Monday, June 13, 2011

It's Game Time for Farm Subsidies and Ethanol in Washington

 Another opportunity for bold-colored distinctions.

This week's legislative schedule in both houses of Congress will provide Republicans (and faux moderate Democrats) a unique opportunity to efface farm welfare by eliminating ethanol credits/tariffs and direct farm subsidies.

On the House side, the annual Agriculture Appropriations bill is expected to hit the floor as early as Tuesday.  Earlier this month, the Appropriations Committee passed the FY 2012 Ag bill, cutting $2.6 billion from 2011 spending levels, and most notably, $686 million from the WIC program.  The committee also approved an amendment by Jeff Flake to cut off direct subsidies for farms owned by those with more than $250,000 in gross adjusted income.

The bill is a good start, however, there are still more cuts that need to be introduced during the floor amendment process.  The committee-passed bill appropriates $17.25 billion in discretionary spending, while providing an additional $116.9 billion in "mandatory spending", for a total of $134.15 billion.  The USDA is one of the most profligate departments, surpassed only by HHS and DOD as the largest recipient of taxpayer dollars.  19% of all federal subsidies and welfare programs are promulgated from the USDA.  Most of the appropriations come from mandatory food subsidies and will need to be cut through welfare reform bills, but there is no reason why we should reauthorize so much spending in this bill.

In addition to the $5 billion in annual direct payments to farmers - predominantly those who grow corn, soybeans, wheat, rice, and cotton - the federal government spends billions more for crop insurance, conservation and export programs, and marketing loans.  The $5 billion in direct subsidizes should be completely eliminated for all income levels, while the other programs should be seriously curtailed.  

Ethanol will get its day of judgement in the Senate.

On the Senate side, Tom Coburn is offering an amendment (AMDT. 436) on Tuesday to eliminate the 45-cent ethanol tax credit and the 54-cent tariff on imported ethanol.  The underlying bill is the Economic Revitalization Act (S. 782), which is a Great Society redistributive program for Democrat special interests.  Every Republican should oppose the underlying bill and support the Coburn amendment on ethanol.  Additionally, this is a time for Democrats, who supposedly detest tax cuts for the rich, to bolster their bravado with real action.

[As an aside, there will be a number of other important amendment offered to this bill, including a DeMint amendments to repeal the Dodd-Frank monstrosity. ]

It's time for Republicans to show that they are consistent in opposing bailouts, subsidies, market interventions, and picking winners and losers.  It's also time for Democrats to end their duplicity about tax cuts for the rich, by showing real compassion for the poor and consumer, and eliminating ethanol tariffs and farm subsidies.  They will also have an opportunity to make good on their promise of cutting the debt with bi-partisan reforms.  Al Gore and Bill Clinton now oppose ethanol welfare.  You can't get more bi-partisan than that.

Invariably, enormous pressure is being applied upon many of the Senators by the ever belligerent power players in the Ag lobby.  Worse, Americans for Tax Reform is threatening Senators that a vote against ethanol would be tantamount to a violation of their no tax pledge.

Ask your Senators to vote yes on both the Coburn and DeMint Amendments.  Here are some pivotal members who need to hear from you:

Saxby Chambliss -202-224-3521
Dianne Feinstein- 202-224-3841
Chuck Grassley -202-224-3744
Johnny Isakson -202-224-3643
John Hoeven- 202-224-2551
Mike Johanns-202-224-4224
Claire McCaskill -202-224-6154
John Thune - 202-224-2321
Mark Warner- 202-224-2023
Jim Webb- 202-224-4024

One of President Reagan's most sagacious and enduring quotes was his observation of the liberal desideratum of government intervention: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."  That description is particularly apt for the agriculture industry.  The government overtaxes it with double taxation through the death tax, imposes onerous regulations, like the FDA Food Safety Bill of 2010, and yet uses market-distorting price-hiking mandates, subsidies, and tariffs to protect the industry.  In fact, farm subsidies might be the anomaly to Reagan's adage because they are subsidized even as commodity prices are at record highs.

Now, Republicans can evince a public image of unvarnished free-market capitalism by staring down the Ag lobby and telling them that we will not overtax and over-regulate you, but we will not subsidize you either.

Cross-posted to Red

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