Sleepless in Midland

Ethanol in gasoline -- Earth Day is a great time to drop this requirement

The idea of putting ethanol in gasoline came about as a way to please the green lobby and corn farmers. But both of those concepts are outdated and unnecessary.

As for the corn farmers, it's time to wean them off the government dole. However, a subsidy once initiated is hard to withdraw.

And if fact, they are wanting more. Tim Carney tells us that the Ethanol lobby asks for a coronavirus bailout:

So it is with the coronavirus crisis. The companies that turn grain into an inferior fuel are already subsidized up to their necks by state and federal governments, and they are already eligible for the coronavirus relief available to all businesses. Yet they want more — they want their own special coronavirus bailout.

Yes, the ethanol industry is now lobbying the Trump administration for a bailout, Reuters is reporting. ...

This is what always happens.

High corn prices and low gasoline prices in 2009? There was a push for an ethanol bailout.

Financial crisis in 2008? Push for an ethanol bailout.

Oversupply in 2007? Lobby for an ethanol bailout.

Another glut in 2010? Lobby for an ethanol bailout.

These days, every industry needs help. But the ethanol industry has been getting it all along and doesn't deserve special treatment now.

Meanwhile, the oil producers are facing a hefty problem of their own. How about a bailout for them?

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2:09 PM 4/22/2020

Farm Bill 2018 -- politicians and beneficiaries celebrate, Republicans yawn

This is one of those things that annoys conservatives -- corporate welfare. In the case of the farm bill, it's big agribusiness welfare.

Here's an interesting factoid that appeared at the Heritage Foundation website:

Heritage Foundation
@Heritage
An astonishing 94% of farm program support goes to just six commodities. Corn, cotton, peanuts, rice, soybeans, and wheat. These commodities account for just 28% of total farm receipts—but these favored farms that produce them rake in billions through subsidy programs.
 12 Dec 2018

Here are some more from Cato:

About 97 percent of all farm households are wealthier than the median U.S. household.
Farm income was 52 percent higher than median U.S. household income.
Subsidies are slanted toward the largest farms.

It's unfortunate that among the many politicians who claim to want to reduce government spending there are too many who are willing to look the other way when it comes to wealth distribution through farm subsidies.

We've created a class of people dependent on the farm subsidies. But it's possible to wean them off. To see a country that did it, go to New Zealand.

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3:14 PM 12/16/2018

Partisan rancor over farm bill not about making the pie smaller but rather how to slice it

Politico tells us this: Cotton growers vs. urban farmers: Bitter partisan fight threatens farm bill. The meat:

Texas Republican Mike Conaway, the House Agriculture chairman, wants more money for Southern cotton growers. Michigan Democrat Debbie Stabenow, Senate Agriculture’s ranking member, is pushing funds for urban farming and renewable energy. ...

At the heart of the impasse is how the farm subsidy pie will be divvied up among regions of the country. Stabenow and Roberts oppose House provisions that the Congressional Budget Office projected would send more cash to farmers in the Southern Plains, including more than $500 million to cotton growers, a top constituency in Conaway’s West Texas district. In order to offset the cost of that proposal, the House bill would shrink subsidies for row crop farmers across the country.

The ideal result for tax payers is if they both lose. Lawmakers should figure out how to wean farmers off subsidies.

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2:44 PM 10/9/2018

Trump is on the wrong side of the ethanol-in-gasoline issue

Trump told Iowa farmers that ethanol will stay. And we've seen how important those campaign promises are to him. This is one he should break.

Jason Hopkins, of the Daily Caller News Foundation, has this article at the website thefederalistpapers.org titled EPA Releases Long Delayed Report on Ethanol and the Environment which should open some closed eyes. Here are a few excerpts:

An extensive report from the Environmental Protection Agency found that including ethanol into the U.S. gas supply is wreaking havoc on the atmosphere and soil.

In a study titled “Biofuels and the Environment: The Second Triennial Report to Congress,” the Environmental Protection Agency (EPA) determined that ethanol derived from corn and soybeans is causing serious harm to the environment. Water, soil and air quality were all found to be adversely affected by biofuel mandates. ... Essentially, the study found that biofuel mandates are boosting production of corn and soybeans.

Large-scale production of these crops is causing environmental degradation.

The EPA also found that — at least in some instances — using ethanol in lieu of gasoline resulted in worse air emissions.

So we've got laws on the books that do more harm that good. It's time for Trump to do a 180 on that promise and for Congress to change the law.

Meanwhile, what's the next environmental bombshell to drop? News that war is good for air quality?

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2:31 PM 8/5/2018

In Grassley's Farm Bill amendment face-time farmers get plowed under

Ewg.org tell us that between 1995 and 2016 $349 billion was paid out in farm subsidies, crop insurance, disaster programs and conservation payments. A farming community lawyer once told me that whenever a new farm bill got passed he would go through it with his clients to find the best way to maximize their income. The farm bill is a cash cow, a sacred cash cow. Most conservatives see the farm bill as a corporate welfare program, but for some reason, it escapes law maker scrutiny.

