Obama Again Urges End of Subsidies to 'Large Agribusinesses That Don't Need Them'

February 24, 2009 06:00 PM

via a special arrangement with Informa Economics, Inc.

President lays out more spending ahead, and targets unneeded spending as well

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

President Barack Obama told a joint session of Congress and a nationally televised audience Tuesday evening that there should be an end to “direct payments to large agribusinesses that don't need them.” During his comments, Obama said the White House has identified $2 trillion over ten years in wasteful and ineffective spending (all areas), including but not limited to "unneeded" direct payments to large agribusiness farms.

"In this budget, we will ... end direct payments to large agribusinesses that don't need them," Obama said, commenting on his forthcoming budget proposals to be outlined on Thursday and in more detail in early April.

Obama's position on farm program payments has not altered since he was a senator and during his primary and presidential campaign. In fact, it is close to the 2008 farm bill language proposed by former President George Bush.

It did not take long for U.S. farm program opponents and activists to welcome Obama's remarks, even though there was little new on the topic.

Some but not all U.S. farm-state lawmakers agreed with Obama's targeting direct payments for budget cuts ahead.

Senate Ag Committee Chairman Tom Harkin (D-Iowa) told Iowa Radio that he agrees "whole-heartedly" that "giant agribusinesses" shouldn't be getting federal subsidies. "I have been opposed to this direct payment program ever since it was first started," Harkin said. "We just never had the votes to change it over and maybe -- hopefully, now, with the backing of this president -- we can end those."

Sen. Chuck Grassley (R-Iowa), ranking member of the Finance panel, told Iowa Radio that he thought what Obama is getting at is "10 percent of the biggest farmers getting 72 percent of the benefits out of the farm program and that's compromising the purpose of the farm program." Grassley said Obama's limits would be no more groundbreaking than Grassley's owns proposal which would set a $250,000-cap on farm payments to individual farmers.

Former USDA Secretary Mike Johanns and now the junior senator for Nebraska (R), said: "I strongly agree we must balance the federal budget, yet I am concerned with some of the proposals that have been suggested. I do not support raising taxes on small businesses or imposing emissions fees through a cap-and-trade system that could have devastating consequences to businesses, agricultural producers and consumers." (Note: Obama’s budget likely will include expected revenue from selling carbon emission credits to polluters.) "And asking our Departments of Defense and Homeland Security to cut 10 percent of their budgets without urging spending reductions in other discretionary spending is not the right strategy for a prosperous future for our nation."

Background: Obama called on Congress to send him legislation that places a market-based cap on US carbon polluting emissions and pushes the production of more renewable energy. Obama's 2010 budget proposal forecasts that the government will begin collecting revenue in 2012 from sales of greenhouse gas emission permits, according to White House Press Secretary Robert Gibbs. While there is currently no federal cap-and-trade program, Gibbs confirmed that an overview of the next fiscal year's budget, which Obama is scheduled to release tomorrow, accounts for funds from auctioning permits under a system that would give companies the right to emit certain amounts of carbon dioxide and other gases.

Meanwhile, the National Farmers Union, who will soon have their president, Tom Buis, depart (to become the CEO of Growth Energy Inc.), has urged an end to the $5.2 billion made in direct payments annually, using the money instead to increase loan rates and/or target prices – a throwback to past farm policy. (NFU will soon have a press conference to reportedly announce Buis' plans.)

Eleven farm groups wrote USDA Secretary Tom Vilsack recently in opposition against any cuts in farm supports and notably direct payments, calling them the “the only component of the farm safety net currently helping every farmer" deal with rising costs of production and a big decline in crop prices.

Comments: Just as former USDA Deputy Secretary Chuck Conner under the Bush administration kept focusing on what he termed "wealthy farmers," Obama and his top officials have taken that baton and want to reach the finish line this time, unlike the farm payment cap attempt by the Bush crowd that was watered down in the final farm bill package. This will not be the only agriculture-related cuts ahead -- not with multiple-year, trillion-dollar budget deficits.

Agriculture cuts were not the only target of Obama's budget axe -- he also noted tax breaks for companies that send American jobs overseas and Medicare waste and fraud. “My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs,” Obama said, nothing that his budget will end “education programs that don’t work.” He added: “We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use.” He also vowed to “root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier” and end “tax breaks for corporations that ship our jobs overseas.”

As for Obama's address, the new president acknowledged public outrage over bank bailouts and misspent federal dollars, but made a sales pitch for continued hefty spending as a way out of a deep recession. (Since Obama has become president, the government has spent $35 billion a day.) He vowed to use the "full force" of the federal government to make sure that major banks can continue lending, but acknowledged that the effort is likely to require more taxpayer dollars. Saying "the day of reckoning has arrived, and the time to take charge of our future is here," Obama acknowledged the economic crisis while insisting that the journey back to prosperity means taking on long-deferred problems instead of letting them mount up for another generation. Striking a balance, Obama concluded, "We will rebuild, we will recover, and the United States of America will emerge stronger than before," signaling his coming budget will help detail the path ahead.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


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