Flinchbaugh: No farm bill seen until April
By Larry Dreiling
Barry Flinchbaugh, it's been said, has been working on farm bills since Chevys had tailfins.
The emeritus professor of agricultural economics at Kansas State University told the American Bankers Association's recent Agricultural Bankers Conference at Milwaukee his experience doesn't foretell a new farm bill being signed into law until next April.
"We will get a farm bill in April of 2013," Flinchbaugh. "It will look a lot like the (current) Senate version that puts a strong foundation under crop insurance and adds a county-by-county or farm-by-farm shallow loss revenue payment."
House Agriculture Committee Chairman Frank Lucas, Flinchbaugh said, was forced by wheat growers in Oklahoma and Texas to place the longtime target price program back into his group's farm bill, a provision that Flinchbaugh said doesn't work.
"It's backwards. In a year like this where farmers have no crop, how can you convince congressmen that if you don't have a crop you don't get a price? I don't know. So they're in trouble, since prices are above target," Flinchbaugh said.
"Say we get just enough rain next year. We've got lots of grain to sell. The market price won't cover them. It's ridiculous. When the battle is ended we'll be left to decide two things: the level of support for food stamps (the committees are about $10 billion apart) and whether or not we have a target price program, while we eliminate the decoupled fixed payment and ACRE."
But Flinchbaugh's belief that a farm bill won't be passed until April means there won't be legislation passed in the last days of this session of Congress.
"I was born an optimist and I'll die an optimist but I better not die tomorrow," Flinchbaugh said of a farm bill passing by year's end.
"There is a possibility that we will pass a farm bill. The real problem with passing a farm bill in the lame-duck session is not Speaker (John) Boehner. It's Majority Leader (Eric) Cantor, who wants Speaker Boehner's job. Cantor said he'd put the farm bill on the floor then he tried to weasel out of it."
Once Dec. 31 strikes without a farm bill, a new Congress begins and all previously debated bills die.
"All that hard work that was put in the Senate will have to start over," Flinchbaugh said. "It's going to be one interesting New Year's Eve. We will wake up on New Year's Day and all the Bush tax cuts will have been restored, $1.2 trillion will have been sequestered, half of which comes from the military.
"If Congress attempts to take this down the road, they are going to discover that the marketplace has had it. By spring, treasury bonds will be rated at DD and the president and Congress will panic and we'll finally get a solution."
The problem Flinchbaugh sees is a lack of leadership based on the power struggle between Boehner and Cantor that has allowed a large number of freshman Republicans to act without control.
"The reason we didn't get a farm bill passed is due to Majority Leader Cantor and those wingnut freshmen in the House who say no to everything," Flinchbaugh said. "When Congress had the audacity in the midst of a 60-year drought to go home without addressing it and let the farm bill expire, the AP called me and wanted to know if I had anything to say. I said that if I were a member of Congress I'd be too damned embarrassed to come home. That starts right at home with my congressman (Rep. Tim Huelskamp, R-KS, whose district now includes the Manhattan area). It is political uncertainty that brought our economy to where it is.
"We've done the same thing to agriculture. It's totally irresponsible. As my old friend, former Sen. Alan Simpson of Wyoming, would say, this Congress gives 2-year-olds a bad name. We have elected a bunch of wingnuts that don't understand compromise and how government should work. Wingnuts on the left and wingnuts on the right."
With the failure to pass a new farm bill this year, farm legislation has reverted to permanent laws passed in 1933, 1938, and 1949. What does that mean for 2013?
"That is very interesting to contemplate," Flinchbaugh said. "If we don't amend the permanent legislation, the 2013 crop will be covered by an ancient non-recourse loan program. A floor would be put under prices at between 50 and 90 percent of parity. Parity is based on a 1910-14 purchasing power index. That means we have a 100-year old policy."
Parity prices for 2013, Flinchbaugh said, include wheat at $18, corn at $12, beans at $27, cotton at $2 a pound, milk at $52 a hundredweight. Secretary of Agriculture Tom Vilsack will be required to hold producer referenda by April on marketing quotas and production controls on wheat and cotton.
"Who loves this? Our competitors. Our Canadian friends think it's great because we'll put a floor price down and they'll beat us on prices and our grain will be in government storage. I don't think agriculture has awoken to this. I don't think they know how inept this is."
The big issue, where the most misinformation about the farm bill resides, Flinchbaugh said, is in legislation on food stamps or the Supplemental Nutrition Assistance Program.
