Perhaps we are entering an era in which Congress will need to be more accountable for the subsidies it provides to farmers and other industries. If so, then Congress and the administration should seek to spend money on programs only where there is a clear public interest at stake and even then only on programs where that clear public interest is being met in a cost-effective manner. The crop insurance program fails both tests.
In an attempt to rationalize the program’s $9 billion annual average cost, its supporters argue that this is a small price to pay for stability in our food supply. But the idea that the U.S. food supply depends on a taxpayer-provided “safety net” is ludicrous. The United States produces large surpluses of food for the export market, and farming has never been as profitable as it is now. Simply put, the only public interest at stake in the farm subsidy debate is the increase in interest on the national debt.
It may be too much to expect Congress to actually eliminate subsidies to a program that serves no broad public purpose, but perhaps it is not too much to ask for greater cost-effectiveness. A simple first step would be to ask farmers to pay a greater share of the cost of insuring their crops. Just as conversion of open bars to cash bars reduces excessive consumption of alcohol, this step would dramatically reduce farmers’ over-consumption of insurance.
Bruce Babcock is a professor of economics at Iowa State University and a contributor to the American Enterprise Institute’s American Boondoggle Project.