KVNO News

2014 Farm Bill brings changes, cuts

By Brandon McDermott, KVNO News

February 26th, 2014

Omaha, NE — The new farm bill was signed into law by President Obama on February 7 of this year.

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The nearly 1,000 page bill will replace and modify many existing programs under previous farm bills.

Having the nation’s agriculture policy and nutritional assistance programs combined into a single bill is a method of bringing urban Democrats together with their rural Republican counterparts, according to Paul Landow, assistant professor of Political Science at the University of Nebraska at Omaha.

Professor Landow noted that customarily, farm bills are passed by the Congress every five years. He said this farm bill is nearly two years later than normal. Landow said there was a great deal of time spent debating the respective merits of nutritional spending allowances and agricultural subsidy programs in the House in 2013.

“Republicans are complaining, primarily because it didn’t cut food stamps (SNAP) enough, as well as additional agricultural aid,” Landow said. “Democrats are complaining primarily because it still offers up all sorts of subsidies to almost every farm industry you can imagine.”

Chris Clayton, Ag policy editor at Telvent DTN in Omaha, said for all the bickering, politicians ended up basically where they started.

“It’s a bill that had a lot of political infighting and at the end of the day they came out with the same bill they could’ve had in 2012,” Clayton said.

Clayton said the biggest change in U.S. agriculture policy came with the end of direct payments to Ag producers. These direct payments cost American taxpayers $4.8 billion per year, according to Clayton. In its place are two revised programs: a revenue program that would protect a percentage of farmer’s total farm revenue from year to year or a program based on commodity target pricing.

For instance, if the base price of a bushel of corn is set at $3.70 and if the average price of a bushel of corn was less than the base over a period of time, producers enrolled in the commodity target pricing program would receive a subsidy making up the difference. Clayton said what program producers choose will depend on where producers are located regionally and what commodities they grow.

“They wanted to get away from some of these direct programs and focus more on crop insurance,” Clayton said. “It will take some time to figure out whether you see some of these changes occur or not. It may very well be five years from now we figure out we are paying more as taxpayers for some of these commodity programs than expected. A lot of that is going to depend on the farm economy over the next five years.”

Clayton said only time will tell whether or not these changes prove beneficial or detrimental to Ag producers and taxpayers.

The Supplemental Nutrition Assistance Program or SNAP, as it is generally known, was cut by about one percent or $800 million over the next ten years.

“From the Democrats perspective one percent or $800 million is much more than they wanted to cut in the first place,” Landow said. “And to those who need the assistance the one percent will be felt.”

Landow said 850,000 households will be affected in the cuts. This includes 1.7 million people who could potentially lose $90 in SNAP benefits per month. Dr. Ernie Goss, Professor of Economics at Creighton University in Omaha, has a different view on the farm bill and its contents.

Goss said he believes that so-called “entitlement” programs like the SNAP program are becoming a drain on the U.S. economy.

“I think these programs should be tapered for these individuals who qualify,” Goss said. “In other words understanding that you need to move off this program it is not a lifetime commitment by the federal government to the individuals and families. But that is not what is going on.”

Professor Goss said he doesn’t support dropping entitlement programs altogether. However, he said he believes that a gradual reduction in their benefits would benefit both the economy and Americans as a whole. Goss said the U.S. made tremendous gains in the 90s with welfare reform but he suggests those advances are being lost.

Goss said he is convinced that the federal government is becoming just a conduit for money going from the states to the federal government and then back to the states in the form of Medicaid, Social Security and food stamps. The new farm bill has only perpetuated a systematic problem, according to Goss.

“We are talking about a nation that is becoming more and more dependent on non-work,” Goss said. “That is my real concern, the gap between the incentives for working versus the incentives for not working. The incentives for not working are growing whereas the incentives for working are growing very little.”

Dr. Timothy Smeeding is professor of economics at the University of Wisconsin-Madison and the Director of the Institute for Research on Poverty at the university. He disagrees with Goss’ sentiments.

“I don’t think that is correct,” Smeeding said. “This program doesn’t do a lot to discourage work. There is some good analysis by Robert Moffit at John Hopkins University that shows that the food stamp program doesn’t work very much. It’s too small to reduce work by itself. You can only spend three to four hundred dollars a month, but you need money for rent, utilities and other things.”

Data supplied by the Nebraska Department of Health and Human Services shows that 78,943 total households in Nebraska received SNAP benefits in 2013. Goss said he knows there are people out there struggling who need this additional help from the government. But he sees a problem with the help being more of a destination instead of a stepping stone.
Professor Smeeding sees the situation differently. He said when people don’t have enough work or their job doesn’t pay enough to meet even their basic needs, then they need help getting the necessities they need to survive.

“But the problem is too often there is not enough work and when there is work it is part time and for low wages which is not enough to support a family,” Smeeding said. “That’s why you need the SNAP program to continue to keep family’s heads above water.”

Professor Goss said he believes that if people have no incentive to work some will be contented in getting aid from the federal government. Before the recession began in 2007 Goss said SNAP cost $30.9 billion. According to Dr. Goss, it is more than double that today. Goss said he is alarmed at this growth in nutritional subsidies.

“We’ve got the smallest percent of the population in the workforce now since 1978,” Goss said. This is no accident, when you encourage and incentivize individuals to leave the workplace that is exactly what they do.”

Goss said there are numerous other areas that desperately need funding as well, programs like education, health research, highways and roads. If entitlements continue to expand Goss said there will be no money left for other economic stimulus programs.

Professor Smeeding said while the cuts are harmful they aren’t as detrimental as the 14 percent or $5 billion cut to SNAP in November of 2013. However, he said SNAP is America’s best anti-poverty program.

“Ninety to ninety-five percent of the nutritional benefits go to people who are below the poverty line,” Smeeding said. ”The program removes about 7 million people from poverty when property accounted for. It reduces the depth of poverty substantially, no other programs does this as well.”

With a contentious issue like cuts to SNAP benefits it is easy to see why it took more than two years to being forth a farm bill that enough lawmakers could support, according to Professor Smeeding. Overall, Professor Goss said this bill doesn’t change much it just ‘shifts things around a little here and there.”

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