Silver Lining for Reform in Farm Bill Failure
June 25th, 2013
This week, we are doing a three-part blog series on the House’s failure to pass a farm bill last week. This first post covers the topic of farm program reform, the second post will be an analysis of why the bill failed, and the third will discuss options for moving the bill forward.
Not long before the Federal Agriculture Reform and Risk Management Act of 2013 (aka the 2013 Farm Bill) went down in shocking defeat last Thursday by a vote of 195-234, the House passed an historic amendment on commodity payment limitation reform by roughly the reverse vote of 230-194. The popularity of the commodity program subsidy reform amendment may hold a key to reviving the farm bill process.
Nearly 70 percent of Democrats and over 40 percent of Republicans voted for the Republican reform amendment offered by Representative Jeff Fortenberry (R-NE). The amendment also garnered support from the Speaker, and the Majority Leader, Minority Leader, and Minority Whip all voted for it. Over a quarter of the Agriculture Committee voted for the amendment, despite strong opposition by the Committee leadership.
While similar commodity payment limitation reform amendments in previous farm bills have received a majority of votes in the full Senate, the measure has never passed in the House of Representatives. In fact, it hasn’t even come up for a vote in decades.
Given that the identical measure is already part of the Senate farm bill, the positive vote in the House now means that Congress has turned a very important corner on the path to enacting farm program reform. Regardless of when and how this next farm bill becomes law, it now clearly must deal with real payment limit reform.
The comprehensive reform now approved by both the Senate and the House would restore common-sense rules to farm programs by:
- creating a hard cap on total commodity payments and benefits so that no farm is eligible to receive more than $250,000 per year in commodity subsidies, rather than the current unlimited amount;
- establishing a hard cap on total payments under the new shallow loss and target price program options at $100,000 per year per farm, rather than the nominally limited but effectively unlimited amount for direct payments; and
- targeting payments to working farmers and closing existing loopholes that allow the largest and most profitable farming operations to collect far higher payments than current law would otherwise seem to allow.
Prior to floor consideration, NSAC posted a fact sheet on the amendment.
Additional Subsidy Reform Needed
In addition to its direct impact on commodity subsidies, the vote on the Fortenberry amendment also sends an unmistakable message that more subsidy reform is needed to pass a farm bill. Unfortunately, the Rule under which the House debated the farm bill last week did not include a number of filed amendments that would have added payment limits and means testing to crop and revenue insurance subsidies. In the new farm bill, those subsidies will make up two-thirds of total crop subsidies.
For instance, the Rule precluded the House from voting on the most important insurance subsidy amendments, including bipartisan amendments by:
- Reps. Richard Hanna (R-NY), Chellie Pingree (D-ME), and Tom Petri (R-WI) to reduce federal crop insurance subsidies by 15 percent for producers whose adjusted gross income exceeds $750,000 per year;
- Reps. Petri and Rosa DeLauro (D-CT) to cap federal crop insurance premium subsidies at $100,000 per year per farm and apply actively engaged rules to limit those subsidies to working farmers; and
- Reps. Jacki Speier (D-CA), DeLauro, and David Schweikert (R-AZ) to increase transparency in the crop insurance program by allowing USDA to release payment information to the public.
Instead, the Rule allowed for just one vote on an amendment by Representative Ron Kind (D-WI) that combined multiple crop insurance reform ideas into a single mega amendment. Relative to the Hanna-Pingree-Petri proposal, the Kind amendment included a far lower and more extreme adjusted gross income provision of $250,000, a threshold beyond which all taxpayer support would be lost. The amendment also included a variety of proposals aimed at reducing support for crop insurance companies.
Despite its all-encompassing nature and more extreme provision, the Kind amendment came within just five votes of passing, going down 208-217. A third of Republicans and two-thirds of Democrats supported the measure.
In the face of a very robust three-year campaign by crop insurance advocates inside and outside of Congress to use this farm bill to increase the cost of the program while fending off any and all reform efforts, this vote indicates a strong, popular desire to rein in program costs — including through placing sensible limits on what is currently a completely open-ended entitlement.
Looking at the successful vote on the Fortenberry amendment and the nearly successful vote on the Kind amendment, it is clear that several of the more targeted and nuanced amendments that were killed by the Rules Committee would have prevailed on the House floor. It is no doubt precisely for that reason that congressional champions of the open-ended entitlement worked hard to ensure those more targeted amendments never saw the light of day.
Farm subsidy reform is a hot issue in this farm bill, though not quite as important politically as the debate raging over the SNAP (food stamp) program. Much of the attention over whether and how to bring the farm bill back to life in the House centers on the $20 billion in food stamp cuts included in the House bill, as well as on a series of dramatic, highly partisan policy changes adopted by amendment on the House floor. It is clear that food stamp provisions will need to be changed if there is any chance of reviving the bill.
The growing bipartisan support for farm subsidy reform, however, also points to another critical element of the path forward on a new farm bill. From the 1970s on, Congress adopted a series of measures to place payment limits, conservation requirements, and means-testing on the receipt of commodity program payments. None of those measures currently exists for crop and revenue insurance. Yet the insurance subsidies surpassed the more traditional commodity subsidies in size and scope several years ago, and both the new Senate and House farm bill proposals would further accelerate that shift, increasing the size of insurance subsidies while scaling back a bit on commodity subsidies.
The bill passed by the Senate earlier this month includes two important provisions in this regard. It modestly reduces insurance premium subsidies for millionaires and it re-establishes the link between conservation and receipt of insurance subsidies. These measures do not nearly go far enough, but they are at least a start in the right direction. Unfortunately, the House bill that was defeated last week included neither provision. The refusal to adopt common-sense reforms helped lead to the bill’s demise.
It is time for the policy framework to catch up to the major shift in how subsidies are delivered to commodity crop agriculture. If current trends continue, crop insurance premium subsidies will make up two-thirds of the crop subsidy safety net, and commodity support will make up one-third. Only commodity supports, however, have sensible limits and basic conservation requirements tied to them. Extending those sensible limits to all aspects of the farm safety net is not only good policy, it is good politics. Along with the historic approval in both the House and Senate bills of strong commodity payment limitation reform, those reforms hold one of the keys to returning to broad bipartisan support for farm bills.