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Pessimism on agricultural-subsidy reform

November 23, 2010 - Mike Maneval
In the raging debate on deficit-reduction proposals, one idea proposed by Erskine Bowles and Alan Simpson, the two political insiders who chair the deficit commission tasked with issuing a report recommending an array of solutions, is to cut agricultural subsidies by $3 billion a year.

Long-time readers of this blog may remember a proposal by U.S. Sens. Dick Lugar, R-Ind., and Frank Lautenberg, D-N.J., to replace the agricultural subsidies system used today, which as of 1996 uses direct payments to farmers for many commodities, regardless of market conditions. Lugar and Lautenberg would replace this system with a crop insurance program. When proposed three years ago, the legislation included increased spending on other programs the two senators felt were neglected. Without the increases to these programs, the reform would spend about $14 billion less a year while expanding assistance to more farms and smaller farms.

Unfortunately, many doubt reform in agricultural subsidies has a serious chance of getting on the Capitol Hill agenda, and for good reason. quotes an agricultural economist at Purdue University, Otto Doering, who says the Republicans' leadership in the House indicates direct subsidies will continue. And with proposals from the retired senator Simpson and former chief of staff Bowles stopping at a ceiling of $3 billion in cuts a year, when they're tasked solely with deficit reduction, optimism for serious reform of farm policy that balances fiscal prudence and a need to preserve a critical industry may well continue to fall by the wayside.


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