Agricultural lobbyists should keep tabs on government bailouts
Dec 3, 2008 9:53 AM,
By Paul L. Hollis
Farm Press Editorial Staff
As the USDA continues to implement the rules and regulations of the 2008 farm bill, it’s easy to forgive and forget all the rancor that surrounded the passage of the legislation. But that would be a huge mistake, especially on the part of agricultural lobbyists who’ll have to fight this battle again in just a few short years.
Just to refresh your memory, the passage of this farm bill required the better part of a year of negotiating or horse trading — whichever term you prefer — and then the Congress still had to override President Bush with not one but two vetoes. We won’t even mention the months leading up to this time, with former USDA Secretary and now Senator-Elect Mike Johanns and his traveling non-listening tour.
The cost of the farm bill was about $300 billion. Of this amount, about two-thirds will go to nutrition programs such as food stamps. Another $40 billion or so will go toward farm subsidies while about $30 billion is allocated for environmental programs. Keep in mind that this total is for the full five years of the program, and that the non-partisan Congressional Budget Office stated the bill was fully paid for, and that it might actually save the government $110 million.
Nevertheless, getting the legislation passed was a task tantamount to pulling teeth, and in his final attempt at vetoing the bill, President Bush scolded Congress for not “modifying certain objectionable, onerous and fiscally imprudent provisions.” He added that it continued subsidies for the wealthy and increased farm bill spending by more than $20 billion.
And if the bill doesn’t pay for itself, it’s certainly fair to ask what Americans are getting for their hard-earned money. The answer is a safe, affordable food supply — no small thing considering how costs are rising for almost all other consumer goods and services.
So why is it so important that we not soon forget the hard-fought victory? Because here we are, just a few months later, and the government is freely passing out loads of money for far less deserving causes.
Here’s a rundown from just the past few months:
• Bear Sterns — J.P. Morgan Chase and the federal government bailed out Bear Sterns when the financial giant neared collapse. J.P. Morgan purchased Bear Sterns for $236 million, and the Federal Reserve provided a $30 billion credit line to insure the sale moved forward.
• Fannie Mac/Freddie Mac — The near collapse of two of the nation’s largest housing finance entities as yet another symptom of the subprime mortgage and housing market crisis. The U.S. government seized control of the two institutions and guaranteed up to $100 billion for each to insure they would not fall into bankruptcy.
• AIG. — When the American International Group was unable to secure a private-sector loan, the federal government intervened by seizing control of the insurance giant. Less than one month after the initial bailout and just days after AIG. announced it had already drawn down $61 billion of its load, the Fed stepped in with an additional $37.8 billion. Most recently, the Feds revised the terms of the bailout and purchased $40 billion in AIG preferred shares.
• Troubled Asset Relief Program — This is the mother of all bailout plans, proposed by the Bush Administration and approved by Congress, authorizes the Treasury Department to purchase up to $700 billion of distressed mortgage-backed securities and other assets and then resell the mortgages to investors.
And that’s not all. Struggling General Motors, Ford and Chrysler are seeking $25 billion in additional assistance on top of $25 billion in federal loans approved in September to help them develop more fuel-efficient cars. GM recently reported it lost $2.5 billion in the latest quarter and does not have enough cash to make it through 2009, raising the prospect of a potential bankruptcy filing.
There was very little wrangling going on as this money was being doled out — no one asked why bad loans had been made, and no one is asking why the U.S. auto industry continued to make behemoth gas guzzlers when foreign automakers were making better selling, more fuel-efficient vehicles. The cash was freely handed out, with practically no strings attached.
This should not be forgotten whenever the time rolls around to negotiate another farm bill.
e-mail: phollis@farmpress.com
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