The Camel and the Ag Pandemic Tent

Weekly WastebasketThe Camel and the Ag Pandemic TentIn which Big Ag looks to make temporary subsidies have a forever home.

Agriculture,  | Weekly Wastebasket
Jun 25, 2020  | 8 min read | Print Article

The COVID-19 pandemic is clearly reshaping communities and economies. But when it comes to agriculture and federal farm policy, it’s less reshaping and more regressing. Federal subsidies are on track to make up at least 50 percent of farming and ranching income this year, the highest level ever. More importantly, special interests and lawmakers are pushing to make this temporary subsidy spike a permanent fixture by empowering the Secretary of Agriculture to make billions of subsidy payments every year without consulting Congress. In other words, they’re exploiting the pandemic to undermine decades of bipartisan efforts towards a more cost-effective farm safety net focused on managing risk instead of maximizing government payments. This is fiscally irresponsible, and an abdication of Congressional responsibility to manage our nation’s finances.

As with the rest of the economy, Washington has opened the Treasury spigot to help agricultural businesses economically harmed by the pandemic. Thus far USDA has committed $16.5 billion in income subsidies for select farmers and ranchers as part of its coronavirus response plan with an additional $14 billion set to fatten bottom lines come July. With politically powerful agriculture interest groups claiming this falls at least $35 billion short, the most conservative estimate is federal financial assistance will constitute at least $60 billion (half of all farm income) in 2020. It could go higher.

If it was just dollars, it might be palatable in the near term. But how lawmakers get to these astronomical subsidy totals – as much as $134 billion if all proposals were enacted – makes it even worse.

Lawmaker and interest group demands have made it perfectly clear. They want future COVID-19 legislation to turn the Secretary of Agriculture into a Commissar of Agriculture with the power to bypass Congress and dole out subsidies via the Commodity Credit Corporation (CCC).

Created during the Great Depression and reconfigured during the Truman Administration, the CCC – in normal times – is simply a financing vehicle to cut and track checks for programs authorized in farm bills. But these are not normal times. Under the legislation creating the current version of the CCC, it is also a source of virtually unchecked power. This “Charter Act” authority allows the Secretary of Agriculture to use the CCC to create programs and spend billions without consulting Congress. As long as vague requirements are fulfilled – promoting domestic consumption, removing surplus commodities, aid in exports, or supporting prices – it’s basically carte blanche.

This broad authority is dangerous and undemocratic with the CCC’s history of politicization. In 2010 the Obama Administration used it to direct a half a billion dollars in “emergency” disaster subsidies to farmers in Arkansas, in a failed bid to secure the reelection of Senate Agriculture Committee Chair Blanche Lincoln (D-AR). In 2018 it was tapped for $218 million to assuage cotton farmers upset that high prices and bountiful harvests negated the need for government subsidies. It’s also been used as a means of expressly thumbing one’s nose at Congress, as Secretary Vilsack did in 2015 to spend $100 million to pay for new ethanol-friendly gas station pumps that the 2014 farm bill explicitly prohibited (Secretary Perdue tapped the CCC to do this as well). And the greatest example is the $28 billion the Trump Administration has committed to purchase the silence of farmers and ranchers decimated by their trade war with China, underlining the CCC’s role of bailing out bad policy.

Despite, or perhaps because of, these past abuses, agricultural special interests and lawmakers are proposing to greatly expand the power of the CCC. Not simply to respond to COVID-19 losses, but every year.

Lawmakers are looking to expand the CCC’s reach far beyond farmers and ranchers by enabling the Secretary to use the CCC to “Aid agricultural processing plants to ensure supply chain continuity during an emergency period.” In case you aren’t fluent in agri-ese, this is money for ethanol processors and textile manufacturers, neither of which are farmers nor ranchers. But, again, the broad discretion given to the Secretary makes this open ended. Food manufacturers, sawmills, chemical companies, toilet paper factories … they all process agricultural products, why not roll them into the Department of Agriculture’s orbit of influence, too? And does it have to be a presidentially declared emergency, or do disasters, which the Secretary has authority to declare, also count? You see the problem.

To eliminate any doubt that lawmakers expect this expanded authority to be used, they also eliminate the only real limitation on use of the CCC – its $30 billion borrowing limit. The CCC is limited to “borrowing” $30 billion annually from the Treasury to finance farm bill programs, disaster response, and whatever program the Secretary cooks up. The only time this limit came close to being breached was 2019, due to the trade war bailout (Congress simply restored the limit a few months early). Senate Agriculture Appropriations Chairman John Hoeven (R-ND) is looking to increase this limit to $50 billion while House Agriculture Committee member Austin Scott (R-GA), with the backing of the American Farm Bureau Federation, is seeking a $68 billion limit. Every year. Permanently. A CCCP if you will.

Expanding the Secretary’s authority to dole out funding without consulting Congress is an especially egregious attempt to undermine Congressional intent while permanently increasing Washington’s role in the balance sheet for farming and ranching businesses. Lawmakers should be more deliberate in their response to COVID-19. They need to ensure a federal farm safety net focused on helping farmers and ranchers manage the risks of today and tomorrow, not expand executive power to maximize government payments indefinitely for a select few.

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