The Farm Bill: Rich Farmers vs. Hungry People

* Editor's Note: Regarding the title of this post...before the farmers begin raising their pitchforks up in protest, let's define what being financially "rich" in America really means. Many rich people in the U.S. don’t believe they’re rich (or they refuse to admit it, either to themselves or to anybody else). In a survey, the vast majority of investors with $1 million in assets don’t consider themselves wealthy. And many poor people don't realize they're poor, and believe they are middle-class. So being financially "rich" can sometimes be just a matter of self-perception. But in real terms: Considering the fact that 50% of all wage earners in the U.S. take home $27,500 a year or LESS, and less than 1% of wage earners have incomes of more than $250,000 a year, I would say that being financially rich means anyone who can quit their job today (if they work) and would never need to worry about food or shelter for the rest of their lives, while also maintaining the same lifestyle of someone who has an annual income of at least $250,000 a year --- no matter where you live in the country. So naturally that would also include the over 8.4 million millionaires and over 400 billionaires in America (the top 0.01%). Being "rich" would include those who can live the lifestyle of someone with an income of $250,000 a year, even if they passed away owing vast amounts of debt (regardless if they left their relatives stuck with paying any bills.)

The Farm Bill: Rich Farmers vs. Hungry People

For decades, urban and rural lawmakers have relied on each other to pass five-year farm bills that provided safety nets to both farmers and poor people.

Now the GOP wants to split the farm bill into two separate bills (one for rich farmers who grow food and one for poor people who need food) making it easier to cut food stamps for the poor, while retaining corporate welfare for a handful of wealthy farmers --- even for members of Congress, such as Rep. Michele Bachmann, who has received over $250,000 worth of crop subsidies.

And many farm subsidies go to people who are not even real farmers. A New York Times columnist on the East Coast is paid every year not to grow crops on wooded land he owns on the West Coast in Oregon.

House Agriculture Committee Chairman Frank Lucas (R-Okla.) said it would be "very challenging" for him to meet the Republican leadership's schedule of having a final agreement on a farm bill by December13th. Failure to meet the deadline means that the farm bill will be kicked over into 2014 for debate after Congress failed to act on the bill in 2012.

The excerpts below are from "The Insanity of Our Food Policy" by the economist and Noble Prize winner Joseph Stiglitz:

Farm subsidies were much more sensible when they began eight decades ago, in 1933, at a time when more than 40 percent of Americans lived in rural areas. Farm incomes had fallen by about a half in the first three years of the Great Depression. In that context, the farm subsidies were an anti-poverty program.

Now, though, the farm subsidies serve a quite different purpose. These farms received an average of about 20 times the amount received by the average individual beneficiary last year from the federal Supplemental Nutrition Assistant Program, or SNAP, commonly called food stamps.

Historically, food stamp programs and agricultural subsidies have been tied together. The two may seem strange bedfellows, but there is a rationale: There is a need to address both sides of the economics of food — production and consumption.

Given the inadequacies of the existing programs to combat hunger and poor nutrition, and given the magnitude of poverty in the aftermath of the Great Recession, one might have thought that the natural response of our political leaders would be to expand programs enhancing food security. But the members of the Republican caucus in the House of Representatives see things differently. They seem to want to blame the victims. Far from alleviating the impacts of these problems, the Republicans’ proposal would reinforce privation and inequalities.

The House has proposed cutting food stamp benefits by $40 billion over 10 years — that’s on top of $5 billion in cuts that already came into effect this month. Meanwhile, House Republicans appear satisfied to allow farm subsidies, which totaled some $14.9 billion last year, to continue apace. Their proposal is a perfect example of how growing inequality has been fed by what economists call rent-seeking.

As small numbers of Americans have grown extremely wealthy, their political power has also ballooned to a disproportionate size. Small, powerful interests — in this case, wealthy commercial farmers — help create market-skewing public policies that benefit only themselves, appropriating a larger slice of the nation’s economic pie. Their larger slice means everyone else gets a smaller one — the pie doesn’t get any bigger — though the rent-seekers are usually adept at taking little enough from individual Americans that they are hardly aware of the loss. While the money that they’ve picked from each individual American’s pocket is small, the aggregate is huge for the rent-seeker. And this in turn deepens inequality.

By cutting back on food stamps, we are ensuring the perpetuation of inequality, and at that, one of its worst manifestations: the inequality of opportunity. When it comes to opportunity, America is doing an alarmingly bad job.

Stiglitz maintains that inequality has been the main impediment to economic growth. The super-rich pay a lower tax rate in proportion to their earnings/income, so higher inequality depresses tax receipts. Also, most importantly, the poor consume more of their income than the rich. In other words, poorer people have less disposable income, and spend more of it on necessities such as food. Whereas, richer people tend to spend proportionately less of their income, since they have so much more money to spend.

Stiglitz believes (as do a growing number of others) that raising incomes for the poor would generate proportionately more consumption. It's become very clear that high levels of income inequality are clearly a problem for economic, as well as social reasons, in America today (who has the highest rate on inequality in the world). And in terms of the balance of austerity and growth, the government [mostly Republicans] has it all wrong --- and on the course we're on, Stiglitz doesn't see the crisis-affected economies of the US getting back to more normal rates of growth anytime soon.

Also read an article that's simply titled "Food Stamps" by Michael O'Hare:

"The insouciant cruelty of fat and happy Republicans simpering about making hungry children dependent (are there no poorhouses? Do the mills not offer employment to a deft eight-year old?) after they engineered the budget deficits they have now decided to rail about, and carried water for the “job-creators” who feathered their nests giving us the recession that’s put so many people on the street and on food stamps, is simply Dickensian. Eric Cantor is a horrible person, whipping a gang of racists and ignorant, fearful, haters into increasingly unspeakable behavior with fake moralizing and outright lies."

* As an aside: Supervalu is the third-largest food retailing company in the United States (after Kroger and Safeway) and ranks #75 on the Fortune 500 list. A Goldman Sachs analyst has recently downgraded the stock of Supervalu (from HOLD to SELL) citing federal cuts to food stamps....then their stock price tumbled. See my post, Food Stamps: Profits from Poor at Risk, at the Economic Populist.

Other excellent related posts:

Why Washington is Cutting Safety Nets (Robert Reich) -- "Congress doesn’t know much about the bottom 90 percent. Just about all members of Congress are drawn from the same top 10 percent — as are almost all their friends and associates, and even the media who report on them."

Poverty in America is Mainstream (New York Times) -- "Put simply, poverty is a mainstream event experienced by a majority of Americans. For most of us, the question is not whether we will experience poverty, but when."

Plutocrats vs. Populists (New York Times) by Chrystia Freeland, author of “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else”

Equal Opportunity, Our National Myth by Joseph Stiglitz at the New York Times