It seems that some of our friends want to know how we feel about outgoing U.S. Secretary of Agriculture Mike Johanns. He announced on Friday that he is leaving his position as Secretary of Agriculture to run for U.S. Senator in Nebraska. Nebraska just happens to be our home state too. Johanns was Nebraska's Governor before he became Secretary of Agriculture.
Since becoming Secretary of Agriculture, Johanns' signature issue has been trade. He has advocated aggressively for cutting trade distorting farm payments to facilitate a new trade agreement. As he runs for Senate, we expect that will cause some concern among farm voters - especially the farmers who are swing voters.
To his credit, Johanns has been a strong advocate for beginning farmer initiatives in the farm bill and that strikes a responsive chord among Nebraska farmers. His listening sessions in Nebraska and across the nation in preparation for the farm bill where probing and well done, and struck a responsive chord.
His recent criticisms of farm programs for benefiting the wrong people could strike a very responsive chord in Nebraska as well. It could also become an issue of significance in the race.
There is very strong support among Nebraska farmers for capping payments to large farms. But Secretary Johanns' proposal does not tighten payment limitations. Rather he proposes raising the limits on payments to large farms. He then proposes cutting off individuals with incomes over $200,000.
As we have written before, that will do little to prevent large farms from gaining payments. By reinvesting earnings in expansion, large farms can keep their taxable income below $200,000. Investors in farms will also find ways around the limit. They can split income between spouses and place farm assets in the name of the spouse with income of less than $200,000. Second, rich landlords will switch from share rents to cash rents. That way the farmer can collect the full payment and pass it on to the landlord through higher cash rent.
Finally, under Secretary Johanns, the USDA did not act on recommendations from its own Payment Limitation Commission (large pdf), created by the 2002 farm bill, and the General Accounting Office calling on USDA to use it existing administrative authority to close a big payment limit loophole by establishing objective standards for what it means to be actively engaged in the management of a farm.
Those recommendations were delivered before Johanns became Secretary, but even as he criticized the tendency of farm programs to benefit people who don't need them, he never used his clear authority to crack down on one of the worst abuses.