Use Your Illusion

We've been off the blog lately, consumed by farm bill research and a whole bunch of work on policy at the state level. Today (finally) we delivered a report analyzing the House and Senate passed farm bills and what they do in terms of payment limits. This is the sort of thing one has to do to be taken seriously. You would think everyone would just know that the House and Senate farm bills don't contain any real reform, given the failure of the Dorgan-Grassley amendment. Sadly, there is a lack of awareness amongst many in the media and in Washington.

Supporters of the House and Senate-passed farm bills have repeatedly termed it "historic reform" and the "most reform ever in a farm bill". This is because both versions remove what's known as the "three entity" rule, implement "direct attribution" and change the adjusted gross income (AGI) limits on those wishing to participate in farm programs. These supporters will admit that these measures don't go as far as Dorgan-Grassley but claim they will make a difference. Well, they don't. You can read the full report here. We know this is the wonk stuff. But the wonk stuff does make a difference. Here's the summary from our press release:

False Reform in the 2007 Farm Bill:

Lyons, NE - A report released today by the Center for Rural Affairs found that 99 percent of farmers affected by the payment limitation "reform" in the Senate farm bill would continue receiving the same large payments by switching to other means of exceeding the paper limits on payments.

The report described the farm bill provisions as "so-called reforms" - merely an illusion to provide political cover for Congress' failure to adopt true reform.

The analysis found only five farmers in seven states that would face any cut in direct payments under the provisions of the Senate farm bill, and none under the House farm bill. However, the analysis found 73 large farms that would receive an increase in payments under the House farm bill.

The report, False Reform: An analysis of Congressional payment limit provisions in the 2007 Farm Bill, examined data on individuals receiving more than $40,000 in direct payments, payments made every year regardless of crop prices, for the 2005 crop year in seven states (Georgia, Iowa, Kentucky, Minnesota, Montana, North Dakota and Oklahoma).

Supporting family-scale farming has long been a stated goal of farm programs that has broad support among farmers and all Americans. However, the House and Senate-passed farm bills fail to advance that goal. In reality, they continue to subsidize the destruction of family farming and the agricultural communities of rural America.

The Center's analysis reveals that eliminating the three entity rule and instituting direct attribution of payments, as proposed by the House and Senate farm bills, would do little to reduce direct payments to the nation's largest farms. The vast majority of farmers currently utilizing the three entity rule to double the nominal payment limit would simply achieve the same result through the spouse rule - which allows married farm couples to receive double the limit by receiving payments in the name of each spouse.

The Center analyzed the marital status of farmers currently using multiple legal entities to receive more than the current $40,000 paper limit on direct payments. Only one percent of farmers for whom marital status could be determined are unmarried and likely to face a payment reduction as a result of Senate bill provisions eliminating the three entity rule and instituting direct attribution of payments. Under the House farm bill, no farmers face a reduction and 73 would receive increased payments because direct attribution is offset by an increase in the paper payment limitation, from $40,000 to $60,000.

Ultimately, the data presented here, in combination with the analysis of IRS data and Adjusted Gross Income limits recently released by Senator Charles Grassley (R-IA), demonstrate the complete ineffectiveness of the so-called "reform" measures in the House and Senate-passed farm bills.

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