Beware the farm subsidy

The current farm bill expires on the Ides of March, and Congress is gridlocked over what should replace it.

Lawmakers had hoped to finalize a deal on a budget for farm programs by last week, but terms are still uncertain, and none of the proposals would bring significant relief for taxpayers and consumers.

No matter what happens, American taxpayers will still be expected to pay subsidies to people who earn more than 30 times the median individual income.

After consultation with the Bush administration, the House Agriculture Committee proposed a bill that would spend

$6 billion more over 10 years than a simple extension of current policy. That's a slight savings from the House's original proposal, which the president had threatened to veto. The agreement tightens eligibility requirements for farmers who receive subsidies, which would mean no payouts to farmers earning an adjusted gross income of more than $900,000 per year, or $500,000 if less than two-thirds of their income is derived from farming.

Those changes are welcome, but they are nowhere near the administration's initial demand of a $200,000 cap. According to the U.S. Department of Agriculture, in 2005, farms with average household incomes of $200,000 per year accounted for 9% of all farms but received 54% of government payments.

Similarly, although the new House proposal makes no changes to programs that increase subsidies when prices fall, it proposes to pay for extra spending on conservation and nutrition programs by suspending payments that go to farmers regardless of prices or production. Suspending payments for one year, that is: 2017. But these subsidies - called direct payments - are the least senseless of the commodity programs, and until recently, they were the administration's preferred method of supporting farmers' incomes.