Farm Subsidies Are Corporate Welfare

Farm Subsidies Are Corporate Welfare

by Mark Luedtke

The argument for farm subsidies is they help small, family farmers stay in business. That's a silly argument – taxpayers should not subsidize businesses. If a small, family farm can't profit in a free market, the family is better served by the breadwinner entering a business which produces a profit. When that happens, both the family and society benefit. But even if you accept the argument that taxpayers should help out small, family farmers, farm subsidies do just the opposite.

During the 70 year history of farm subsidies, the percentage of America's population on farms has dropped from 25% to 2%. Contrary to what politicians tell us, farm subsidies are designed to benefit rich farmers and drive off small farmers because the more crops a farmer plants, the bigger the check government sends him. That's because farm subsidies are rooted in socialism.

Woodrow Wilson took the first bite of the apple by guaranteeing prices of certain crops after WWI. The result was that farmers switched to planting those crops with a government guaranteed price, created a glut, and the Federal government was stuck with a bunch of worthless crops it had to dump at significantly lower prices. Taxpayers footed the bill for the difference.

Roosevelt's New Deal agricultural interventionism cost more in dollars and human lives. While Americans starved and struggled to import expensive food, FDR's government burned crops, slaughtered livestock, and paid farmers not to grow food. All the while, FDR lied to Americans, telling them that American farmers couldn't produce enough food to feed the people. That's the socialism at the root of farm subsidies.

Today, family farms netting up to $2.5 million after expenses receive fat, government checks. That's Congress' definition of a struggling family farm. The top 5% of subsidy recipients collect over 50% of the subsidies. The top 10% collect 73%. Small farms get next to nothing. Economies of scale give the corporate farmers a big advantage over small farmers, but the subsidies magnify the advantage and drive up the price of farmland by up to 30%. Small farmers can't afford to buy more land to grow more crops to make more money. Instead, corporate farmers often buy up struggling, small farms, turning the owners into tenant farmers or sending them packing.

Socialism, not free markets, make the rich get richer and the poor get poorer. According to the Topeka Capital-Journal, 56 of America's richest citizens receive farm subsidies. Billionaires David Rockefeller Sr., Sam Walton's heirs, Microsoft co-founder Paul Allen, and Paris Hilton's grandfather have all received subsidy checks. We're subsidizing Paris Hilton's lifestyle. Michael Jordan's sidekick Scottie Pippen and Jane Fonda's ex-husband Ted Turner have fed from the taxpayer trough as well.

It's hard to imagine a bigger corporate welfare give-away than farm subsidies, but Congress did when it passed the new farm bill.

President Bush managed to win a cap on subsidies for the largest farmers - Congress wanted a higher cap than $2.5 million. But taxpayers paid a hefty sum to make that cap palatable to lawmakers. The farm bill is laden with pork, but that's small potatoes. 66% of the $307 billion farm bill, $200 billion, went to what was euphemistically called “domestic nutrition programs”. That's code for welfare. This farm bill is literally a welfare bill.

During this period of record food prices, taxpayers are dishing out $43 billion in subsidies for the production of rice, corn, wheat, soybeans, and other crops that are at record high prices. We're forking over $27 billion to farmers not to farm. And if prices return to their historic norms, the subsidy payments and the cost of the farm bill balloon. Congress has rigged the market so taxpayers will make corporate farmers richer either by paying outrageous food prices or paying outrageous subsidies. We don't even get to pick our poison.

Farm subsidies also depress the world economy. Because we heavily subsidize large, corporate farms, incentivizing them to over-produce and glut the market, produce prices all over the world are depressed, while we pay more than we should for other produce. Poor farmers in developing nations can't get a fair market price for their crops. Then our government sends those same poor farmers welfare checks paid for by taxpayers. While corporate farms bring home the bacon, government penalizes poor farmers here and abroad and punishes taxpayers twice: we spend billions subsidizing corporate farms, and we spend billions in welfare to overseas farmers because they can't make a living thanks to our subsidies.

Anybody who voted for Republicans or Democrats has nothing to complain about. When Newt Gingrich successfully led Republicans against big-government in 1996, Congress scheduled a phase out of farm subsidies by 2003. But Republicans fed Gingrich to the wolves so they could return to their big-government ways, and under George Bush they revived the subsidies in 2002. Bush may have vetoed this farm bill monstrosity before both parties overrode him, but his failure of leadership and Republicans in Congress are as much to blame as the Democrats.

We have nobody to blame but ourselves. We elected these 2 parties. In 5 months, we'll have the opportunity to reelect the same failed parties and get more of the same failed policies, but even worse. Or we can vote 3^rd party and reverse the decline of America. To paraphrase Ronald Reagan, neither Republicans nor Democrats are the solution to our problems, both parties are our problem. Free markets are the solution.