The Democrats' Best Shot at Reform

With the farm bill coming up this for renewal this year, Democrats in Congress have the opportunity to end farm welfare as we know it.

In 1996, a newly Republican Congress ended welfare as we knew it. In doing so, the Republicans improved a New Deal program that had become archaic, counterproductive, and dependency-forming. They also improved the public's image of Republicans. By defining the GOP as a party of ideas rather than interests, they burnished its reformist credentials and helped propel George W. Bush to the White House.

Fast-forward a decade. Once again, Congress has changed hands. Once again, the new majority needs to signal that it stands for more than business as usual. Once again, an archaic, counterproductive, and dependency-inducing New Deal program is ripe for reform. Once again, a consensus has emerged on the general direction for reform. This time, the opportunity is to end farm welfare as we know it.

In 2007, agricultural subsidies come up for reauthorization. Numbingly complex and arcane, farm bills have traditionally been of interest mainly to the agriculture lobbyists and farm-region legislators who wrote them in the Capitol's back rooms. In 2007, however, all Democratic lawmakers, not just the farm groupies, would be well advised to pay attention.

Rep. Earl Blumenauer, D-Ore., is certainly taking notice. Though not a member of the Agriculture Committee, "I've been preparing for this reauthorization, and I plan to be actively involved," he said in a recent interview. "It's critically important to my state, which is shortchanged by the farm bill." His district has fruit, wine, nurseries, and "the largest Christmas tree farm in America"—all outside the charmed circle of federal farm subsidies.

Blumenauer's political calculus, however, is national as well as local. "I think the farm bill is perhaps the best example of federal policy frozen in time, in a mixture of inertia, political considerations, and complexity," he says. "It currently is not serving most states, it's not serving most farmers, it's not fiscally conservative." He sees agriculture as one of only two ripe opportunities for Democrats to prove themselves as reformers in 2007 (the other being energy). "We have a chance," he says, "to send the message that we're serious about making government work right."

No one, not anyone, would sit down today and design the current farm programs. Although much revised in their details, they remain a paradigm of New Deal heavy-handedness, distorting markets in a way that accomplishes little at high cost. Subsidies are absurdly lopsided: 93 percent of payments flow to five crops (corn, cotton, rice, soybeans, and wheat), which together account for only a fifth of U.S. farm receipts. Meanwhile, 60 percent of farmers and ranchers get nothing.

Payments flow disproportionately to large farms and wealthy farmers. Much of the subsidies' value is sopped up by higher land prices, often benefiting absentee landowners instead of working farmers. Worst of all, the steepest price is paid by desperately poor farmers in the developing world, who must compete not only with American farmers but also with the U.S. Treasury.

Expert opinion has in recent years converged on an alternative approach, called revenue assurance. If the goal is to give farmers more income stability than volatile agricultural markets provide—and that, these days, is the only goal that most people agree has a public-policy justification—then revenue assurance is, in principle, a fairer and more efficient way to do it. The government and subsidized private insurers could indemnify farmers against sharp declines in earnings; government-supported "farm savings accounts" could provide further protection.

As it happens, such an approach fits neatly into a framework that is emerging as the Democrats' alternative to old-fashioned government handouts. The government and the private sector have steadily shifted economic risk "onto the fragile balance sheets of American families," Jacob S. Hacker, a political scientist at Yale University, argues in his recent book The Great Risk Shift. Moreover, he says, "the job market has grown markedly more uncertain and unstable." Hacker and other Democratic-aligned thinkers argue for a new focus on wage insurance and other methods of reducing income volatility.

Just being not-Republicans worked for the Democrats in 2006, but it is unlikely to suffice in 2008. Democrats need a plausible alternative to the Republican model of increasing personal choice—but also increasing personal risk—by partially privatizing Social Security and Medicare. The farm bill thus comes along at a providential moment, offering a test bed and showcase for a big idea at a time when the party sorely needs one.

None of that would matter if reform were politically impossible, but it is not. Difficult, yes. "If I were a betting man, I'd bet that the next one would look like the present farm bill with a bit of fiddling," says Robert L. Thompson, an agricultural economist at the University of Illinois (Urbana-Champaign) and a former Agriculture Department chief economist. "But the probabilities are just a little bit higher than normal that we'll get more-fundamental change."

Many farmers—not most, but more than previously—are supporting change. The corn lobby is talking up revenue assurance. Growers of fruits, vegetables, nuts, and other nonsubsidy crops, who mainly sat out the writing of earlier farm bills, have organized to demand fairer treatment in the new one. "That's a very significant new development," says Ken Cook, president of the Environmental Working Group, which advocates reform.

Environmentalists, anti-hunger groups, and international development organizations are also lobbying for change. Environmentalists want a shift toward conservation, and some, such as the American Farmland Trust, call for replacing crop-specific subsidies with revenue insurance. Bread for the World (motto: "Seeking Justice. Ending Hunger") likewise calls for a subsidy phaseout and an emphasis on mitigating farmers' financial risk. Development organizations want to curtail subsidies that hammer poor farmers in developing countries.

Something else: "Latino groups are rallying around the farm bill," says Rick Swartz, a Washington consultant who is organizing an alliance of reformist groups. Latinos, many of them former field laborers, are the fastest-growing demographic cohort of new farmers, Swartz says, and most of them grow unsubsidized specialty crops. In September, the National Latino Congreso passed a resolution calling for reform—a first, Swartz says.

Democrats will not have failed to notice that many of these change advocates are core Democratic constituencies.

Nor, probably, will they have missed that today's subsidies flow in vast disproportion to deep-red Republican states in the South and Midwest. Hmm. Then there is the fact that the farm bill is must-pass legislation. Congress will have to send something to President Bush, and he will have to sign something. That is an advantage that welfare reformers never had.

To realize all of this reform potential, two things must happen. First, the Democrats' leaders must seize the issue from the back-room farm interests, elevate it to national prominence, and demand a transformational farm bill instead of a transactional one. Second, Bush must join the effort, as President Clinton did with welfare. One party can't overhaul a bipartisan program, and only Bush's threat to veto a business-as-usual bill can prevent backsliding.

Here again, the stars seem aligned.

In 2002, Bush called for a reformist farm bill but retreated under pressure from Republican aggies. "Now the president is in a different situation," Blumenauer says. "It's all about legacy now." Agriculture Secretary Mike Johanns is energetically promoting reform, calling the 2007 farm bill "a great opportunity ... to refresh the way we view agricultural support and farm policy," as he put it in a November speech. "His speeches," says Cook, the environmentalist, "are music to a lot of our ears."

Bush, no less than congressional Democrats, needs to show he can be a change agent. "If the president, in his State of the Union, would lay down a marker that he won't accept a [conventional] farm bill," Blumenauer contends, "he could help the reformers in Congress, and it could be a significant achievement as they leave the stage."

A pipe dream? Maybe. Ending farm subsidies as we know them would be a minor miracle. But then, the 1986 tax reform and the 1996 welfare reform acts were minor miracles, and both happened under divided government and amid fierce partisanship. "Once the politics get aligned on this," Blumenauer says, "I think real progress could happen quickly." The biggest unknown is whether the Democrats will have the vision to view the farm bill as seed corn instead of pork.