It should alarm every American, regardless of
political affiliation, that their elected representatives directly
control less than one-third of the annual federal budget
One way to cut the budget is to begin eliminating programs that no longer
serve the public’s interest; and now serve as little more than wealth transfer
payments to particular industries
How
much does it cost to run a country? Each year federal, state and local
governments confiscate more than $5.7 trillion from the economy, based on 2013 figures. Of
that number, $1.1 trillion is eaten by local governments; state governments
take in $1.6 trillion, and the federal government consumes more than $3
trillion. And still runs a deficit of hundreds of billions
each year.
Part
of the problem is that We the People have developed quite a voracious appetite
for OPM – other people’s money. Federal aid and entitlement
programs consume the lion’s share of the budget; this is called “mandatory
spending” and it amounts to around 65 percent of the budget every year (and
that will only grow, thanks to the most recent expansion of Medicaid under
Obamacare). “Discretionary spending” is that which is subject to the annual
congressional appropriations process; it amounts to about 29 percent of the
annual federal budget, according to National
Priorities, a non-partisan
watchdog group that monitors federal spending. Interest on the federal debt – 6
percent currently – takes up the rest of the money.
Now,
two things should jump out at you immediately. First, it should alarm every
American, regardless of political affiliation, that their elected
representatives directly control less than one-third of the annual
federal budget. In addition, Americans should understand that this same
phenomenon is occurring on the state and local levels, too – mandatory spending
on pensions, health care and other benefits, as well, meaning that even
locally elected representatives don’t have as much control over local spending
as you might think.
Second,
the fact that there is so much mandatory spending means there is little room to
cut the budget – which, in turn, means there is little room to cut deficit
spending. So, as deficit spending rises, so, too, will the interest on that
debt, which means over time our elected representatives will have even
less influence over spending priorities, since payment on the federal debt
should be considered mandatory as well (since the country realistically cannot
default on its debt). That means in sum, mandatory spending amounts to nearly
three-quarters of all annual spending; the only way to really stop the
bleeding red ink, then, is to eliminate all discretionary spending
– a category that includes the military, by the way.
Obviously
that isn’t possible. And in order to reform mandatory spending, there must
be political reforms - namely, the American people will
have to agree on reforms that reduce government obligations (like
Medicare, Social Security, etc. – and good luck with that).
But
there is a way to cut the budget by billions each year. One,
tighten up on the waste. As outgoing U.S. Sen. Tom Coburn, R-Oklahoma,
demonstrated each year with his Wastebook, the U.S. government flitters away tens of
billions a year in wasteful, unproductive spending.
Another
way is to begin eliminating programs that a) no longer serve the public’s
interest; and b) now serve as little more than wealth transfer payments to
particular industries. Like farming.
According
to Isaac Orr, a research fellow for energy and environment policy at The
Heartland Institute, U.S. taxpayers are on the hook for more than $9 billion
for so-called “crop insurance” payments, as part of a Dust Bowl-era policy
that was supposed to protect the nation’s food growers from losses. As Orr
points out, the program has only expanded since:
Originally designed to help farmers in the wake of the drought
that coincided with the Great Depression, federal crop insurance was little
utilized until 1980, when the government began paying approximately one-third
of farmers’ premiums. Enrollment ballooned further after 2000 when Congress
amended the policy to pay for 68 percent (on average) of crop insurance
premiums.
He
goes onto note that crop insurance and other agricultural subsidies are no
longer merely safety nets designed to mitigate disaster; they have become
“income-support mechanisms” for thousands of farmers against both price and
production:
Between 2003 and 2007, federal crop insurance costs averaged
$3.4 billion per year, but between 2008 and 2012, factors such as drought and
high crop prices caused the costs of the crop insurance program to increase to
an average of $8.4 billion per year. In 2012 alone, the program cost taxpayers
$14.1 billion.
Orr
says a number of federal agricultural policies contain “harvest price options,”
which, in 2012 alone, paid out record-high prices to farmers for corn they did
not even grow. Such pricing options serve as encouragement for farmers to
plant their crops on poor-to-marginal land because they know they will be
guaranteed a payout no matter what level of production they achieve. If you
open the taxpayer’s wallet to farmers, in other words, they will line up to
help themselves.
Encouraging
farmers to over-insure and plow up land that is not well-suited for crops harms
other segments of the agriculture industry, says Bill Bullard, CEO of the
Ranchers-Cattlemen Action Legal Fund for the United Stockgrowers of America.
“One of the contributing factors to the alarming decline in U.S. cattle
numbers, which are now at the lowest levels since the ’50s, is that good
pastureland has been plowed up to become only marginal cropland that is only
profitable because of government subsidies,” he said.
Orr
says a recent analysis by the Government Accountability Office found that even
modest reforms to the program could save taxpayers plenty.
“For
example, by reducing premium subsidies by just 5 percent, the federal
government would have potentially saved more than $400 million in 2012, and
nearly $2 billion if it had reduced these subsidies by 20 percent,” Orr wrote,
citing the GAO study.
But
is there any political will to do this? Certainly lawmakers from farm states
will lobby hard to retain the subsidies, and there is no indication anyone in
D.C. is really in a budget-cutting mood anyway (unless you’re Barack Obama and
the department targeted for cuts is the Defense
Department – the one
constitutional obligation of the federal government).
What are YOUR thoughts on farm subsidies – good for
the country and taxpayers or just another of many unnecessary drags on the
budget? What is YOUR solution to the issue – Cut it completely, cut it a
little, or not at all? INFORM THE DEBATE below!
Comments
How much more grazing land would be available
if states would assert their ownership over federal lands and sell some to be
put to productive use. Subsidies do amount to “trickle-up” redistribution of
wealth. Subsidies should end for all
industries, but not for farming, until the Mexican border is secured. The farmers on the border need their subsidy
to keep “hired guns” as ranch-hands these days.
Norb Leahy, Dunwoody GA Tea Party Leader
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