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Ag economist talks about chances for new farm bill

Feb. 7, 2013 | 0 comments



"It's a fascinating time to be an economist - an agricultural policy analyst. It's also extremely frustrating," says Barry Flinchbaugh, a professor from Kansas State University.

"I've never seen our political system more broken, more partisan or more dysfunctional than it is right now," he said, speaking to an audience of 1,600 farmers and agribusiness people at last week's Corn/Soy Expo.

The first farm bill Flinchbaugh worked on was in 1968 and he has advised lawmakers on farm policy ever since. Now, he's finding contact with lawmakers frustrating.

"Every time I go to Washington I tell my wife it can't get any worse and by damn it does."

The overall economy, says Flinchbaugh, is in much better shape than most people give it credit for, especially the big, national media. The economy had been growing at a rate of three percent but skidded to a much slower pace last quarter "because of politicians not having the guts to do what we sent them there to."

The whole "fiscal cliff" scare put investors and the markets into a fearful mode, something that could have been avoided if Congress had done its job, he argues. That political uncertainty hurt the economy.

"Why should you invest? You have no idea what taxes are going to be or health care costs or rules and regulations coming out of Washington. How do you build a business plan?

Flinchbaugh calls the fiscal cliff "a totally manufactured crisis - done totally so the two parties could have a fight."

Similarly, no farm bill got passed because there was an ideological fight over food stamps and the deficit. All that got accomplished with the farm bill extension was "kicking the can down the road."

One good thing that came out of the farm bill extension was that the estate tax issue was settled with an exemption at the $5 million level, which means family farmers can pass on their operation to the next generation.

In an economy that had been faltering over the Great Recession, agriculture had been a bright star, the economist said, and then the drought occurred.

"In the midst of the worst drought in 60 years Congress went home Sept. 30 without getting a farm bill passed and allowed the 2008 farm bill to expire," he said with contempt.



OLD AG POLICY

The expiration of that five-year farm policy measure meant that federal agriculture policy immediately reverted to the 1938 Agricultural Adjustment Act. Though that measure was revised in 1949, it was based on 1910-14 ag economics.

When members of Congress realized that this reversion to old policy would take effect, many called for it to be repealed. Flinchbaugh begs to differ.

"If we repeal this law we'll never pass another farm bill. Don't let them repeal it. If they do there's no spur to pass new legislation."

Big media began running stories about how milk would cost $6 or $8 a gallon based on the 100-year-old farm policy. It would have provided dairy supports at $52 per hundredweight. "If we got to that we'd put Herefords in the dairy barn," he quipped.

This so-called "dairy cliff" forced Congress to pass the extension on New Year's Day as they did.

"Never underestimate how important food and agriculture is," he told his audience.

Earlier in the farm bill process Flinchbaugh had been optimistic. There was real statesmanship in the Senate and he singled out Sen. Debbie Stabbenow (D-MI) who chairs the Senate Agriculture Committee as well as the ranking minority member Sen. Pat Roberts (R-KS).

The two worked out a bi-partisan farm bill that "put farmers first and partisan politics second," says Flinchbaugh. That measure was able to garner a two-thirds bipartisan vote from Senators when it reached the floor.

"That is the way it's supposed to work. But both of them caught hell from their leaders, who want gridlock."

Similarly in the House, Rep. Frank Lucas (R-OK) who chairs the Agriculture Committee and ranking minority member Colin Peterson (D-MN) worked out a "decent bill," he said, that was not much different from the Senate bill.

That bill received support from the House committee in July and then never went to the floor of the House and never went to a conference committee - the one that irons out differences between two versions of a measure.

"There have been no conference committee meetings on anything for over a year."



EXTENSION BILL

"The best I can tell is they took the 2008 farm bill law and anywhere they saw 2012, they just put 2013. That means direct fixed payments are still in for another year."

That was one aspect of the old farm policy that everyone thought would be gone as negotiations continued.

