Trump’s Proposed Cuts to Farm Subsidies Don’t Go Nearly Deep Enough

Earlier this month, as part of his annual budget, President Donald Trump proposed significant cuts to federal crop insurance subsidies. 

The cuts, which were similar to ones included in a previous budget proposal, would carve 31 percent out of the annual budget for the subsidies. Estimates suggest the cuts would save more than $21 billion over 10 years.

While the cuts target the wealthiest farmers, they would also impact every recipient.

“This time, the White House said the wealthiest operators, with an adjusted gross income of more than $500,000 a year, should pay full price for crop insurance,” Successful Farming reports. “And it said producers with an AGI of less than $500,000 annually should pay a larger share of the premium.”

That’s a good start. I call it a start because crop-insurance subsidies (and farm subsidies generally) should be eliminated entirely, at once, for every farmer, rich and poor alike. Still, Trump’s call for cuts to the wasteful program—particularly in eliminating crop-insurance subsidies for the wealthiest farmers—is worth celebrating.

“Typically, subsidies have benefited wealthy, larger farmers who farm just a handful of crops and who should not—and, flatly, do not—need them to succeed,” I detail in my bookBiting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable.

In a subsequent column in 2018, I highlighted that Republicans in Congress had sought “passage of another bloated farm bill, [which] would attempt to eliminate an Obama-era change that had reined in taxpayer-funded farm subsidies paid to many of the wealthiest American farmers.”

The non-partisan Congressional Budget Office is one of many offices and groups that’s long urged a reduction in crop-insurance subsidies. The nonprofit Environmental Working Group (EWG) is another.

“Crop insurance premiums are so heavily subsidized that participating farmers receive $2 in indemnities for every $1 they spend to share the cost of premiums,” EWG noted in a 2018 fact sheet calling for reforms to crop-insurance subsidies.

Not surprisingly, supporters of crop-insurance subsidies are angry at Trump’s proposal.

“This is what happens when ideologues decide to cut programs just for the sake of cutting,” said Rep. Collin Peterson (D–Minn.), the powerful chairman of the House agriculture committee.  “We will make sure that the farm bill isn’t cut during this year’s budget process.”

Tom Philpott of Mother Jones lamented the cuts to what he dubbed “a key support for corn and soybean farmers during extended periods of low prices, such as the one currently in effect.”

Nearly every administration promises to make some cuts to farm subsidy programs. Yet the cost of farm subsidies almost always balloons.

Back in 2013, Sen. Debbie Stabenow (DMich.), who chaired the Senate Agriculture Committee, called the Farm Bill she championed “an opportunity to cut spending.” How’d that work out? In 2015, one pundit wrote that the same Farm Bill “will prove to be the most expensive ever thanks to new subsidies Congress added on top of the already costly crop insurance program[], new research suggests.”

Thirty-five years ago, the 1985 Farm Bill, signed by President Ronald Reagan, was then the most expensive to date.

“Since the Reagan administration took office in 1981, the cost of farm programs has soared, reaching more than $100 billion by the end of last year,” the Chicago Tribune reported in 1988. “That’s more than six times the cost of such programs in the four years of President Jimmy Carter`s administration.”

Many farmers want and need crop insurance. And those that want or need it should have it. By all means.

Insurance isn’t the problem; taxpayer subsidies are. In the same way that government car insurance subsidies would encourage more and riskier driving, crop insurance subsidies encourage overproduction of subsidized crops and discourage diversification and conservation. Cutting these subsidies, as Trump has proposed, is a worthwhile start.


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About The Author

Baylen Linnekin

Founded in 1968, Reason is the magazine of free minds and free markets. We produce hard-hitting independent journalism on civil liberties, politics, technology, culture, policy, and commerce. Reason exists outside of the left/right echo chamber. Our goal is to deliver fresh, unbiased information and insights to our readers, viewers, and listeners every day. Visit https://reason.com

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