So it's encouraging to see this: Chuck Grassley’s Amendment to Farm Bill Would End Subsidies for Off-Site ‘Farmers’.

“Under the current law,” the senator said, “a designation called ‘Active Personal Management Only’ allows people who do not work on farms to get farm subsidies of $125,000, or $250,000 for a married couple.”

Grassley’s amendment would tighten restrictions on who receives farm subsidies, boiling down eligibility to only farmers and their immediate families who live and work on the farm.

It's a start.

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10:37 AM 6/13/2018

The message taxpayers should take away from that latest farm bill attempt is that Republicans aren't interested in cutting spending

The other day we talked about the farm bill on these pages and I said, "Democrats hate it because of the corporate welfare. Republicans hate it because of the SNAP handouts." But the latest rendition was defeated for neither of those reasons. Enough Republicans were willing to hold it hostage in return for consideration of an immigration bill. Defeating a big spending bill is a good thing, even if for the wrong reason.

Chris Edwards provides a scathing editorial about it in That the farm bill even got to a vote speaks volumes about GOP:

That the farm bill even got to the House floor shows how uninterested Republican leaders are in tackling rising budget deficits.

According to the Congressional Budget Office, the bill would not have saved any money — instead, it would have continued annual spending of about $20 billion on farm subsidies and $65 billion on food stamps. But with today’s strong economy, Congress should be trimming both farm and food subsidies.

The only conservative element in the House bill was a tightening of work requirements for food stamp recipients. But the savings from that reform would have been offset by higher spending on federal job training activities, and those activities have a poor track record.

Mr. Edwards notes the hypocrisy of the idea that welfare should be a short term safety net yet the corporate welfare should be long term. More:

Yet, the House bill keeps the agriculture subsidies flowing as an entrenched part of the farm lifestyle — a lifestyle, it should be noted, that is very prosperous. The average income of farm households was $117,918 in 2016, which was 42 percent higher than the $83,143 average of all U.S. households.

Furthermore, the bulk of subsidies go to the largest and wealthiest farmers. A recent study found that 60 percent of crop subsidies from the three main farm programs go to the largest 10 percent of farms. Over time, the high-end concentration of farm subsidies has increased, so reform is more needed than ever.

It will be hard to wean long term farm welfare recipients off the dole. But we need to try. Drain the swamp, indeed.

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11:02 AM 5/23/2018

farm bill -- there's something in it for Dems and Reps both to hate

Democrats hate it because of the corporate welfare. Republicans hate it because of the SNAP handouts. But the reason it failed to pass in the House of Representatives the other day really had nothing to do with either of them. The Freedom Caucus drove the nail in it because they couldn't get their immigration bill moved forward. Details in Farm bill goes down as Freedom Caucus votes against it.

The free market would ultimately prove to be a better economic system for farming. But farmers have been on the government dole so long and to such an extent -- USDA subsidies in the United States totaled $17.2 billion in 2016 -- the adaptation period would be too long and loud for our representatives to tolerate. So we'll likely have to just learn to live with it.

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4:04 PM 5/18/2018

President Trump, please just say no to alcohol, in gasoline

Conservatives and progressives can agree on this. Using corn based ethanol as a gasoline additive is a waste of resources. Conservatives don't like it because it's basically corporate welfare. Progressives don't like it because it doesn't improve the environment and adds to the cost of buying fuel.

But the ethanol lobby has a lot of clout. And they've got Donald Trump's ear. Too bad he’ll allow more ethanol sales to make farmers very happy.

Trump campaigned as a maverick, but in many ways he is a typical politician.

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2:20 PM 4/13/2018

Trump should eliminate ethanol gasoline requirement

It's encouraging that Trump is keeping his promise to trim back EPA regulations, e.g., his pledge to end the war on coal.

However, there's one promise Trump made that conservatives wish he hadn't made -- his pledge to keep the ethanol-in-gasoline requirement. And dammit, he did it. See Trump's agriculture secretary, Sonny Perdue, declares that 'ethanol is here to stay'.

Trump's renewable fuel goals favor ethanol industry.

And here's an interesting reaction. Increasing number of Americans are willing to drive farther, pay more for ethanol-free fuel. That article contains a link to pure-gas.org which purports to direct drivers to stations that sell gasoline without ethanol.

What's the harm in using gasohol? A casual web search suggests there's not a consensus. Many newer cars have been built to handle it. But the older vehicle owners might consider an additive along with a fill-up to prevent damage. The same holds true with small engines in mowers and boats.

Whether there's potential harm or not, the government should not be picking winners and losers.

