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Editorial: Rich Farmers Get Richer

The deal in December to avert the so-called fiscal cliff had one welcome consequence: It derailed a new farm bill, the $100 billion annual spending package that’s renewed every five years and filled with subsidies for some of the U.S.’s most prosperous businesses.

To keep the money flowing to farmers, as well as to food-stamp recipients, the 2008 bill was extended until this September, allowing Congress time to come up with a bill that would cut unnecessary handouts to farmers while preserving safety-net programs. Instead, Congress is poised to make ill-advised cuts and dole out fresh largess to farmers who don’t need it.

That’s shameful, especially because President Obama provided a good starting point in his proposed budget. It called for trimming spending by almost $38 billion during the next 10 years by eliminating the $5 billion in annual direct payments to owners of farmland and reducing subsidies for crop insurance.

Congress should build on this, starting with strict means testing for farm benefits. U.S. farmers as a group, with an average annual household income of more than $89,000, are much better off than most Americans. This year, farm net income will reach $128 billion, the highest in inflation-adjusted terms in 40 years.

Congress also should cap subsidies to individual farmers at $40,000 a year, saving $1 billion annually.

Although Congress will probably eliminate direct cash handouts to owners of farmland, the agriculture lobby has persuaded legislators to make crop insurance even more lucrative than it already is. This $9 billion annual subsidy is supposed to help farmers protect their harvests. But it is insurance in name only and amounts to a dollar-for-dollar transfer, paying farmers for minor declines in crop yields. Insurance should help farmers cope with catastrophic losses from floods or droughts, not guarantee hefty incomes.

The Senate, which is dominated by Democrats, seems content with aiming low. It plans to vote on a farm bill that saves just $24 billion over the next decade. This includes $6 billion mandated this year by the budget sequestration.

The Republican-controlled House is considering lowering spending by about $40 billion in the next decade. About half the cuts would come from nutrition programs, which make up about three-fourths of all farm-bill spending.

This reduction in support for food stamps is about five times greater than what the Senate calls for and would harm people who need government aid. About 80 percent of food-stamp recipients are elderly, disabled or children; their average benefit is $4.45 a day.

Food-stamp rolls have increased to 47 million largely because of the rise in unemployment and poverty after the 2008 financial crisis, setbacks that the economy has yet to overcome. The Obama administration also made it easier to qualify for food stamps, which help the poor more efficiently than other forms of welfare, stimulate the economy and, yes, support the farm sector.

The Congressional Budget Office forecasts that spending on food stamps will peak this year at $82 billion and then, as the economy improves, decline by about $1 billion a year.

If Congress wants to reform food stamps, it should order the Agriculture Department to put tighter restrictions on what food recipients can buy. The goal should be to help people eat better, not to deny them food. That will be easier to accomplish if Congress stops wasting money on farmers who are doing fine without it.

Bloomberg View