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Sep 26 2013

Food Stamps vs Crop Insurance

Here’s a surprisingly rational column by Henry Olsen in the conservative magazine National Review about the House Republicans and their obsession with cutting food stamps. He points out that those same Republicans ignore more expensive programs in the same bill (food stamps are part of the annual farm bill) that primarily benefit those who don’t need the help.

The conservative war on food stamps is the most baffling political move of the year. Conservatives have suffered for years from the stereotype that they are heartless Scrooge McDucks more concerned with our money than other people’s lives. Yet in this case, conservatives make the taking of food from the mouths of the genuinely hungry a top priority. What gives? And why are conservatives overlooking a far more egregious abuse of taxpayer dollars in the farm bill?…

The problem with the war on food stamps is that there’s one subsidy program in the farm bill that promotes greater dependency than food stamps and is growing just as fast: government-financed crop insurance. Yet conservatives say virtually nothing about this bailout of the rich and focus their ire on payments to the poor…

America’s crop-insurance program is obscene. Farmers receive government subsidies averaging 70 percent of their premiums to purchase insurance that protects them against declining crop value. There’s no income limit for this subsidy: The vast majority of this taxpayer money goes to farmers who make in excess of $250,000 a year. The insurance policies are sold by private companies, and the government also pays those firms about 20 percent of the premium cost to cover their expenses. The companies get to keep the profits from the policies, so taxpayer money makes crop insurance a largely risk-free investment for insurance companies. Thus, the government uses taxpayer money to pay rich farmers to buy insurance from wealthy insurance companies, whom the government also pays to sell the policies to the farmers. Talk about a “free” market.

Every problem conservatives complain about in food stamps is even worse in crop insurance. As you might expect when a program essentially offers intelligent, entrepreneurial people free money, they take it, and costs have exploded. From 2000 to 2011 — the same time period Heritage uses to analyze the growth in food-stamp expenditures — annual crop-insurance costs have also increased fourfold, from $2.2 billion to $8.6 billion. But at least with food stamps a significant portion of the cost growth since 2007 — between 30 and 50 percent, according to University of Chicago economist Casey Mulligan — occurred because the recession made more people eligible. Crop-insurance subsidies are not means-tested, so their increase is not necessarily due to falling income resulting from bad economic times.

In fact, crop-insurance subsidies are tied to crop prices, so they rise when prices rise. Crop prices, and hence farm incomes, reached record highs in 2006 and remain historically high today. Thus, the crop-insurance program is designed to give wealthy farmers more taxpayer money when they are already doing exceptionally well.

Crop insurance is even worse than food stamps at promoting dependency. Most food-stamp recipients receive only a couple of hundred dollars a month, a part of their income. Companies that sell crop insurance are 100 percent dependent on government payments for that business, and farmers are 70 percent dependent for their insurance — a rich subsidy that should strip away the idea of the farmer as a bold entrepreneur, while the welfare recipient is a burden on the public purse: The taxpayer spends more on the former than the latter. That’s why the crop-insurance lobbyists are frantically working Capitol Hill to keep feeding at the taxpayers’ trough. Crop insurance is perhaps the best example of a loosely structured government program tempting people who don’t need help to live at someone else’s expense. But instead, Heritage and its allies in this fight have chosen to focus on food stamps.

He could just as easily have focused on the many other ways that taxpayers subsidize huge agribusiness concerns to the tune of tens of billions of dollars:

Over the last decade, the farm bill has cost taxpayers more than $168 billion. In theory, the program uses loans, price supports, and payments to protect family farmers from the fickle fluctuations of weather, price, and economic conditions, so that their businesses remain stable and Americans are ensured a steady supply of affordable food. In practice, the program keeps food prices high, costing consumers billions, while funneling most of its aid to giant agribusinesses and wealthy farmers. About 75 percent of total subsidies go to the biggest 10 percent of farming companies, including Riceland Foods Inc., Pilgrims Pride Corp., and Archer Daniels Midland. Among the “farmers” who get federal subsidies are Bruce Springsteen (who leases land to an organic farmer), Jon Bon Jovi (who owns bee colonies), former President Jimmy Carter, and billionaire media mogul Ted Turner.

But unlike poor people, agribusiness concerns have well-paid lobbyists in Washington and lots of money to spend on campaign contributions. And the Republicans think that demonizing the poor as lazy and shiftless is good politics because it plays well to their base. That’s why all of this is happening.

14 comments

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  1. 1
    Michael Heath

    Ed writes:

    . . . the Republicans think that demonizing the poor as lazy and shiftless is good politics because it plays well to their base.

