Temporary farm subsidy program may finally meet the reaper
NEW YORK – The building is one of the finest on Central Park West. Celebrity residents. Park views. Units priced at up to $24 million. It is most definitely not a farm.
But last year, the U.S. government sent $9,070 in farm subsidies to an apartment here.
Even the women who got that money isn’t exactly sure why.
“I really don’t know,” Lisa Sippel said.
Sippel does own farmland, but it’s in Missouri. Somebody there does the work.
Still, Sippel gets the federal payments, which were originally meant to keep small farmers afloat. “I’m kind of an absentee landlord,” she said.
The money, it turns out, comes from one cockeyed farm-aid program that was supposed to end in 2003. It didn’t: Congress kept it alive and now hands out almost $5 billion a year using oddly relaxed rules.
As long as recipients own farmland, they are not required to grow any crops there. Or live on the farm. Or even visit it.
The program is one of Washington’s walking dead – “temporary” giveaway programs that have staggered on years beyond their intended expiration dates. Letting them live is an old and expensive congressional habit, still unbroken in this age of austerity.
Now, both the House and Senate are trying to kill off this budget leftover, 10 years late.
“It’s something that was supposed to die that has gotten an extra decade of life. So, do the math,” said Scott Faber of the Environmental Working Group, which has fought these subsidies for years. In all, the program has cost at least $46 billion more than it was supposed to.
For elected officials, a temporary program is a little act of political magic; it allows them to take credit for creating a program and also for ending it – all at once. The hard job, of course, is actually letting the thing die.
That task is pushed off to future officials, who often push it off again. So Washington is now full of “temporary” programs that are old enough to vote.
The Essential Air Service program, a subsidy for flights to small airports, was supposed to expire in 1988. It’s still alive. The widely popular research and development tax credit has been a temporary measure since 1981. It was renewed, along with more than 50 other temporary programs, in January’s “fiscal cliff” deal.
And – buried among the USDA’s array of aid programs for farmers – there is this death-cheating, farming-optional farm subsidy.
It has become a case study in how a temporary giveaway turns permanent, but it began in 1996 as an idea to save the government money.
A penny-pinching Republican Congress wanted to eliminate the com
-plex system of subsidy payments that had begun in the New Deal, but it didn’t want to make farmers quit cold turkey.
So Congress devised a kind of nicotine patch for farm subsidies. The new program would pay out smaller and smaller amounts over seven years. Then it would end.
To make the changes more palatable to farmers, Congress loosened the requirements for getting the payments. They would be calculated based on a farmer’s past harvests. In the future, farmers could grow the same crops. Or different ones.
Or no crops at all. The money would still come.
“These are not welfare payments. These are declining market transition payments,” said then-Rep. Pat Roberts, R-Kan., the architect of the plan. When those payments finally ended, Roberts promised, Congress would have finally gotten “the dead hand of government out of the business of farming.”
Roberts’ seven-year plan held up. For about two years.
Then, in 1998, farm income fell. A drought crippled harvests. The farm lobby howled for help. Congress complied by adding $2.9 billion in extra payments. The declining transition payments would no longer decline before their end date.
In 2002, Congress got rid of the end date, too.
Farm income was on another downswing then. The budget-cutting fever of the 1990s had passed. Congress renamed these giveaways “direct payments” – no longer a transitional measure but an expected, regular transfer from taxpayer to government to farmer.
Roberts voted “nay” as his temporary payments became permanent.
“I guess we put the seed of reform in the ground, and it sprouted up there for a while, and maybe it grew into a noxious weed,” Roberts, now a senator, said in a telephone interview.
In 2008, with Democrats in charge of Congress, the payments were renewed again. This time, Roberts was a “yea.” He worried that if they disappeared, legislators would come up with something more expensive and heavy-handed to replace them.
The payments were renewed one more time in January, through the end of 2013.
But problems have appeared. The features that had made these payments a good short-term political gesture – their relaxed rules and regular cash flow – made them terrible as a long-term aid program.
That’s because farm aid is supposed to be a safety net, ready during hard times.
This was not that. This was an ATM, spitting out money in good times and bad.
“Direct payments make no sense at all,” said Harwood Schaffer, a professor who analyzes farm policy at the University of Tennessee. “When corn is $2 a bushel or $7 dollars a bushel, they get the same direct payments. So at $7 a bushel it simply increases their profit.”
Recent analyses of the program have found that it subsidizes some people who aren’t really farming: the idle, the urban, and occasionally the dead.
The idle include recipients at 2,300 farms that haven’t grown crops at all for the past five years, and 622 that haven’t grown anything for 10, according to the Government Accountability Office.
In addition, the program has paid hundreds of millions to people who lived more than 300 miles from the farmland they owned. That’s legal, under the program’s rules, but only if the owner shares in the farm’s financial risks and remains “actively engaged” in farm decisions from afar.
But these rules do not seem to be strictly enforced.
“I am not the farmer. But I have a farmer. And I don’t understand the mechanics of the payment whatsoever,” Catharine Snowdon said.
Snowdon lives in Washington, D.C.’s Georgetown neighborhood, but a trust at her address receives direct payments tied to a farm on Maryland’s Eastern Shore.
Last year, the government sent $1,208, according to Agriculture Department data compiled by the Environmental Working Group.
“I think it’s soybeans every year and corn some other years,” Snowdon said when asked about the farm’s management. She said she had never investigated exactly why the payments came. “It’s not a significant amount of money for me to get excited about it.”
The Environmental Working Group found at least 24 addresses in the District, and at least 21 in Manhattan, that received more than $1,000 in direct payments last year.
The Agriculture Department says it is possible for these urban recipients to turn down these payments.
But it’s very rare.
Now, Congress may end the payouts instead.
In both the House and Senate, committees have passed farm bills that would end these direct payments. They would be replaced with other programs that often require farmers to grow actual crops.
“You got people on Wall Street that probably own farmland,” said Sen. Charles Grassley, R-Iowa. “Well, they ain’t gonna get ’em anymore.”
Grassley himself would lose direct payments if the bill passes – he got $8,207 last year for a farm he owns in Iowa. Others on Capitol Hill get more. Last year, the program paid $70,574 to Rep. Stephen Lee Fincher, R, and his wife. Fincher, a fiscal conservative from Frog Jump, Tenn., has also called for the payments to end.
Direct payments seem easier to cut now, because farm income is near record highs. Corn, for instance, is selling above $6.60 a bushel.
“It’s become readily apparent that you couldn’t save them,” said Mary Kay Thatcher of the American Farm Bureau Federation. Thatcher got $1,340 in direct payments last year for her Iowa farm.
President Barack Obama has also called for eliminating the payments. So it seems that the subsidy that cheated death is almost gone.
Almost. But not quite.
The House’s farm bill would allow a subset of direct payments – those for cotton farmers – to continue for two years. The reason: There’s a new aid program being set up to help those farmers, but it hasn’t been implemented yet.
To tide them over, the cotton farmers will continue to get payments. At the House Agriculture Committee, they say there’s no reason to worry about that.
After all, these payouts are only going to be temporary.