$50 Million Earmark

In less than two weeks, our nation’s farm and food stamp programs will expire.  It sounds daunting, but there is no real practical impact on farmers or food stamp recipients.  Nonetheless, some lawmakers are still peddling the myth that come October 1, we will hit an economic Armageddon.

Yesterday, Politico reported that some lawmakers are concerned about the passage of the new farm bill because of costs to dairy farmers as a result of the expiration of the Milk Income Loss Contract (MILC).  Again, not much to see here, but  one dairy state Senator is trying remedy this perceived problem:

 “Sen. Patrick Leahy (D-Vt.) is spearheading an effort to extend MILC and enrich the payments in light of the drought impacting farmers and feed prices. And the draft House bill backfills recent program cuts and extends MILC to Dec. 1. The added cost would be about $50 million according to preliminary estimates—a clear bid to get dairy votes.” 

However, this method of making the bill popular won’t fly with conservatives.

Remember, in July, Speaker of the House John Boehner explained one of the largest reservations he had with the farm bill – aside from the near $1 trillion price tag – was milk.  He said, “We’ve got a Soviet-style dairy program in America today, and one of the proposals in the farm bill would actually make it worse.”

What these portions of the bill do is to effectively allow the federal government to manipulate the market and to control the supply of milk.  Principled conservatives will not simply give in on these types of government generated market distortions.  Adding $50 million to this bill is not an effective way of making it more agreeable to other lawmakers.   Rather than making the bill more costly for taxpayers, the farm bill needs to undergo real market oriented reform.

The debate about subsidies to dairy farmers falls under the umbrella of a broader ongoing debate among Members of Congress regarding the earmark ban that Republicans implemented in November of 2010.  The ban was designed to prevent the practice of using earmarks to buy support for unpopular legislation.  And while the $50 million that Leahy wants to inject into the farm bill is not an earmark per se, it has the same legislative impact.  It is an attempt to gain support from dairy state lawmakers.  While this measure may be appealing in one particular sector of society, it is not a good long term answer for the country as a whole.

In fact, dairy farmers will not suffer a devastating impact if the five-year extension is not immediately passed. The funding dairy farmers receive will not be automatically terminated with the expiration of the 2008 farm bill.  On the contrary, additional subsidies to dairy farmers will harm Americans.  Heritage’s Diane Katz explains:

“Dairy subsidies date back some 70 years, the product of New Deal market manipulations to control agricultural prices. Congress has tinkered with various milk programs over the decades, but the USDA continues to “manage” supplies through a jumble of price controls and income supports for farmers.  In the past, advocates cited the perishable nature of milk as justification for government intervention in the dairy industry. Technological advances have revolutionized milk production, making such interventions obsolete—if they were ever needed to begin with. Dramatic price fluctuations and the consolidation of dairy operations expose the failure of existing milk policies to stabilize prices or sustain family farms, as intended.”

She continues:

“What has remained unchanged through seven decades of dairy policy are the price distortions that result from the government’s interference. By limiting supplies to maintain higher prices, consumers pay hundreds of millions of dollars more for milk, butter, cheese, and a variety of other dairy products.[41]Thus, Americans are taking a double hit on dairy: Tax revenues are used to subsidize producers, and production limits raise the cost of products.”

As Heritage Action has continually said, the farm bill in its current form is not acceptable.  No amount of tinkering will assuage conservatives’ dissatisfaction with this bill until it undergoes real reform.

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