Soundings

James Bovard
Fat Farmers vs. the City Poor
Winter 1996

Here's how congressional Republicans could cut $15 billion a year from the federal budget and help American cities in the bargain: abolish agricultural subsidies and import controls.

Farm programs were born in the 1930s, when farmers' incomes were lower than those of urban workers. Today most farmers are far wealthier than other Americans. The Census Bureau reports that as of 1991, the median net worth of American families was $36,623. In contrast, the average full-time farmer was a millionaire, with a net worth of $1,044,396. Yet the federal government spends billions of taxpayer dollars each year paying farmers not to farm, so as to prevent the supply of food from outstripping demand. City dwellers pay twice for this policy—once in their tax bill, once at the supermarket. All told, federal farm policy cost consumers $11.1 billion in higher food prices in 1994, according to the Organization for Economic Cooperation and Development.

Much of this cost came from tariffs and quotas on imported food. Federal restrictions on imported sugar, for example, drive U.S. sugar prices to more than double those on the international market. This costs American consumers over $3 billion per year, a tax of more than $60 a year on the average family of four, according to the U.S. Commerce Department. Another example: the federal peanut program, which guarantees American farmers roughly double the world price for their domestic peanuts, shells consumers for up to $513 million a year, according to the U.S. General Accounting Office. Federal farm policy adds roughly 80 cents to the price of a family-size 40-ounce jar of peanut butter-a staple of low-income families.

Federal farm programs were scheduled to expire in 1995, giving Congress a golden opportunity to reform—or, better, eliminate—them. Thus far, the Republican revolutionaries have punted. Pat Roberts of Kansas, chairman of the House Agriculture Committee, endorsed a "Freedom to Farm" proposal that would have greatly reduced government restrictions on farmers' income while changing subsidy formulas in ways that would trim outlays modestly at best—and could even end up increasing them—over seven years. Congress ended up putting off agriculture reform during the autumn budget battle. When it reconvenes in 1996, what the GOP leadership does about farm subsidies will be a vital test of its credibility. A party that opposes big government cannot in good conscience continue taxing urban workers to subsidize rural millionaires.
 

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