"They're funded through the end of the year. We are now getting advice from right-wing congressmen, mine included--if I had him in class I'd have flunked him--to take food stamps out of the farm bill and then we can get the farm bill passed," Flinchbaugh said. "We take out food stamps, pass what's left and everybody's happy.
"There are less than 50 agricultural districts out of the 435 districts. How are you going to pass a farm bill if all that's in there is programs for farmers, like conservation and renewable fuels? How are you going get the congressman from this district (Milwaukee) to support it? This isn't rocket science. They can even understand this at The University of Kansas. It's that simple."
"What's problematic is building a majority to support a farm bill when farmers and ranchers are a minority," Flinchbaugh said.
"Eighty-two percent of the USDA budget is food and nutrition budget. Take those parts out of the budget and USDA will no longer remain a cabinet level agency. Many subcabinet agencies would have a higher budget. So, we will remove food stamps from the USDA and move them to Health and Human Services and let my old friend Kathleen Sebelius run them. We will take part of USDA, like the Forest Service and put it into Interior with the BLM. Conservation and all environmental programs will go to EPA. This is nonsense."
As to the issue of the fiscal cliff, Flinchbaugh was upset that the proposals of the Simpson-Bowles Commission, which called for higher taxes along with spending cuts, were not enacted.
"I refused at first to understand why my Republican friends did not work to get Simpson-Bowles passed in the first place," Flinchbaugh said. "It's because they signed that damned stupid pledge. You think without illegal immigrants I know one person who needs to be deported: Grover Norquist. He's caused more problems in the last few years than anyone else.
"Seventy percent of the reforms come from cuts. Thirty percent comes from tax increases. Why won't any decent Republican vote for that? There are some really false assumptions out there, like you can't raise taxes in a recession, an economy that's growing at 2 percent? All you need to do is cut taxes and grow your way out?"
"There is no example of supply side economics that ever worked," Flinchbaugh said.
"Ronald Reagan knew better. He increased taxes 11 times. If the wingnuts ever bothered to learn that they'd run him out of the party. Remember Poppy Bush and no new taxes? He told Barbara Bush later that night she'd be a one-term first lady. Poppy Bush had the courage of his convictions and laid the foundation for five years of Clinton era budget surpluses.
'The best assurance to having funding for a farm bill is to reduce government activity in the capital markets. The economy grows, the budget balances and you bring certainty. Today we have $5 trillion in loose cash just laying out there. It will be invested if you work toward balancing the budget and reducing government activity in the capital markets. You'll get economic growth of a minimum of 5 percent. That is both supply and demand economics. One without the other is half-baked. Markets don't work with just supply economics or demand economics. You need both. If Congress or the president doesn't get this, the marketplace will get it."
During a question-and-answer period, Flinchbaugh was asked about the plan of Gov. Sam Brownback, R-KS, his former pupil, to introduce a proposal to the Kansas Legislature next year to eliminate the state income tax.
"I'm semi-retired, so I can be a little more loose with my tongue, and I try not to personally attack politicians. We need less of that. Sam and I are personal friends but I resorted to what I said about (Huelskamp) because I can't get him to listen, and neither can anyone else," Flinchbaugh said.
"I've told the governor that his plan won't work. Research has shown that if you eliminate the income tax in Kansas you freeze spending and property taxes 75 percent. He's listening to that fraud economist from California, Arthur Laffer, who's a supply sider, who thinks you can grow by cutting taxes. It doesn't work. History shows it doesn't work. It transfers the bills from state government to the local government so Governor Brownback can run for president in 2016 and say I cut state taxes."
Flinchbaugh said the tax system that works best is the three-legged stool of property, sales and income taxes.
"States that do that are doing fine, states like Nebraska and the Dakotas. You have to get the mix right. You cut state spending and you'll really only cut taxes about 3 percent," Flinchbaugh said.
Despite the issues America faces, Flinchbaugh sees reason to be optimistic especially through his students.
"Every fall I teach a class full of students in their early 20s and I always apologize to them for what my generation is leaving them, $17 trillion in debt," Flinchbaugh said. "They're dedicated, they work hard and they know there's no automatic job waiting for them when they graduate, so they even come to class. I go into that classroom and I understand why I do what I do."
Larry Dreiling can be reached by phone at 785-628-1117, or by email at email@example.com.