"This one-year extension shows the system isn't working - but it's certainly better than the 1939 law."

Flinchbaugh said it's unfortunate that "all the good work Stabbenow and Roberts did in the Senate was null and void on Jan. 7 when the new Congress took over."

In the new session a farm bill will have to be rolled into negotiations on sequestration - the onerous automatic budget cuts put in place by the last Congress - and a worsening budget picture.

It will also be negotiated in what he sees as a worsening climate for compromise. "The world of ag policy has changed significantly in the last few weeks."

Roberts has been booted from his position on the Agriculture Committee and will no longer be the ranking member capable of forging the kind of compromise he did last year, says Flinchbaugh.

He has been replaced by Sen. Thad Cochrane (R-MS), a member from the deep South who was famously quoted as saying he was "going to teach Roberts how to eat rice." Flinchbaugh sees this as a return to the old farm bill arguments over cotton and rice subsidies.

"Even though Senate leader Harry Reid re-introduced it, the Stabbenow/Roberts bill is dead," he predicted.

Last year's Senate bill had proposed cuts of $28 billion while the House measure included cuts totaling $35 billion. The difference between the two was largely how much support to give to food programs for the needy.



LOBBYING NEEDED

"You need to talk to your Congressional representatives - especially your senior Senator (Ron Johnson) and tell them why food stamps belong in the farm bill."

There are less than 50 "rural" Congressional districts in the U.S. Congress, he said, and removing food stamps and feeding programs from the farm bill would mean a farm bill would never get passed - there wouldn't be enough representatives who cared.

"This isn't rocket science. It's ideological crap run amok," he said.

Eight-five percent of the U.S. Department of Agriculture's budget is the food programs.

"You need to tell Congress that if they remove feeding programs from USDA it would be the beginning of the end for USDA. It would be the beginning of the end for Lincoln's department that he established in 1862."

Some have urged that these feeding programs be moved to the Department of Health and Human Services and that would also transfer food safety compliance to that department, he said.

Forestry, now part of USDA, would be transferred to the Department of Interior and "all chemical regulations would go to the Environmental Protection Agency. That's what will happen if we take food stamps out of the USDA."

One of the real issues that will come up this year as Congress discusses the farm bill is "do we protect price or do we protect revenue," he said. The debate will center on target prices versus target revenue.

With Cochrane as the Senate Agriculture Committee's ranking member Flinchbaugh sees a big change. As he sees it Mississippians don't like the insurance programs. "They don't want insurance programs for rice."

Last year subsidized crop insurance was seen as taking over many of the functions of federal crop programs. Now, in Flinchbaugh's assessment, that is in jeopardy.

"The cost of crop insurance (to the federal government) will be a battle. In the major media crop insurance is the new bad guy."

Crop insurance, he said, is the reason why farmers had roughly the same net farm income last year - during a record drought - as they did in 2011.



DEBT CEILING

The debt ceiling debate going on now in Washington is a totally false debate, says Flinchbaugh. "This is Congress saying they don't want to pay our bills - the bills that have already been racked up."

The ag economist said if Congress wants to solve the debt crisis they should pass the recommendations included in the bi-partisan Simpson-Boles report that recommended both budget cuts (70 percent) and tax rises (30 percent.)

"We get this deficit thing solved and we will end the year with five percent economic growth.

Flinchbaugh said the idea that taxes can't be raised in an era of slow economic growth if false. "That is supply-side economics, which is half-baked."

He praised President George H.W. Bush for raising taxes to balance the budget even though he knew it would likely make him a one-term president. "But he did what the country needed."

"There's no evidence you can cut taxes and get out of an economic mess like this. We need political leaders who can conduct themselves in a spirit of compromise and civil discourse - the old American way."

"I've never seen a public issue that a dose of moderation wouldn't solve," he added.

Flinchbaugh makes 150 speaking engagements a year and has been a popular speaker at Corn/Soy. This was his fourth appearance there.

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