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1:30 PM 10/10/2017

When public servants receive the pork their agency doles out

There was an excellent Q&A broadcast on C-Span the other day featuring Adam Andrzejewski, the founder of the watchdog site, Openthebooks.com. Click this link for access to the video.

And if you're interested in wasteful farm subsidies click Federal Transfer Report, Farm Subsidies & The Big Dogs for a summary of the downloadable PDF report. Here's part of the summary:

Within Washington, D.C. northern Virginia and Maryland ZIP codes, 2,801 entities received a federal government farm subsidy payment with an aggregated total of $18.478 million. Review our interactive “Washington, D.C. & Beltway Farm Subsidy Heat Map.”

Federal farm subsidy program dollars are flowing into the “urban areas”- where there are no farms. Farm subsidy lobbyists, U.S. Dept. of Agriculture executives, the very well connected, wealthy heirs, and even U.S. Senators are receiving farm subsidy checks.

And something we've known for a long time, most of the subsidies go to big agribusiness, not family farmers:

In fact, small family farms are not receiving much money. Our analysis shows that billions of the FY2008-11 subsidies flowed to just 1.4% of recipients- those receiving at least $250,000! News outlets have repeatedly reported that just 10% of recipients received 74% of the subsidies.

In fact, the farm subsidy is so pervasive and lucrative that many of the top Washington, D.C. farm subsidy recipients are farm subsidy lobbyists, lawyers and executives at the U.S. Department of Agriculture. Even elected representatives in the House and Senate are receiving their piece of the federal pie.

Read the whole thing to get more of a flavor of what voters are up against.  Furthermore, as we've noted in a prior post, in order to cut back on an entitlement we need the backing of public opinion, a willing president, and a cooperative legislature.  Currently we have none of those in regard to farm subsidy handouts.

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2:55 PM 9/11/2017

Morning paper reminds us that Republicans will fight budget cuts

In case we needed a reminder, MRT.com provided one. Our own Texas District 11 Congressman Mike Conaway is doing what politicians do. He's all for a balanced budget so long as his own sacred cows are spared.

See Conaway voices concerns over USDA budget.

Agribusiness has been on the dole for so long that to take them off it cold turkey would be portrayed as mean spirited and stingy. OK, but can't we wean them off it gradually and let them adapt to the free market? That makes sense, but it really depends on the strength of their lobby.

As a general rule, if government these days is an organ of income redistribution, and if we're looking at a permanent entitlement in the form of whatever Obamacare becomes, then at least attempt to benefit the maximum number of people rather than narrow industry groups.

farm subsidies -- will Trump rein them in?

As president, there really isn't much he can do about them except tweet complaints and browbeat Congress.

Subsidies go to large agricultural corporations, they cost the taxpayers billions of dollars, and they distort the market. If they actually do provide some sort of safety net to the family farmer then that's a minor side effect of this government largess.

Fortunately, others see the problem. See The Insane World of Agriculture Subsidies and To Drain the Swamp, Trump Must Reform Agricultural Policy, for example.

Unfortunately, a lot of those subsidies went to companies in states Donald Trump carried. Conservatives, libertarians and independents would like to see a reduction in government expenditures. And a cut to the farm subsidies would certainly seem appropriate. But in his view, the farm industry may be one of those he thinks deserves a handout.

There are many in Congress who think farm subsidies are just fine. So it may be unrealistic to hope to see some reform. But we'll see.

Agriculture appropriations bill would exempt some FDA appointed boards from FOIA

Tim Carney explains it in Agriculture subsidy agencies stick FOIA exemption into spending bill. It seems someone slipped in this exemption for the boards appointed and funded by the FDA to research and promote various agricultural products. Here's Carney:

The industry lobbies argue that these boards shouldn't be subject to FOIA, because the government collects their funding only from the industry, and not from taxpayers. But of course, requiring all U.S. producers of a commodity to pay a fee is, ultimately, requiring all consumers to pay a fee. So these boards make us pay more for our foods so the industry can do research it wants to do, and otherwise promote their food.

The money it takes to respond to FOIA requests, the industries said, was money they couldn't spend on research and crop promotion.

Sen. Mike Lee, R-Utah, will oppose the provision, according to his office. "This is crony capitalism organized by Washington at its worst," Lee said. "Not only is the federal government forcing market participants to collude, it is then actively engaging in a cover up of that collusion."

House Committee on Agriculture chairman Mike Conaway would put the citizens before the lobbyists. Wouldn't he? OK, maybe not this time, maybe not next time, but someday, yes someday he will.

Texas Dist 11 Representative Mike Conaway votes to uphold his highest priority -- keeping farm subsidies high

Today's morning paper contained this article: Conaway explains budget vote at MCRW luncheon in which Mr. Conaway denotes his priority:

Conaway, chairman of the House Committee on Agriculture, said he voted to approve the bipartisan budget deal that only 78 other Republicans supported in order to prevent changes to crop insurance.

