What is in this article?:
- Deficit-reduction to kill direct payments and pinch subsidies
- President Obama sent a $4.4 trillion deficit-reduction plan to Congress. It proposes the elimination of direct agricultural payments and reduction of subsidies to crop insurance companies.
The president sent a $4.4 trillion deficit-reduction plan to Congress. According to a White House fact sheet, the total reductions include $1.2 trillion in cuts to discretionary spending already enacted; $580 billion in cuts from mandatory programs; $1.1 trillion from troop withdrawals; $1.5 trillion from tax reform; and $430 billion in interest savings.
The proposal, which includes $33 billion in savings from agriculture subsidies, noted that, “Farm income has been high and continues to increase, with net farm income forecast to be $103.6 billion in 2011, up $24.5 billion (31 percent) from the 2010 forecast — the highest inflation-adjusted value for net farm income recorded in more than 35 years. The top five earnings years for the past three decades have occurred since 2004, attesting to the profitability of farming this decade. The administration remains committed to a strong safety net for farmers, one that protects them from revenue losses that result from low yields or price declines, and strong crop insurance programs. But there are programs and places where funding is unnecessary or too generous.”
The administration is proposing to:
(I.) Eliminate direct payments. The administration noted, “The direct payment program provides producers fixed annual income support payments for having historically planted crops that were supported by government programs, regardless of whether the farmer is currently producing those crops — or producing any crop, for that matter. Direct payments do not vary with prices, yields, or producers’ farm incomes. As a result, taxpayers continue to foot the bill for these payments to farmers who are experiencing record yields and prices; more than 50 percent of direct payments go to farmers with more than $100,000 in income. Economists have shown that direct payments have priced young Americans out of renting or owning the land needed to enter into farming. In a period of severe fiscal restraint, these payments are no longer defensible, and eliminating them would save the government roughly $3 billion per year.”