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    Splitting the Farm Bill is Only the First Step Towards Reforms

    07/10/2013

    Leading up to the fortunate failure of the Farm Bill on the floor of the House in June, conservatives have been urging Congress to separate the agricultural parts of the bill from the food stamp programs so that each major program could be debated and reformed on its own merits. The House leadership has responded by actually splitting the bill and offering an agriculture-only bill, which is an excellent move on their part.

    However, splitting the Farm Bill in two should not be an end in itself – it should be a means to finally having the ability to make much-needed reforms to each bill.  House Republicans need to include at least some of these major reforms to each bill in order to begin getting a handle on the rampant overspending and corporate cronyism within them.

    Agriculture Bill

    • Restructure Crop Insurance:
      • Means Testing: Currently, the majority of crop insurance payments go to large and very profitable farm corporations. The insurance subsidies are meant to help farmers who truly cannot afford insurance.
      • Reduce Overly Generous Subsidies: The federal government currently pays an average of 62 cents of every dollar of crop insurance premiums for farmers. Subsidizing their coverage to this extent incentivizes farmers to take more insurance than they could otherwise afford, and therefore to plant crops on more land and lower-yield land than they would otherwise.
    • Don’t Create New Entitlements: The Farm Bill as proposed includes a brand new entitlement program, which has been accepted by Republicans who supposedly seek to rein in entitlements and their resulting out-of-control spending. The shallow-loss insurance program subsidizes farmers to buy insurance that would cover the difference if their revenues dip below the previous five years’ average. Since the past few years have seen the highest agricultural revenues on record (despite a major drought) this program would put taxpayers on the hook to guarantee extra profits to agriculture when revenues inevitably fall back to normal levels.
    • Eliminate Special Industry Carve Outs: Parts of the Farm Bill read like chapters out of a textbook for crony capitalism, with industries which have the best men in Washington receiving special subsidies, tax credits, and payouts. Sugar, wheat, peanuts, soybeans, cotton, and corn are only among the largest industries which get special treatment in the farm bill, instead of competing in a free market like any other crop. All of these government favorites should have to compete on the same playing field as any other industry, without government guarantees to back them up.

    Food Stamp Bill

    Ideally, food welfare programs (the Supplemental Nutrition Assistance Program (SNAP) being the largest) should become a block-grant program in which the federal government would simply give states a fixed number of dollars and allow each state to determine the use of the money. Under the current system, states simply receive money based on how many people they enroll. Thus, they are encouraged to enroll people without worrying about fraud, inefficiencies, and effectiveness.  When states have a fixed amount of money and control how the money is spent they will take every effort to make sure those who really need help receive it, and to crack down on those who are abusing the program.

    While block granting food stamps to the states would be one of the best solutions, other reforms can greatly expand the effectiveness of the program as well. These reforms include:

    • Information Transparency: Currently, the U.S. Department of Agriculture (USDA) does not reveal important information about SNAP, such as product purchases, and important aggregates, limiting the effect investigative journalists can do at exposing fraud or inefficiencies in the $80 billion program.
    • Eliminate Current Advertising Policies: For years, the USDA has been inappropriately advertising food stamps, including hiring recruiters who must meet quotas and advertising to illegal immigrants, all of which is largely based on numbers instead of need.
    • Consolidate the Various Food Welfare Programs: There 18 food assistance programs on the books, many of which overlap and create inefficiencies.
    • Eliminate “Broad-Based Categorical Eligibility”: Currently, States can also use what’s called “broad-based categorical eligibility” for SNAP in which they determine eligibility not on the program’s income or asset limitations, but on an individual’s participation in other welfare assistance programs. This usually leads to relaxed standards, allowing more fraud and abuse.
    • Cap Future Spending: In the last decade, food stamp spending has increased by 297%. While some of this can be attributed to the recession and other factors, much of the increased spending is due to an overly aggressive outreach program and relaxed eligibility standards. Instead, spending should be capped to only include rise in inflation, population, and unemployment.
    • Create Effective Work Requirements: Current food stamp programs contain little work requirements for eligibility of benefits, and those that are in place have been relaxed. For example, in the 2009 Stimulus plan suspended the SNAP’s work requirements for able-bodied adults without dependents (ABAWDs), a ‘temporary’ suspension that has continually been renewed. Non-elderly, able-bodied adults should be required to work or search for work as a requirement of aid. This encourages people to back on their feet and reduces the caseload of food stamp programs.

    [Andrew Montgomery wrote the food stamp half of this post. For more information on food stamp reform, read his "Top Ten Reasons Food Stamps Need to Be Reformed" HERE.]