He rakes in about a million dollars from lobbyists and industry groups each election cycle, and he gets 80% of the vote. Unfortunately, the voters concerned about crony capitalism, government subsidies, the government deficit and the huge federal debt are few in number. So he has little to fear. In fact, very few incumbents have anything to fear.

So should we give up the fight? It's tempting, but no. Some day, maybe not today, maybe not tomorrow, but some day Republicans will begin to see the light, acknowledge that these give away programs benefit mostly big agribusiness, conclude that crop insurance subsidies fleece taxpayers and stop voting for politicians that promote this corporate welfare.

Here's what's wrong with farm subsidies

Revenue insurance with the government paying most of the premium. Now that's a sweet deal. Wouldn't oil producers like to have insurance that would replace lost revenue due to the plunge in the price of oil? That's not likely to happen for the oil industry, but for farmers it's easy. The government provides revenue insurance for farmers based on the highest price reached during the season.

Farm subsidies are basically wealth transfers. And many politicians garner favor among special interests with promises of more such transfers.

I've written about farm subsidies before, and since those programs are so ingrained in our government it's easy to get complacent about them. So it's nice to see someone as influential as Helen Fessenden, staff writer for Econ Focus, the economics magazine of the Federal Reserve Bank of Richmond, address them in The Crop Insurance Boom. Here are some excerpts:

Critics of crop insurance subsidies, however, point to the fact that the program is still a transfer from taxpayers to farmers and private insurance companies, and as constructed, it is more income support than classic insurance. The government covers about 60 percent of the cost of farmers' insurance premiums as well as 100 percent of administrative and operating costs for insurers, which means farmers can sign up for policies that provide payouts far more generous than reflected by their out-of-pocket cost. ...

"The paradox is that crop insurance may be intended as risk management for farmers, but it actually encourages more risk-taking," said Vincent Smith, agricultural economist at Montana State University. "It's a transfer of risk away from the insurance firms and the farmers." ...

One of the program's most controversial aspects is the policy design. For most crops, farmers have an array of plans to choose from, but the most dominant is an option called revenue protection. Under one of the most popular revenue-protection plans, a farmer can purchase a policy to insure yield losses or revenue losses on certain crops, but he bases that coverage on the highest price of the season. If a low yield drives up the price of a crop from spring to harvest, the farmer is indemnified for lower yields at the higher harvest-time price; if the price falls over the course of the season due to overproduction, the farmer may use the higher springtime baseline when calculating compensation. Either way, this option maximizes the payout from the insurer. Revenue protection contrasts with yield protection, in which a farmer is protected against harvest-time losses in yield, say, in the case of drought; those payouts are pegged to the price projected at springtime. In 2014, about 75 percent of policies were revenue protection, compared with only 13 percent that were yield protection.

By the way, the government pays for 60% of the insurance premium -- a nice freebie for those on the receiving end. The oil industry has been targeted by Democrats for as long as most of us have been around. And not long ago there was the cry that oil industry subsidies should be cut. Well, there aren't any oil industry subsidies in spite of the losses and layoffs following the price crash. If anyone is serious about cutting subsidies they need to go for the farm bill.

Get corn out of our gasoline

Energy news has been dominated lately by the Keystone XL pipeline, the sharp decline in the price of oil, and the oil export ban. But there's another issue that should get some attention. That's the government's requirement that corn be put in our gasoline.

Environmental groups and the petroleum industry both oppose it. But corn farmers had the clout to get it placed into law. A re-do is long overdue.

Senators Toomey, Feinstein and Flake have co-sponsored Senate bill 577 to eliminate the Clean Air Act's mandate for corn in the gasoline we buy at the pump. Will they be successful? We have to hope so.

See: Corn, Scorn and Policy Porn -- Trigger warning -- there's no porn there,
Bill 577 status,
Toomey's press release,
Feinstein's press release.

Taxpayers are on the hook for farm bill promises

The government's basic job, as it has developed, is taking money away from some people and giving it to other people. And the difference between Democrats and establishment Republicans is that they prefer different people to benefit from the wealth redistribution.

That brings us to a Republican favorite, the farm bill. Daren Bakst of The Heritage Foundation explains how the farm bill was actually a blank check to farmers:

The 2014 farm bill eliminated the infamous direct payments program that gave farmers subsidies regardless of need. Instead of stopping there and making real progress, Congress created two new commodity programs, Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC), which will likely cost as much as and probably far more than the direct payments program. The farm bill did not limit the liability that taxpayers will incur from these programs. In essence, Congress wrote a blank check.

The House overwhelmingly passed an amendment[1] to its original farm bill (a bill that was voted down) that would have capped the costs of these programs. The same provision was included in the farm bill[2] that was sent to the Senate for conference. Regrettably, the provision was removed during conference.

Both ARC and PLC should be eliminated. In the interim, Congress can adopt the House’s commonsense step and provide some reasonable limits to the taxpayers’ exposure.

