Congress Must End Blank Check to Use on Government Farm Subsidies

Leading members of the agriculture committees in Congress have proposed using an obscure law, the Commodity Credit Corporation Charter Act, to give the administration a permanent annual blank check of nearly $68 billion to spend on government subsidies to farm businesses. The administration would be free to allocate the funds to programs that would be neither developed nor authorized by Congress.

This means any president could use the funds to benefit special interest groups for political purposes. From a policy perspective, allowing any administration free rein to spend that much money on programs of its choosing with little or no accountability to Congress is a bad idea. It also represents an abdication by Congress of its policy and oversight responsibilities as the legislative branch of the federal government.

Historically, Commodity Credit Corporation funds are sent to farm businesses through a wide range of farm bill programs authorized by Congress. These include crop subsidies triggered by low prices, payments to adopt soil and other natural resource conservation practices, promoting exports of a variety of crops, financing international aid shipments, providing disaster assistance, and supporting agricultural research.

In normal times, Congress would almost certainly not consider any proposal to raise the Commodity Credit Corporation cap, and certainly not to nearly $68 billion. The current annual spending cap of $30 billion has been in effect since 1986. Since then the cap has only been exceeded once by a small amount. There is no reason for a permanent increase because of current and projected spending on authorized farm bill programs. The Congressional Budget Office estimates that those subsidies will average less than $11 billion each year over the next decade.

Since 2018, the administration has exploited certain discretionary provisions of the Commodity Credit Corporation Charter Act to send an additional $28 billion to farm businesses as compensation for any losses they might have incurred because of the trade wars with China, Mexico, Canada, and other nations. Then with the Cares Act, Congress increased the cap by $14 billion to deal with disruptions in the agricultural commodities market caused by the coronavirus pandemic.

Over the past 40 years, administrations have rarely chosen to use excess Commodity Credit Corporation funds for their own purposes. When they have, their initiatives have been limited in scope and subject to scrutiny by Congress. When President Obama disbursed $350 million in emergency disaster assistance in 2010, some of the funds were specifically targeted for Arkansas rice producers, a move that many viewed as an attempt to help Senator Blanche Lincoln retain her seat in her unsuccessful campaign for the 2012 election.

Congress responded by inserting a provision in the appropriations bill for the next fiscal year that sharply curtailed the administration’s discretionary authority to use CCC funds for any emergency payments. Those restrictions were retained through 2017, but were not included in 2018 and subsequent appropriations bills. The administration was then free to use its CCC discretionary authority to compensate farmers to the tune of an additional $28 billion for any trade war related losses. The payments were designed with limited oversight from Congress, though many farm state legislators were comfortable with the process because it was a way of avoiding a protracted public debate over supplemental legislation to benefit some of their key constituents.

Like other largely export-oriented industries, many farm businesses have been hit hard by the current administration’s trade policy decisions over the past three years, and now, more dramatically, by the pandemic. But giving permanent carte blanche authority to the administration to compensate producers with new federal handouts that are 200 percent larger than those currently authorized by Congress is fiscally irresponsible, and the abrogation of Congress’s legislative and oversight responsibilities.

While this approach could be viewed as addressing urgent and legitimate needs, it will more than likely lead to politically motivated subsidy initiatives in the future, and with little or no oversight from Congress, such programs will inevitably invite abuse. The $30 billion CCC cap should be left in place or even lowered. Let Congress be the one to decide when circumstances warrant raising the cap, not when it is politically expedient for a current or future administration.