How Much Will The Farm Bill Cost? The Congressional Budget Office Doesn't Know
March 9, 2015
In 2014, policymakers touted the farm bill, which eliminated subsidies for farmers who did not need them. Nevertheless, any progress the bill saw was short lived thanks to two new and very costly initiatives: The Agricultural Risk Coverage and the Price Loss Coverage programs.
The Price Loss Coverage program, in particular, is of major concern as it grants payments to farmers when the price of their crop has fallen substantially. The idea behind the Price Loss Coverage program was that it could protect farmers from a lack of sales. This is especially critical because of the high fixed costs of running a farm and keeping it open.
Price projections are critical to knowing how much money the Price Loss Coverage program should receive, and in this case, the Congressional Budget Office (CBO) has been criticized for using outdated information to predict crop prices. Taxpayers may ultimately bear the burden of this miscalculation.
Consider these facts and figures:
- The CBO believed the farm bill would cost $3.6 billion per year for five years prior to passing the farm bill.
- After the farm bill passed, the CBO adjusted the annual expected costs by $1.7 billion, making the total expected annual cost $5.3 billion (a 47 percent increase)
- Economists and analysts are still convinced the published numbers by the CBO are underestimated and costs could be as high as $8 billion annually for the first five years.
While it is difficult to refute the essential service farms provide for Americans and the American economy, agriculture is also an industry made up of businesses, which face normal business risks. The 2014 farm bill attempted to reduce these risks, but the data was grossly misrepresented when deciding how much to spend on these programs. Congress could protect Americans by repealing the farm bill.
Source: Daren Bakst, "Protecting Taxpayers from the Farm Bill's New Blank Check," Heritage Foundation, March 3, 2015.
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