The Nov. 1 rollback in food stamp benefits has complicated the debate. Farm bill shows Capitol's dysfunction

Maybe it’s time to admit that whatever comes out of the great Farm Bill Wars in Congress will be — an experiment.

Indeed, it’s a whole new world already compared to the last enacted bill in 2008, which passed by veto-proof margins and was helped along then by added money for nutrition and continued direct cash payments to farmers.


This time the mandate is entirely different: requiring a major rewrite of the commodity title while also tackling food stamps — all in the name of reform and deficit reduction.

( Also on POLITICO: Full agriculture policy coverage)

Ignored by the national press, it’s one of the great untold policy battles of this Congress. But it’s also now reached a breaking point, where each side has tied itself in such knots that Washington will soon enter its third year of debate on a five-year bill — an apt symbol of the Capitol’s dysfunction.

The Nov. 1 rollback in food stamp benefits — for which President Barack Obama shares responsibility — has greatly complicated the partisan debate over nutrition funding. A compromise still seems possible in the range of $10 billion in savings. But the White House dug in deeper Tuesday when Cecilia Munoz, director of the president’s Domestic Policy Council, told reporters that she saw “no reason” for any further savings from the nutrition program.

If that’s really the administration’s position, it could kill the farm bill outright. Then again the warring commodity groups are doing a pretty good job themselves — frustrating hopes of a deal before the House goes home Dec. 13.

Matched against this bleak picture is the fact that farmers back home are waking up to the price of inaction as corn cash sales have dropped to the $4 per bushel range — down dramatically from a year ago. And after last week’s historic Senate blow-up over filibuster rules, members of both parties see the farm bill as a last beacon of sorts in Congress for bipartisan action.

“We have to make this place work, and the farm bill is one of those things we can still do together,” Sen. John Hoeven (R-N.D.) told POLITICO. “It’s even more important now after what’s been happening here.”

So why is it so hard?

One big reason is that everyone seems to have underestimated the challenge of replacing the current system of direct cash payments that’s been the backbone of the commodity title since 1996.

The checks have been going out at a rate of $4.5 billion a year — regardless of what’s planted, if anything at all. This is impossible to defend as farm income has grown. But the catch-22 is that no replacement will be so direct or simple.

What’s more, any new safety net must fit a tangled agriculture landscape that’s seen dramatic changes from 1997 to 2013 — often facilitated by the same direct payments.

This is because the cash subsidies are based on the past production history of a farm — not its current or future plantings. Thus fields can be put into grass and still generate government aid. Wheat and cotton payments go out to farms, which long ago shifted to corn and soybeans to capture the higher returns driven by the federal renewable fuel standard.

In fact, corn plantings have grown by 21 percent or more than 17 million acres since 1997. Soybeans jumped by another 7 million acres. Wheat, cotton and rice plantings fell by a combined 18.6 million acres, even as 3.3 million acres were pulled out of the Conservation Reserve Program.

The new farm bill will include two options in its commodity title: a Senate plan geared to revenues, a House alternative keyed more to production costs. Both promise to save money on balance and are accompanied by tighter payment caps. But each runs into trouble for trying to be more honest than the artificial “base acre” formula that has guided direct payments.

The great flashpoint is the World Trade Organization and fears that American producers will face complaints if government payments are tied too closely to what a farmer actually plants.

The two most powerful lobbies here are the National Corn Growers Association and the American Soybean Association. Together, they have the greatest stake in export markets and tend to operate in tandem — both on the farm and in Washington, where each holds immense influence with Senate Republicans.

Both backed the Senate’s revenue protection program with the hope that any WTO concerns could be placated by making the subsidies temporary and tied to a rolling average of market prices. So much so that the Senate felt free to promise payments on a farmer’s recent planted acres — a boon to those in the Midwest and Great Plains who have expanded beyond their historic farm base.

But in talks with the House, the farm debate has suddenly come full circle with NCGA and ASA now promoting solutions akin to the old “base acre” formulation of direct payments.

“If agreement cannot be reached on this or some other approach that avoids tying payments to current-year planted acres, we would reluctantly oppose a new farm bill,” the two lobbies wrote in a toughly worded, even threatening letter to negotiators Tuesday.

Two forces help explain this response.

First, House Agriculture Committee Chairman Frank Lucas (R-Okla.) is insisting that the final bill give producers the choice of price supports calculated on the basis of a farmer’s production costs. This reflects Lucas’s personal convictions and the influence of Southern growers like the rice lobby. But it also sets up a surprising level of conflict between a chairman and the corn-and-bean forces so prominent in agriculture.

Second, the market itself has turned against corn at the worst point, bringing down prices and increasing the chances that the NCGA’s own favored Senate plan will be paying out at double the per-acre-rate of direct payments in 2014. Critics contend this embarrassment is what’s behind the escalated fears of WTO complaints. Certainly the pressure has increased to “decouple” commodity payments from whatever a farmer plants for that year.