Will they do it? Taking back something already promised will be difficult. Especially since, as we were told before passage of the 2014 farm bill, farmers plan their year based on what the farm bill says, i.e., on how best to maximize their income from government payouts.

Republicans and Democrats should agree on this - end corporate welfare and crony capitalism

Timothy P. Carney suggested before the last election that Republicans should take up the banner to end corporate welfare. And he's made some concrete suggestions on just where to begin. See An anti-corporate welfare, anti-cronyism agenda for the 114th Congress. Here are his bullet points:

Health Care
Repeal Obamacare’s Insurer Bailout (“Risk Corridors”), or Make It Budget Neutral.
End the Individual Mandate.
Take Away States’ Exclusion Authority.
End Guaranteed Payments, and Reform the Doctor Cartel.

Energy
End the Ethanol Mandate and Ethanol Tax Breaks.
End Renewable Energy Subsidies.
End Oil Subsidies.

Taxes
Make Corporate Taxes Simpler, Lower, and More Neutral.
Reform the Research and Development Tax Credit.

Finance
Abolish or Rein in Fannie Mae and Freddie Mac.
Shrink the Moat of Regulations That Protects Big Banks from Competition.
Kill Dodd-Frank’s Too-Big-to-Fail Designation.

Trade
Kill the Export-Import Bank.
Abolish the Overseas Private Investment Corporation.
Repeal the Jones Act.

Agriculture
End the Sugar Program.
Reform or Abolish the Federal Crop Insurance Program.

What you see here is merely a list. Go to the article to read the details of each.

Could a Republican Congress with a Republican president do this? I would like to think they could, but it would take a lot of public pressure. Here at Midland, Texas, our own Congressman has both feet deeply rooted in the farm subsidy programs, and he gets 90% of the vote without even campaigning. He's probably not an outlier. Each of the other Representatives likely have their own pork projects they want to protect, and they're very supportive of each other.

Mike Conaway's farm bill keeps on giving examples of why corporate welfare is so detested

U.S. Representative for Texas District 11, Mike Conaway, cruised to victory on Tuesday. And Wednesday morning he was on a Midland, Texas, radio station boasting about getting over 90% of the vote.

His opponent was Libertarian Ryan Lange, and although Lange was virtually invisible during the campaign, perhaps because he raised zero dollars , he must be some kinda of super political powerhouse. Why else would donors dump almost $2 million into Conaway's campaign chest for this election?

Conaway's donors really must be dumb. Or maybe they're smart and just know how to play the game for more corporate welfare. Let's revisit one of Mr. Conaway's pet causes, the Farm Bill. Here's Bloomberg.com:

A record U.S. harvest has pushed crop prices so low that taxpayers may pay billions of dollars more to subsidize farmers than anticipated just months ago, thanks in part to changes Congress approved this year.

Lawmakers passed a five-year farm law in February and hailed its projected savings in subsidies of $14 billion over a decade. The forecast was based on farmers getting paid more for their crops. Instead, prices have fallen and may trigger subsidies the law aimed to reduce.

“This was a bill based on false premises of fake savings,” said Josh Sewell, a policy analyst with Taxpayers for Common Sense in Washington. “The prices Congress used to calculate the bill’s cost were divorced from reality.”

The bill, one of the few bipartisan measures Congress passed this year, could end up costing taxpayers billions of dollars more than expected after legislators bet commodity prices would stay high and states would end programs that qualified them for higher food stamp spending.

Gee. A government program that costs way more than promised. Either they didn't anticipated that or they did and foisted it on us with a lie. Either way, it's a good argument that government should just quit meddling with business with their relentless rewards and punishments.

Meanwhile, Mr. Conaway is angling for chairmanship of the Agriculture Committee. He was steadfastly against George W. Bush's efforts to reform corporate farm subsidies, so if he gets the chairmanship it will likely be business a usual.

Farm bill's sugar high

This is one of the reasons why many people who vote for Republicans secretly hate them. The Democrat's claim that the Republican Party is the party of the rich is partly true, and it's drilled home when fat cats get corporate welfare.

Our own US Representative for Texas District 11 usually gets about 80% of the primary vote and about the same in the general election. He tells voters what they want to hear, he gets tons of free publicity from the local media, and he gets a million dollars per campaign season from interested parties. It's almost impossible to unseat an incumbent. The impossible has happened, but it won't happen here. By the way, he hates the idea of term limits.

But this isn't a rant about Agriculture Committee member and aspiring chairman, Mike Conaway. The subject here is an old one: Sugar and the way the Agriculture Committee allows the continuation of a depression era mechanism whereby the US pays millions of dollars each year to subsidize sugar producers and keep sugar prices high.