    Where the media fails miserably to publish analyses of the attributes of this base in volume commiserate with this population’s influence on public policy and results. To do so would be the worst form of Christian “persecution” this population would “suffer” from.

    While readers of Ed or Andrew Sullivan’s blog are mostly well-informed on conservative Christian influence and their effective impact, the general public remains oblivious to the significant degree they hurt us.

  2. 2
    trucreep

    I wonder how much the simplicity of an argument has to do with this as well. It’s way easier to say “people are living off the government” than to explain what Mr. Olsen has. Do rural areas tend to vote GOP? That could be another reason they don’t take it up.

  3. 3
    smrnda

    I suspect this is entirely an issue of image to the Republican leadership – they *see* farmers as bold (white) entrepreneurs, so that any government money they get must be okay, but they *see* food stamp recipients as stereotypical welfare queens, therefore, they must cut the aid. It’s working from biases rather than evidence, but it isn’t like the Republican party has much interest in evidence and facts.

    Now and then a better informed conservative makes a good point, but that’s not exactly a dominant faction in the Republican party.

  4. 4
    raven

    Xianity seems to be infinitely flexible.

    Half of all food stamp recipients are children. Most of the rest are disabled or over 60.

    And the ones who most fervently want to see them starve in the streets are…xians.

    It’s the age old question. Who would jesus starve first, the kids, the disabled, or old people? He even said so, let the dead bury the dead and follow me to our glorious libertarian future. Which seemed to be to watch the Romans destroy the Second Temple in a failed revolt and kick all the Jews out of Israel.

  5. 5
    Modusoperandi

    It’s always pessimism and cynicism with you, Ed. Don’t worry. They’ll go after these subsidies once poor urban (*wink wink*) people start owning massive farming corporations.

  6. 6
    lldayo

    Which sounds worse:

    We want to get rid of welfare, which is rife with abuse of people who don’t want to work, to stop wasteful government spending.

    …or…

    We want to get rid of farming subsidies, which is rife with abuse of people working to feed our nation, to stop wasteful government spending.

    One of these two pretty much insures you won’t get elected.

  7. 7
    troll

    So does this mean that National Review is part of the liberal media now?

  8. 8
    laurentweppe

    We want to get rid of farming subsidies, which is rife with abuse of people working to feed our nation, to stop wasteful government spending.

    It’s more like rife with abuse of lazy pampered landlords prospering from the back-breaking labor of farm workers.

  9. 9
    dogmeat

    Do rural areas tend to vote GOP? That could be another reason they don’t take it up.

    Most rural areas have become heavily Republican in the last 50 years or so.

    ———-

    It’s more like rife with abuse of lazy pampered landlords prospering from the back-breaking labor of farm workers.

    Not true!!! Those evil liberals are taking away jobs from workers and crushing the entrepreneur spirit!!! These people are JOB CREATORS!!!! Independent farmers, the foundation of our country!!!! [/sarcasm]

    That is pretty much the argument you’ll see. Major agricultural lobbies will present any proposed cuts as likely to ruin old McDonald and his farm. They’ll flood the media with commercials of actors third or fourth generation farmers lying through their teeth about bravely exposing the terrible nature of the proposed cuts. It’s the same reason why we can’t cut defense spending, we have this idiotic argument about the Affordable Care Act, couldn’t pass a better form of healthcare reform, we can’t reform the financial markets, and alternative energy research has been stifled for decades.

  10. 10
    Ace of Sevens

    The thing is, food stamp money is used to buy food. The food stamp program supports grocery stores, farmers and everyone else in the food business. Cutting would be bad for them.

  11. 11
    Gregory in Seattle

    “Yet conservatives say virtually nothing about this bailout of the rich and focus their ire on payments to the poor.”

    And that, in a nutshell, is all the Republicans represent nowadays.

  12. 12
    Modusoperandi

    Gregory in Seattle, “nowadays”?

  13. 13
    hunter

    “He points out that those same Republicans ignore more expensive programs in the same bill (food stamps are part of the annual farm bill) that primarily benefit those who don’t need the help.”

    That’s the whole point — the Republicans in Congress want to reward those brave, entrepreneurial spirits who rake in cash for not growing food. (Which is where a lot of those farm subsidies go.) If anyone needs food stamps, it’s their own fault — they should go to China and get a job.

  14. 14
    democommie

    “He points out that those same Republicans ignore more expensive programs in the same bill (food stamps are part of the annual farm bill) that primarily benefit those who don’t need the help.”

    They’re not ignoring them. They’re pushing them to make BigAg happy. Giving a flying fuck about the poor–not in their job description.

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