Thursday, March 13, 2008

For Shame

When it comes to picking taxpayer pockets, no one -- not the trial lawyers or even AARP -- has it over the farm lobby. How's this for clout? Though last year was one of the best ever for farm incomes -- up 44% to $87.5 billion -- farmers are about to score the most lavish subsidies in American history.

The House and Senate are now ironing out differences between their bills, and it's all but certain that farmers will get about $26 billion over the next five years in subsidies. Soybean and wheat farmers are slated to receive higher price supports, though bean prices hit a 34-year high last year and wheat prices have soared to a new record.

All of this will be highly problematic for America's trade negotiators. Brazil has already won a World Trade Organization complaint against the U.S. for providing illegal subsidies to cotton farmers. That ruling allows Brazil to apply $4 billion in retaliatory tariffs on American goods. Several similar suits are pending against the U.S., and these complaints were filed before any of these latest hikes in price supports.

The giveaways are so large that the House version is the first farm bill ever that would raise taxes to pay for it -- by $14 billion, mostly on the U.S. subsidiaries of foreign companies. This only discourages new foreign investment in the U.S. at a time when the weak dollar is already chasing it away. It's a sign of how insidious these welfare programs are that the Farm Bureau, traditionally an antitax outfit, recently signed off on the tax hikes in return for the subsidies.

And speaking of cashing in, Congress has also spurned the Bush Administration's sensible proposal to establish a $200,000 income ceiling in order to receive subsidies. Instead, full-time farmers will be able to earn up to $1 million per farm ($2 million for a married couple) and still be eligible for a USDA handout. That means you can be in the top 0.2% in income in the U.S. and still get a subsidy check from Uncle Sam. Yet Robert Goodlatte of Virginia, the Republican who helped craft the House bill, says with a straight face that the bill is "real reform and a real safety net for the farmer." Yes, thank heavens for that millionaire safety net.

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