Agriculture and Nutrition Act of 2018
Floor Speech
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Mr. McCLINTOCK. Mr. Chair, farm subsidies, essentially taking money from taxpayers to inflate the price of their own groceries, was never a good idea. They are the poster children of corporate welfare since the vast proportion of them go to large corporations, not to small family farms. And 60 percent of American farms get no subsidies at all, contradicting the claim that somehow American agriculture couldn't exist without them.
We spend about $20 billion a year subsidizing about 40 percent of our farms. That is $160 a year out of the direct taxes of an average family in America, and that doesn't include the cost to consumers from higher prices. As we just heard, the sugar program alone costs taxpayers $3.7 billion a year in higher sugar prices. That adds about $30 more to their grocery bills.
Subsidies hurt taxpayers, they hurt consumers, and they even hurt farmers in the long run. The decline in farm economy since the last farm bill ought to warn us we are doing something wrong.
Prices are signals sent by consumers over what they want to buy and the amount that they are willing to pay. If left alone, they tell producers what consumers want more of and what they want less of. If consumers want less soybeans and sugar and more wheat and cabbage, prices for soybeans and sugar decline and prices for wheat and cabbage increase. Producers respond by planting less soybeans and sugarcane and more wheat and cabbage, unless--unless--the government distorts those price signals through subsidies. Producers end up planting more of what consumers don't want and less of what they do. Thus, producers are artificially induced to perform below their potential productivity.
Many of the subsidies today are in the form of crop insurance. Farmers get heavily subsidized insurance to guarantee them profits for their products. Who pays those subsidies? Taxpayers. What is insurance? It is the monetization of risk. It is the way markets assign a dollar value to the risk that one undertakes in any human enterprise. The higher the risk, the more expensive the insurance.
By subsidizing crop insurance, we once again corrupt the price signals that farmers need to make rational decisions. If crop insurance for soybeans is expensive, the market is warning farmers not to rely on soybeans. If taxpayers subsidize the cost of that insurance to lower its price, we are encouraging very risky behavior by masking the cost of that risk.
Once again, that produces bad outcomes for taxpayers, for consumers, and ultimately the farmers themselves because they have been led toward higher risk by distorted price signals.
Nor is subsidized insurance necessary for farm loans. Bankers loan to other non-subsidized parts of the farm economy without subsidized insurance. There are no good arguments for continuing these subsidies. Most farmers don't get them right now. Those who do tend to be major corporations and not family farmers.
Now, my amendment preserves subsidies for the next 2 years and then gradually phases them out over the next 10 years, assuring that producers who have grown dependent on these subsidies have plenty of time to adjust their operations. But at the end of this 12-year process, we have a much more efficiently functioning agricultural market that is accurately responding to the needs of consumers rather than to the whims of government bureaucrats.
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Mr. McCLINTOCK. Mr. Chairman, I would remind the ranking member that the reason the 1996 Freedom to Farm bill ended up costing us more is because we ended up adding a whole new series of subsidies to it. Experience is important to heed.
New Zealand has four times more dependency on agriculture than the United States--they are four times more dependent--and it once maintained an extensive subsidy program just like ours. In 1984, New Zealand ended those subsidies. Well, what happened? Farm productivity rose, farm earnings rose, farm output all rose.
What did New Zealand farmers who opposed the ending of subsidies say once those subsidies were removed and the economy responded? The Federated Farmers of New Zealand says that it ``thoroughly debunked the myth that the farming sector cannot prosper without government subsidies.''
Mr. Chairman, it is long past time to debunk that same myth in our own country, restore to consumers the power to command what producers grow, and restore to producers the accurate price signals they need to maximize their productivity in a free and undistorted market.
Mr. Chair, I yield back the balance of my time.
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Mr. McCLINTOCK. Mr. Chairman, this amendment does two things: It increases from 20 percent to 70 percent the percentage of able-bodied adults in SNAP that would be required to comply with the work requirements in the bill, and it requires the use of the E-Verify system to assure that work training is available only to legal residents in this country who are legally entitled to work.
H.R. 2 provides for a requirement that work-capable, nonemployed adults look for work or train for work in order to receive SNAP benefits. That is important. When Maine implemented a work requirement for able-bodied welfare recipients, they found that 84 percent of this population left the welfare rolls and, within a year, had doubled their effective pay. Alabama saw the same results.
Unfortunately, H.R. 2 would only engage about 20 percent of this population--20 percent. This amendment would boost the work participation rate to 70 percent of able-bodied adults in the program. It does so by implementing changes recommended by The Heritage Foundation.
H.R. 2's work requirement affects parents of children under age 6. This amendment reduces the exemption to those with children under age 3 but with an important difference: H.R. 2's requirements extend the work requirements to both spouses of children under the age of 6. This, in effect, is a marriage penalty that treats married couples as if they were single.
The amendment I offer applies to only one spouse in the family, allowing the parents to share domestic and work responsibilities between themselves in any manner they feel is appropriate. This recognizes, encourages, and rewards marriage as the stable and nurturing environment that it is.
H.R. 2 allows States to waive the work requirement in geographic areas defined by them with higher-than-normal unemployment rates above 6 percent. This amendment deletes the waiver for an important reason: Where there is high unemployment, there is also more reason to encourage job training and job searching in order to equip recipients to compete in tighter job markets. Sidelining these individuals is self-defeating both for them and for the local economies.
Also, the amendment removes the ability of States to define these geographic areas in a manner that would defeat the work requirement in the first place.
H.R. 2 also allows States to exempt 15 percent of the able-bodied population from this work requirement. This amendment takes it to 5 percent.
Finally, this amendment requires that SNAP recipients be screened by the E-Verify system to assure that training is going only to those who are obeying our laws and are legally in this country. This requirement is essential to the enforcement of our immigration laws. Otherwise, we are spending taxpayer money to train illegal immigrants whom Federal law prohibits from being employed.
This amendment transforms the work requirement in H.R. 2 from an empty and symbolic gesture covering just one-fifth of the able-bodied population receiving food stamps to more than 70 percent.
It rewards, rather than penalizes, married couples and recognizes that the shared responsibilities of marriage are one of the single greatest factors in reducing poverty. Children born into homes with single parents are five times more likely to live in poverty. It is time our policies reflected the importance of marriage in protecting our children.
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Mr. McCLINTOCK. Mr. Chairman, I continue to reserve the balance of my time.
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