Kevin Williamson explains it very succinctly in Uncle Stupid’s Sugar Buzz. Excerpt:

It works like this: As I have argued here before, the United States does not have a government — it has a bank, and a very poorly run bank at that. The Bank of Uncle Stupid last year lent the nation’s poor, struggling sugar barons $862 million in order to improve their positively Dickensian conditions. With the fat harvest coming in, sugar prices are going down — and the public must, at all costs, be protected from low prices. If sugar prices take just another tiny little tick in a southerly direction, then an unusual provision built into the sugar barons’ loan agreements with the federal government kicks in: They don’t have to repay their loans in cash — they can repay them in raw sugar.

The government then sells that sugar at a steep discount to the ethanol industry which is responsible for such terrible ideas as the requirement that it be pumped it into our vehicle gas tanks.

Williamson ends with this:

Needless to say, your traditional brain-dead Chamber of Commerce–type useless Republican clock-puncher loves this stuff. So does Marco Rubio. If the so-called party of free enterprise cannot figure out a way to run against this kind of pillaging, then they do not deserve to win.

Here's an idea for a campaign slogan: Republicans! You'll get your money's worth!

By the way, the government caused high consumer price of sugar may be why food producers have replaced sugar with high fructose corn syrup. Yum!

Link via newmarksdoor.com.

Cotton subsidy recipients spend the money on typical consumer items

The USDA and its Congressional enablers probably don't pretend that the money doled out in cotton subsidies should be used to actually help produce cotton. So it's not surprising that the recipients spent the money just like any other Americans who got a boatload of free money would spend it.

In USDA Cotton Subsidies Pay for Cars, Elephant Lamps, Artwork, Elizabeth Harrington gives some details from a recent OIG report:

The program, which was created in the 2008 Farm bill, pays textile mills 3 cents per pound of upland cotton they produce to be used on investments, equipment, and new property. However, the OIG found at least $900,000 in payments that went to manufacturer’s “personal use.”

For instance, one recipient used government funds to buy two Ford Explorers, costing over $45,500. The recipient bought a Ford Explorer and then traded it in for a new one 11 months later, the day before a government deadline requiring the funds to be spent or paid back to the USDA’s Farm Service Agency (FSA).

Use it or lose it. That's government efficiency for you.  But since that's how all government agencies relate to their budgets, how could they come up with anything else?  More:

“Altogether, we questioned 75 expenditures, totaling over $2.4 million,” the OIG said. “This occurred because FSA has not implemented effective internal controls to determine which capital expenditures are eligible uses of EAAP funds.”

A recipient also spent $6,500 worth of cotton subsidies to “to decorate executive offices with carpet and artwork.”

Our tax dollars at work.

How the porked up farm bill got passed -- Tim Carney has the skinny

It was a neat trick. The farm bill had a lot of opposition from Republicans, conservatives, libertarians and Democrats. But it passed anyway because of the transfer of one payment program from the omnibus spending bill to the farm bill. Timothy P. Carney explains it in Why indefensible farm bill was backed by party leaders and K Street.

That payment program was “Payments in Lieu of Taxes,” or PILT. About 30% of the land in the U.S. is federally owned, and states and counties can't collect property taxes from the U.S. government on that land. So PILT was devised to transfer federal taxpayer money to those states and counties to help offset the property taxes they could have collected had it been privately owned. It's a very popular program in states which contain a lot of federal land.

PILT was originally in the omnibus bill that was passed in January. But the Farm Bill still needed votes. So just before the omnibus bill came to a vote, in a clever move, PILT was removed from the omnibus bill and stuck in the Farm Bill. It worked. The Farm Bill passed, and big Agribusiness and their lobbyists will get what they want as soon as Obama signs it.

Crony capitalism is a on scourge on our government, and no one does a better job of exposing these parasites than Tim Carney.

Fat cats on farm bill welfare

EWG.org has a list of billionaires from Forbes 400 richest Americans who are on the farm bill dole, and there are a lot of familiar names there. Check it out.

One in particular that jumps out is Obama Administration Secretary of Commerce Penny Pritzker.

Her farm bill dole came through her 18.57% ownership in Chicago Mill & Lumber Co which gobbled up over $1.6 million in farm subsidies from 1996 to 2006. Since part of that was during the previous administration I suppose Obama would blame it on Bush.

Penny Pritzker is supposed to have a net worth of $2.2 billion. And wasn't it President Obama who famously said some people make too much money and there should be a limit? That doesn't apply to his Chicago friends.

This came to us by way of Timothy P. Carney who observed:

Republicans talk about cutting welfare for the poor. Democrats talk about hiking taxes on the rich.

Here's a compromise: cut welfare for the rich. One place to start would be farm subsidies.

Right on.

Post script.  The President himself:

I mean, I do think at a certain point you’ve made enough money.

A farm bill hero

He's Rep. Tim Huelskamp, R-Kansas, who was elected in 2010, represents the district which happens to be the second largest recipient of farm subsidies in the country. And he voted "no" on the farm bill in the House on June 20.

