Rep. Jim Jordan's Ohio district ranks among the top 50 recipients of farm subsidies. | AP Photos Farm subsidies test GOP pledge

As eager as they are for a fight with the White House, Republican budget cutters have a problem in their own back pasture: what to do about a system of farm subsidies that’s still pumping billions into GOP districts at a time of record income for producers.

Net cash farm income for 2010 is projected to finish near $92.5 billion — a 41 percent increase even after subtracting payments from the government. Yet conservatives are almost tongue-tied, as seen last week with the Republican Study Committee’s proposal to eliminate relatively modest subsidies for an organic food growers program without mentioning the nearly $5 billion in much larger government direct payments to farm country — including to the home districts of many of the RSC’s members.


Indeed, 24 of the RSC’s estimated 165 members hail from the House Agriculture Committee, and total annual direct payments to their districts run more than $1.09 billion a year, according to a POLITICO review of data compiled by the Environmental Working Group. RSC Chairman Rep. Jim Jordan doesn’t sit on the Agriculture panel but represents an Ohio district that ranks among the top 50 recipients of farm subsidies, including $30 million in annual direct payments.

Rep. Jeff Flake (R-Ariz.), a longtime activist in the RSC’s ranks, told POLITICO that farm subsidies remain “low-hanging fruit” for future budget cuts, and it’s wrong to read too much into conservative silence. But after winning back swing farm seats last November, the costly payments are clearly a sensitive subject for the GOP, even as the party demands deep cuts elsewhere in domestic spending.

The opening shot is Tuesday’s House vote on a resolution reaffirming the Republicans’ promise to cut $100 billion by rolling back domestic appropriations to the 2008 levels under former President George W. Bush. And the RSC is pressing Speaker John Boehner (R-Ohio) to both keep this promise and agree to a second round of cuts to bring spending down to the 2006 levels set by the last Republican-controlled Congress.

A 78-page bill to that effect was filed Monday with 25 sponsors. And in a letter to Boehner signed by 89 Republicans, RSC leaders urged that he hold firm.

“Under your leadership during the campaign, House Republicans boldly pledged to cut federal spending by $100 billion by returning current spending back to FY2008 levels,” the letter reads. “Despite the added challenge of being four months into the current fiscal year, we still must keep our $100 billion pledge to the American people.”

Tuesday’s debate will take place just hours before President Barack Obama’s State of the Union address in the same chamber. And the implicit goal is to trap the president in a vise, so to speak, squeezed between Republican demands and what are sure to be a grim set of updated deficit estimates from the Congressional Budget Office Wednesday.

“It’s politics, pure and simple,” said Rep. Jim McGovern (D-Mass.). “This is show business.”

But as seen with the farm subsidy issue, the politics may be double-edged for the GOP.

Fully in control, the leadership easily prevailed Monday on an early procedural test. The 240-160 vote fell along party lines with just eight Democrats feeling enough pressure to fall in line with the GOP on the spending issue.

Looking down the road toward the real fight in early March, the impact of the proposed spending cuts will be more real, and Majority Leader Eric Cantor (R-Va.) has promised an open process by which alternative budget proposals will be debated.

“RSC, progressives, they will all have the opportunity to present their view of how we should cut spending,” Cantor told reporters. “We’ve not announced exactly when that will take place. Stay tuned. But I will say again, this is going to be an open process.”

Most attention will be on discretionary appropriations, which fund the daily operations of the government. But Republicans have already opened the door to cutting Medicaid funding for the states or so-called mandatory funds authorized under Obama’s health care reforms. And given the size of the payments to farmers, even a 20 percent reduction could yield as much as $1 billion in annual savings.

The direct payments program itself is rooted in the early years of the so-called Republican Revolution of the mid-’90s and the famous Freedom to Farm Act, which promised to wean producers off federal support. The payments were billed as a temporary measure but have stubbornly endured, paid out under a formula driven by past production levels and not what prices or costs are for farmers today.

The result is really an “income enhancement” payment for producers and one that stands out even more now that farm income has risen dramatically. While 2009 and the global recession saw much lower farm income than today, there is significant evidence of a more permanent change in U.S. and world commodity markets from when the direct payments were first conceived.

Keith Collins, former chief economist for the Agriculture Department and now a private adviser to the crop insurance industry, said that two trends are chiefly responsible. First, new middle-classes are emerging in developing countries like India and China that are able to pay more for food and second, closer to home, is the growth in the heavily subsidized production of ethanol and other biofuels.

Thus the projected farm income for 2010 is not only a rebound from 2009 but also significantly higher than the historic 10-year average. And the president’s deficit reduction commission recommended a net decrease of about $10 billion over 10 years in subsidies.

With a new farm bill in the offing, there is sure to be resistance to any dramatic changes this year. And it can be argued that Agriculture already took a $6 billion hit last July in renegotiating the Standard Reinsurance Agreement that governs crop insurance. One-third of those savings, or about $2 billion, was to be invested in improvements to the Conservation Reserve Program, but farm interests will argue that they are already out front in deficit reduction.