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Drought Nation Heads for Dry Federal Well

A Commentary by Froma Harrop

Tuesday, July 31, 2012

As three-digit temps broil the sidewalks through late afternoon, one walks alone in this charming Nebraska panhandle city. These days, Chadron seems more pan than handle. The only thing breaking the silence is the nearly daily siren summoning local firefighters to a conflagration in the grass and brush countryside. Its source is usually easy to locate. Smoke clouds stand out in the big sky.

As severe drought helps unleash fires in large parts of the vast and beautiful High Plains, its rural economy looks to Washington for help. Despite their claims of self-reliance, many inhabitants here and elsewhere in the agricultural heartland have little love for the free market. Now they are trying to drink at a federal well that has itself been drained by a weak economy and tax cuts. One can understand why the five-year farm bill will probably go nowhere until after the election.

In truth, the farm subsidy programs were controversial even in the flush days. Farmers who otherwise embraced conservative small-government politics were pained by or ignored the contradiction of their dependence on taxpayers.

And taxpayers have been well tapped. They cover on average 62 percent of the farmers' insurance premiums. In tough years, when payouts explode, the taxpayers, not the insurance companies, bear the brunt of the costs, notes Iowa State University economist Bruce Babcock.

The most beloved subsidies are the "revenue protection" policies tying payments to the harvest price of the crop rather than the price it was insured at. Because the drought has driven prices higher, farmers may do better than they would have with adequate rain. Thus, corn growers with access to groundwater enjoy high crop prices. Competitors looking to the skies for water lose their crops but not money, thanks to Washington. There are no losers here.

Politicians supporting such policies hearken to the struggling family farm, but when it comes to farm policy, a few things should be noted. Only 38 percent of American farms receive subsidies, mainly those growing grains and cotton. California's famous fruit and vegetable empire, for example, gets relatively little help from Washington. But the state's cotton and rice growers, while accounting for less than 3 percent of the agricultural output, reap 44 percent of its federal crop subsidies, according to the Environmental Working Group.

It is commonly known that these subsidized farms are getting bigger, and the biggest taxpayer subsidies go to the richest few. Hundreds of subsidy checks go to absentee landowners in New York City. Members of Congress personally collected $6.1 million from 1995 to 2011.

Both the House and Senate agree on ending direct cash payments to farmers, at a savings of $5 billion. But some in Congress want to replace it with insurance programs that make the old spending look shabby by comparison. Notably outrageous is the Lucas-Peterson bill, named for Reps. Frank Lucas, R-Okla., and Collin Peterson, D-Minn. It would expand crop insurance subsidies by another $9 billion. Labeling it a "Soviet-style" proposal, House Speaker John Boehner, R-Ohio, swept it aside.

Ideological differences among Republicans are apparently holding up the legislation, and that is a good thing. Reforms will be easier to make after the election. Babcock thinks they can save $42 billion over 10 years.

One other thought for policymakers. Drought is no foreigner to America's midsection. Conditions were reportedly worse in the 1950s and, of course, the Dust Bowl years of the '30s. But this one is up there, and if climate change is as real as it looks, things will get worse, as higher temperatures evaporate more of what water there is. How long can water-deprived regions rely on a federal well that is itself running dry?

COPYRIGHT 2012 THE PROVIDENCE JOURNAL CO.

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