House Shouldn’t Use Disaster Aid Bill to Funnel More Handouts to Cotton Interests

COMMENTARY Agriculture

House Shouldn’t Use Disaster Aid Bill to Funnel More Handouts to Cotton Interests

Dec 20, 2017 3 min read

Former Senior Research Fellow

Bakst analyzed and wrote about regulatory policy, trade, environmental policy, and related issues.
Taxpayers haven’t just subsidized American cotton growers such as this one in Texas. They also paid $300 million to Brazil's cotton industry. iStock

The House’s disaster aid bill, at $81 billion, is nearly double the Trump administration’s request of $44 billion. These costs are not offset by spending cuts elsewhere. So much for fiscal responsibility.

Contained within this bill is an expansion of already excessive handouts to the cotton industry. Using the cover of a disaster bill to funnel more money to cronies at the expense of taxpayers is precisely the type of action that leads Americans to have such a low opinion of Congress.

Besides that, the provision has absolutely nothing to do with disasters.

Specifically, it would make cotton eligible for another farm handout scheme known as the Price Loss Coverage program, which primarily helps large farm businesses meet their financial bottom lines.

This subsidy expansion has been a desire of the cotton lobbyists and the “swamp” for over a year. To date, such a major policy change hasn’t become law.

Cotton growers already participate in the federal crop insurance program. This is a program in which taxpayers pay for 62 percent of the premium costs for participating farmers.

That apparently isn’t enough. So Congress created a special crop insurance program just for cotton called the Stacked Income Protection Plan, known as STAX. Taxpayers pay a whopping 80 percent of the premiums for the new cotton-only program, which covers minor losses for cotton growers.

It gets even worse. In recent years, taxpayers haven’t just subsidized American cotton growers. They also paid $300 million to the Brazilian cotton industry as part of a 2014 settlement agreement.

That agreement was struck in order to resolve a longstanding trade dispute with Brazil in response to past U.S. domestic cotton subsidies, which violated World Trade Organization rules. The $300 million payment is in addition to about $500 million the U.S. paid to Brazil from 2010 to 2013.

Lawmakers intentionally excluded cotton from the Price Loss Coverage program in the last farm bill because of trade-related concerns. By adding cotton to the program, Congress very well could be jeopardizing the settlement agreement and risk trade retaliation.

If the past is any indication, Congress would expect the U.S. to pay off Brazil with even more taxpayer dollars to maintain indefensible cotton subsidies.

A recent report from the Congressional Research Service provides even more compelling information on just how generous Congress (using taxpayer money) is to the cotton industry. From 2014-2016, cotton:

  • Was the fourth-largest recipient of farm program support.
  • Received the third-largest amount of farm program support by planted acre.
  • At a cost of $104.56 per acre was more than double the average amount per acre ($48.52) among program crops analyzed.

This proposed expansion of cotton subsidies is fiscal malpractice and completely thumbs its nose at American taxpayers.

Such a major, substantive change to farm policy is also completely inappropriate for a disaster aid bill, especially given the fact that lawmakers will debate the next farm bill in this upcoming year.

The House should immediately remove this additional cotton handout from the disaster aid bill. It is shocking that lawmakers included it in the disaster aid bill in the first place.

This piece originally appeared in The Daily Signal