The US Congress, its approval rating still near all-time lows, is reinforcing its own record of stupefyingly short-sighted lawmaking with what may be the most harmful piece of economic legislation in America in years: the $1tn 2013 farm bill.

It should be called the 2012 farm bill – or, officially, the Agriculture Reform, Food and Jobs Act of 2012 – because the habitually sluggish group of lawmakers in Washington were too busy in 2012 to pass it. Campaigning for office and ginning up the fake fiscal cliff crisis occupied a lot of time, so lawmakers passed an extension of the $650bn 2008 farm bill for another year. That set an expiration date of September 30 this year. The delayed timing, however, is the least of the problems with it.

As members of Congress have negotiated over various amendments and riders to the bill, they've set an impressively consistent trend: they mix good ideas and bad ideas and combine them to create the absolutely worst possible policies. Elements of the farm bill, as it stands, will cut food stamps to the poor and the previously incarcerated, thus increasing poverty and possibly crime; add to the growing obesity crisis by encouraging chemical sugar substitutes; push genetically modified food at the expense of public health with the so-called "Monsanto Protection Act"; and support factory farming at the expense of sustainable food production with abusive crop subsidies.

That's quite a lot of damage to wreak with a single law, but this Congress certainly seems up to the challenge.

The farm bill will set US food policy for 2014 to 2023, encompassing everything from agriculture to food stamps. The food stamps show the worst decision-making. Conservatives are apparently annoyed that Americans are using more food stamps. That much is true. Food stamp usage has grown by at least 70% since the financial crisis in 2008, with a record 47.8 million people relying on food stamps in order to afford their weekly grocery bills. This is costing the government $74.6bn.

Members of Congress - whose average pay is $174,000 a year are outraged by this. As they enjoy over $4.6bn in subsidized healthcare, travel and other government perks subsidized by taxpayers, these lawmakers bemoan the waste of government spending on the poor. They pledge fiscal discipline – pinching every taxpayer penny – on the backs of people living below the poverty level, as the lawmakers themselves count on up to $1.2bn in retirement benefits.

So it is that these beacons to financial restraint, surrounded by a $6bn bubble of government-subsidized comfort, have succeeded in cutting food stamp help to the poor by about $20.5bn in this bill. They've also planned to eliminate food stamps – for life – for anyone who was ever convicted of a crime, which will disproportionately hurt the urban poor (pdf). Some lawmakers argued the SNAP, or food stamp, program should be cut because of the trend of food stamp users buying things like energy drinks – a trend that continues, not incidentally, due to the low availability of fresh and healthy food in poor areas.

Ironically, while they cut the government help to the poor, some of these lawmakers are the personal beneficiaries, to the tune of thousands of dollars, of government farm subsidies.

Yet they still ask: why do we need food stamps at all? There is an economic recovery, some lawmakers argue, why aren't more people buying their own food?

This is perhaps the most damaging and revealing idea of all. The "recovery" so far consists primarily of vaporous paper money – inflated stock prices and bounding home prices that provide a "wealth effect" but don't actually fatten anyone's bank accounts or pay anyone's bills.

In fact, the rise in food stamp use is neither anomalous nor abusive. It makes perfect sense. Poverty goes up in recessions and in weak recoveries like this one. About 12 million people are out of work. Only about 58% of the population is employed, which is around the lows of the early 1980s recession, and which also has not changed appreciably for around three years.

Long-term unemployment is a persistent problem, with 40% of all unemployed people out of work for six months or longer – at which point many employers arbitrarily deem them unemployable. Poverty has been rising steadily since 2008 – just like the use of food stamps.

Partially responsible for this mess, by the way, is the notably counterproductive fiscal policy decisions made in Congress to support damaging austerity, as even the chairman of the Federal Reserve said last week.

The ability to ignore its own part in the widespread and continuing economic crisis in America is more evidence that Congress, esconced in its marble halls and subsidized cafeterias, has absolutely no idea what is happening in the rest of America, and why so many previously middle-class families have trouble making ends meet.

It would be really something if those grousing lawmakers recognized that more Americans are using food stamps, for instance, because Congress has let them down. While Congress bickered over fake crises – deficits that aren't pressing and taxes that don't matter – we have real economic crises. The poverty crisis. The unemployment crisis. The inequality crisis. All of those have gone completely unaddressed by any kind of substantive legislation.

Though food stamp legislation is the biggest embarrassment in the farm bill, it is hardly the only one. Another testament to craven lawmaking is the rider that opponents dubbed The Monsanto Protection Act, for its chief corporate beneficiary. Companies including Monsanto sell genetically modified seeds, which dominate the US farm and food supply. These seeds are laboratory-created to survive being sprayed with powerful and harmful pesticides, which not coincidentally are also sold by Monsanto and its rivals.

The percentage of US soybeans, cotton and corn that come from genetically modified crops hovers between 80% and 90% depending on the crop. Currently, these companies have to wait for the US Department of Agriculture to test the seeds for potential harm to humans. The Monsanto Protection Act would allow big agriculture companies to sell genetically modified seeds before they are tested, and prevent the USDA from interfering with the sale of the seeds even if they are proven to be harmful to humans.

That is self-evidently a total capitulation to corporate interests at the expense of consumers and the American food supply; it's only recently, however, that opposition has been raised by senators including Jeff Merkley of Oregon, based on opposition from his state's farmers.

Small farmers rarely win. Right now, big factory farming rules the country. Around 12% of American farms have sales over $250,000; those same wealthy farms account for 84% of the production value in the country according to a useful, if right-leaning, primer from the Heritage Foundation. This is a loss to consumers as larger farms tend to hurt local water supplies due to greater runoff from pesticides and fertilizers. These larger farms also tend to give more power to buyers who buy in bulk, fueling a corporate rather than a consumer market.

Then there is the problem with sugar in the bill. US sugar is expensive – 50% higher than sugar on the world market from 2008 to 2012, according to price data from ICE Futures US obtained by the Wall Street Journal. That's because the US sets a minimum price for sugar, which, in turn leads to scrapes like the one we're in now. According to the Wall Street Journal, the USDA may have to buy 400,000 tons of sugar at an estimated loss of $80mn in taxpayer dollars just to keep the price of U.S. sugar artificially inflated.

The farm bill sets a minimum price for sugar, mainly US-grown sugar from beets leading to criticism that the country is fueling "Big Sugar" through loans to farmers and import restrictions from cane-sugar-producing countries like Central America and the Caribbean. Naturally companies that make sweet products, including Hershey's and Coca-Cola, oppose this.

To a consumer, high sugar prices may seem like a boon, but they're not. Since sugar is in nearly everything, many supermarket products will cost more when sugar prices rise. And, as long as sugar prices are high, food companies will continue to favor chemical sugar substitutes and products like high-fructose corn syrup, which is derived from heavily subsidized corn instead. Health advocates have criticized high-fructose corn syrup as a potentially harmful contributor to the obesity crisis.

This is a litany of economic and public health disasters from just one bill. The only good thing the farm bill will do is end direct payments; those are subsidies paid to support farmers, regardless of the price or fruitfulness of those crops. Even that move is long overdue.

The farm bill is still being debated, and still may change form. We can only hope it will. In its current form, it's a short-sighted embarrassment to American lawmaking.