From DailyCaller.com:

“I know one farmer stood up and said, ‘Hey, you’ve got to defend our subsidies.’ … Well, I understand, but I also have to defend the future for the entire country,” Huelskamp told TheDC News Foundation.

“Most folks recognize in my district that the food stamps and the farm programs need to do a better job with less money in those programs,” Huelskamp added.

Not only does his district rank #2 on the list of farm subsidy recipients, Mr. Huelskamp's top industry contributor was Crop Production & Basic Processing.

It takes courage to stand up to special interests and put America first. And the man has the right stuff. Three cheers for this American hero!

Sneaky farm bill hiding in the tall scandal weeds

What would you call a government program that guaranteed that you would receive 90% of your average revenue? There's a phrase for it, "corporate welfare." However, politicians call this farm bill give-away the Average Crop Revenue (ACRE) program.

There are so many scandals sucking the air out the room that there's hardly any space for publicity about bad spending bills. So the farm bill is sneaking through the weeds, and the budget hawks can't get attention. But some people are watching and writing. And here are a few with selected excerpts.

The Great Farm-Bill Ripoff:

Reform has been slow to come for a couple of reasons. The first is demosclerosis: A rich and powerful minority is highly motivated to lobby for the continuation of its benefits – benefits that do not much inconvenience most of the public on a day-to-day basis, which therefore has little reason to lobby against them.

The second reason is the unholy pact between farm-state interests and urban ones. For reasons far beyond the ken of mortal men, the largest portion of the quinquennial farm bill as measured in dollars has nothing to do with farming. Roughly 80 percent of its outlays go to food stamps. Rolling the two completely separate issues into a single bill ensures that lawmakers from conservative states will support handouts for city folk, and lawmakers for city folk will support handouts to farm interests.

The Costly and Outdated Farm Bill:

One of the most important reforms would be to separate these programs [food stamps and farm subsidies] into two different bills. This would make it more likely to get reform of agriculture policy, instead of politicians using these different issues with their different interest groups to maintain the status quo. ...

The costliest farm program is crop insurance, yet Congress does little to address these costs.

When farmers buy insurance, 62 percent of their premiums are paid for courtesy of the American taxpayers. Unlike other farm programs, there's no limit on the total subsidy received by farmers. According to the nonpartisan Government Accountability Office (GAO), a $40,000 limit on premium subsidies would have saved taxpayers $1 billion in 2011.

Fake savings: The 2013 House farm bill:

The data demonstrate that the House bill, with its crop insurance and PLC provisions, is essentially a bait and switch proposal. It exposes the taxpayer to substantial risk while, in combination with other federal subsidy programs, virtually guaranteeing that most farmers will always receive at least 90 percent of their expected farm incomes.

The only partisan split on this is over who gets the largess.

Farm Bill taxes rocks

You might think that rocks would not be the farmer's friend. And you would be right. But that's where the government comes in.

Heritage.org points to this gem they found in the Farm Bill. It's a provision which creates a new board which will tax businesses in the natural stone industry and use the money for industry promotion. But by creating this new board for promotions, the existing industry groups can focus on lobbying.

The best part: "This is the very same model adopted by milk, beef, cotton, and some 15 other commodities that depend upon taxation rather than donation. Combined, they accumulate nearly $800 million dollars annually—most of which is recouped by businesses raising retail prices. The scheme has even spread to Christmas trees."

Never mind that it shouldn't be in the Farm Bill, it shouldn't be in any bill. The government shouldn't be in the business of collecting taxes from an industry for the purpose of promoting that industry. It's bad enough that we have to listen to ads promoting some government agency or agenda. We don't need government ads promoting some industry whose lobbyists had enough juice to get their favorite laws passed.

Paul Ryan's budget makes tiny tiny cut to farm subsidies

With many fiscal conservatives suffering anxiety attacks about the federal debt and a government's inability to do anything about it, the House passed Paul Ryan's budget proposal -- House Concurrent Resolution 25.

The part about farm subsidies is a little disappointing.

Instructions.--
(1) Committee on agriculture.--The Committee on Agriculture shall submit changes in laws within its jurisdiction sufficient to reduce the deficit by at least $1,000,000,000 for the period of fiscal years 2013 through 2023.

That's $1 billion over eleven years. Agriculture payments totaled $10.4 billion in 2011, and that was the lowest amount since 1997. (Source: UDSA, "Value of total direct government payments, by State, 1949-2011" spreadsheet.)

So, based on the 2011 payments, a $1 billion cut in spending over eleven years comes to a reduction of about 1% of the total. But the Resolution doesn't say they'll cut spending by $1 billion, it says they'll cut the deficit by that amount. No one really knows what they'll do with that. And since every Republican in the House voted YEA, it couldn't have worried them too much.

