May 27, 2004

May 27, 2004 | Commentary on Taxes

Farm Subsidies vs. National Security

American cities still lack the resources to prevent a catastrophic terrorist attack. And Washington sends $110 million in farm subsidies to an Arkansas co-op named Riceland Foods.

Many troops risking their lives in Afghanistan and Iraq lack the necessary equipment to protect themselves, such as body and vehicle armor. And several members of Congress vote themselves farm subsidies as much as 119 times larger than what the typical farmer receives.

Millions of overtaxed Americans live paycheck to paycheck. And Washington doles out these tax dollars to David Rockefeller, Ted Turner, basketball star Scottie Pippen and former Enron CEO Ken Lay.

This year, Washington will spend more on corporate welfare than on homeland security.

What's going on?

Budgets are about setting priorities. During wartime, misplaced budget priorities can put American lives in danger. The $60 billion spent annually on corporate welfare represents $60 billion that now cannot be spent protecting American troops abroad and defending our cities from al Qaeda.

America's largest and most wasteful corporate welfare program is farm subsidies. The 2002 farm bill will cost taxpayers $180 billion over 10 years. It remains a shining example of the interest-group excess that has pushed annual federal spending above $20,000 per household while also diverting funds from vital national priorities.

American farm policy is an exercise in economic incoherence. It attempts to remedy low crop prices by paying farmers to plant more crops, which only lowers prices further. After paying these farmers to plant more crops, lawmakers turn around and pay other farmers to plant fewer crops. Worst of all, America's farm subsidies undercut Third World farmers and keep millions of people in poverty.

Lawmakers, summoning outdated stereotypes, assert that farm subsidies are needed to prevent the bankruptcy of millions of family farmers, who perform backbreaking labor for poverty incomes. Yet farming in 2004 is a stable, profitable industry dominated by large agribusinesses using 21st-century technology. The typical farm household reports an income 17 percent above the national median and a net worth of more than $500,000 -- despite living in rural areas with lower costs of living.

True, many farmers still struggle. But they aren't the ones subsidized. If farm subsidies were really about poverty relief, Congress could guarantee every full-time farmer an income of $35,000 per year for $4 billion.

Instead, farm subsidies cost $12 billion to $30 billion annually. Lawmakers distribute two-thirds of this bounty to the top 10 percent of subsidy recipients. The vast majority of these households, who work on large farms, report an average income of more than $135,000. Are these the "poor family farmers" lawmakers are talking about?

It gets worse: 78 farms received more than $1 million each in subsidies in 2002. The $110 million received by Riceland Foods that year was more than Washington gave to every farmer in 12 states combined. Their subsidy alone could have funded seven Blackhawk helicopters, 1,200 airport luggage scanners or an additional 1,700 border patrol agents.

Not to be outdone, a dozen Fortune 500 companies, including John Hancock Mutual Life Insurance, Westvaco, Chevron and Caterpillar, have pocketed farm subsidies as much as 510 times larger than what the median farmer receives.

Even Congress gets into the act. Members of both parties and both houses of Congress have received farm subsidies as much as 119 times larger than those given the median recipient. Some of these lawmakers even sit on the agriculture committees that oversee these programs.

During World War II, Americans sacrificed their lives, incomes, new cars and nearly every consumer good to support the war effort. During the war on terrorism, lawmakers won't ask millionaires, agribusinesses -- or even themselves -- to sacrifice their excessive government handouts.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

About the Author

Brian M. Riedl Grover Hermann Fellow in Federal Budgetary Affairs
Thomas A. Roe Institute for Economic Policy Studies

Related Issues: Taxes

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