frankly didn’t feel they had under the current bill.
GWEN IFILL: Robert Young, what is your sense about the balance between political and economic incentives to change or alter farm policy in this case?
Is this bill, what we have before us now, the fruit of political incentive or the fruit of economic incentive?
ROBERT YOUNG: Well, I think that again because we’re talking about much different kind of market situations than what we had in 1996, and Gebe I think is absolutely right that there was this strong sense that something else needed to be done.
We had come back again in each of the last four years and had passed separate, individual assistance packages.
What this did I think is provide a larger, or stronger, safety net for producers so that they’re now able to go to the bank, sit down with their lenders, et cetera, and have some plan in mind and some expectation as to what that safety net is going to look like.
In the past, again in ’98, ’99, et cetera with the very weak markets, you had some expectation that Congress was going to pass some further assistance, but had no guarantee. Certainly if I were a lender I would not have lended money on that expectation.
So to a large extent I do think that the desire to put additional money into the sector did very much reflect the kind of economic realities that were in place last year given the budget surpluses as well as the weak markets. Now, you know, the exact form of the bill, the exact provisions, the exact make-up of the bill that probably had a lot more to do with the politics than anything else.
GWEN IFILL: Robert Young and Gebe Martinez, thank you both very much.