It's a start. And I suppose we should be grateful for that. But the solution is right under their noses: Free trade. Bryan Riley explains it very clearly in The Best Plan for Farmers and Ranchers: Free Trade. Simply end the subsidies, and the free market will produce winners all around. Farmers make money, taxpayers save money, and the hungry of the world get fed.  It's win, win, win.

Mike Conaway – a masterful politician

We really have to admire the guy's political skills. He's the U.S. Representative of Texas District 11 who gets reelected easily each time.  Though to be fair, we must acknowledge the strong wind at his back from all the glowing publicity he gets locally.

Let's look at those political skills in action. Our own morning paper touts his ranking as the fifth most conservative representative in 2012.

Note that four others tied him for that fifth place spot and two tied for 10th place. So that gave us a total of 11 Representatives in the top 10. One thing all 11 have in common is that they all voted "no" on 1/1/13 fiscal cliff deal.

Here's where the mastery came in. He voted "no," but one of his pet projects, the farm bill, was renewed in the fiscal cliff deal. He was quoted in the newspaper after that vote as saying he's glad they extended the farm bill. Well he should. Had it not been renewed, consumers would have had to swallow a poison pill, or as theatlantic.com calls it the dairy cliff. That would occur if the farm bill didn't get renewed because decades old law would force the government to buy large quantities of dairy products and other food staples at prices fixed to an outdated index which would cause some food prices to skyrocket.

Mr. Conaway must have known that the fiscal cliff bill would pass without his vote. So he basically got a free ride, and his ranking a "conservative" remains intact. Masterful.

Too bad Congress doesn't repeal those old laws. But then farm bill proponents wouldn't be able to hold it like a knife to our necks each time the farm bill comes up for renewal.

a letter to editor at the local paper

Late last year we were warned that milk prices would double if the farm bill didn't get extended, adding one more surprise at the bottom of the fiscal cliff.

Fiscal cliff, sequester, poison pill. It takes a nation in fear to get the government to govern.

"Poison pill" is my own phrase to describe the phenomenon better known as the agricultural "Permanent Law" which would significantly hike the prices of some food essentials if the farm bill should ever expire.

The poison pill was established in the '30s and sets a commodity price support based on a decades old price index. However, some of the prices were much higher then than now. It's tempting to think prices should have been lower, but remember that farming was very labor intensive then, and modern farms produce goods cheaper.

If the poison pill is repealed then a farm bill expiration will allow the free market to set prices. Why won't they repeal it? Because the House and Senate agriculture committees think that a central planning committee is better than the free market. And by keeping alive the threat of a hike in food prices those committees preserve their power.

Is there any reason to hope that some day the House and Senate agriculture committees will relax their grips and let the free market work?

Our own District 11 Congressman Mike Conaway, whose stated goal is to become chairman of the House Agriculture Committee, gets quoted quite frequently in the MRT on topics over which he has no more influence than any of the other 434 House members. But so far he has not explained why the budget deficit has to be burdened by farm subsidies nor has he explained why the threat of astronomical food prices has to hang over us if the farm bill doesn't get extended.

However, I'm optimistic. I'm hopeful that some day Mr. Conaway will have the strength to stand up to agribusiness lobbyists, look them in the eyes and say, "No. This has to end. The people who reelected me are more important to me."

George Johns

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Published in the print edition of the Midland Reporter Telegram on 2/17/2013. Not online.

Conaway and the farm bill

A generalization can be made about Republicans -- they believe that if you take a human being who is able to take care of himself and coddle him with handouts it makes him helpless and dependent. That's why they pressed so hard for welfare reform during the Clinton administration and why they object so strenuously now to the expansion of welfare without the work requirement.

But when it comes to corporate welfare Republicans either look the other way or cheer it on. The farm bill is an example. The farm bill is a government giveaway to agribusiness, and West Texas' own District 11 Representative Mike Conaway is one of its biggest cheerleaders.

Mr. Conaway draws in about a million dollars each election cycle even if his opponent is a broke unknown. The money comes from individuals and PACs that want what he can give. And this cycle Agribusiness PACs and individuals have thrown $213,000 his way.

The morning paper contained an article about him and his pet project which quotes my favorite farm bill canard: The House version of the farm bill will "save taxpayers more than $35 billion." By this they mean the House bill spends $35 billion less than the Senate bill. So saving taxpayer money means spending less than the maximum amount someone else wants to spend. Maybe the Senate will rethink and set a higher target. Think of the money we would save!

The government has been propping up American agribusiness so long the big farm companies can't operate without it and can't compete with foreign producers without trade restrictions. What we need is a welfare-to-work program for agribusiness. They've got too many friends in Congress to do it all at once. But just maybe someday we'll have a Congress that will wean them off the government dole so they can figure out how to make it on their own the way our ancestral farmers did and in the process become proud of themselves again.

Meanwhile, agribusiness is like General Motors. And the difference between Republicans and Democrats is the entities they reward with government largess.