At one level, it can seem pure power politics. The corn-soybean alliance is an immense, centralized national force. The wheat lobby, by comparison, is less organized and more divided regionally. Southern rice and peanut growers are small by comparison. Cotton took itself out of the commodity debate early and is focused instead on securing a new revenue insurance program tailored to its needs.

But beneath all the jockeying is a conflict of two genuine values. One speaks to the goal of providing a safety net without distorting planting decisions. The other argues that any aid should be a function of a farmer’s real risks and needs — not some artificial template that invites its own distortions.

To bridge this gap, the NCGA and ASA have offered a variety of proposals to create a more honest “base” that reflects a farmer’s recent plantings. But critics contend it’s still the same old rabbit hole — which Congress can’t go down again after the Alice-in-Wonderland experience of direct payments.

As a practical matter, too, what happens to the estimated 19 million acres of cotton “base” acres since cotton has taken itself out of the fight? And isn’t the Senate’s own revenue protection program, dubbed Agricultural Risk Coverage, a little risky in a strict decoupled scenario?

For example, ARC allows revenue losses to be measured not just county-wide but at the individual farm level. This was a concession to Sen. Max Baucus (D-Mont.) on behalf of Great Plains wheat producers whose counties are often so vast that county-wide averages don’t accurately reflect the experience of farms at one end or the other. But using a decoupled system, it opens the door for producers nationally to game the system after establishing a farm level “base” for their revenues.

A Mississippi farmer might establish a high revenue base for ARC assuming a 50-50 split between 160 acres of soybeans and rice on his land. He could then plant all 160 acres with soybeans, a profitable but lower grossing crop than rice. He would pocket then not just his earnings from the soybeans but an added 10 percent gain — thanks to coming in under his ARC “base” revenue target.

All this suggests some better compromise needs to be found that requires a closer match with real plantings.

One option would be to establish the best current base possible and then pay farmers on planted acres but only to the extent to which they conform to those crops. If a farmer wanted more flexibility to switch crops within his total farm acreage, he could. But he would then be paid at a lower percentage rate to reduce the marginal impact of his changes.

For example, direct payments are now distributed on 85 percent of a farm’s base. The new bill could pay on planted acres but up to 80 percent of the base — if the crops conform. If the farmer wants more flexibility, his government support could be lowered to 70 percent or some other number.

None of this alters the pressure the House faces to scale back the target prices it has set for its own Price Loss Coverage program.

The actual PLC payments reaching farmers are less than they appear because of various discounts factored into the equation. But critics would argue that the rice and peanut targets are set deliberately high to increase the frequency that some aid will be triggered — and dollars flow to make up for the loss of direct payments.

If this commodity discussion seems tortured in its detail, the talks so far on food stamps have been the opposite: all emotion and little detail.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) has resisted suggestions that the president become more involved. But Munoz weighed in Tuesday together with Gene Sperling, director of the National Economic Council. And days before Thanksgiving, the pretext was the release of an 11-page report underscoring the importance of food stamps — formally titled the Supplemental Nutrition Assistance Program.

Stabenow’s own version of the farm bill includes about $4 billion in 10 years savings from SNAP. And she has been reluctant to go much further given the rollback of benefits this month — a long-scheduled but still troubling drop ending the temporary increase approved in 2009 as part of Obama’s stimulus program.

Nonetheless, there are options that could move the Senate closer to $10 billion without dramatic harm to SNAP.

The most obvious is to crack down further on what many see as an abusive practice by states known as “heat-and-eat.” Under this scheme, token amounts of low income fuel assistance — sometimes as little as $1 per year — are distributed to SNAP recipients, thereby qualifying them for a standard utility deduction to leverage higher food stamp benefits.

Virtually all of the $4 billion in SNAP savings in the Senate bill come from setting a minimum threshold requiring states to at least distribute $10 in such fuel aid to qualify for the utility allowance. The Congressional Budget Office has estimated that $8.7 billion could be saved if that minimum were doubled to $20 as proposed by the House.

A second option, with modest savings but bigger policy implications, calls for reestablishing some more uniform range of income eligibility rules for SNAP.

Governors like the flexibility they have now to administer SNAP but the result is a checkerboard of different rules from one state to the next. Families living just miles apart in the Dakotas and Minnesota are subject to three different gross income tests for the same federal benefit.

Democrats will not want to surrender all this flexibility. But states could be required to go no higher than 150 percent of poverty or about $29,000 for a family of three. This might save in the range of just $100 million to $200 million a year. But it would be a step toward the House and some of the savings could be plowed back into increasing employment and training funds for SNAP recipients — a shared goal with many Republicans.

“We continue to believe that there is no need to be cutting the food stamp program — the SNAP program,” Munoz told reporters. “There is no reason that we need to be focused on the SNAP program in terms of cuts.”

Sperling hastened to add: “As the President says, we all need to compromise to move forward.”

But time’s short and every farmer knows: saying and doing are two different things.