Congress Expands Farm Subsidies, Cuts Food Stamps
NEW YORK ( MainStreet) The $1 trillion farm bill passed in the Senate Tuesday afternoon in a vote that sends it to President Barack Obama's desk for signature. The bill passed in the House last week among protests from both sides of the aisle, with liberals criticizing its cuts to food stamps while conservatives claiming it doesn't cut spending enough.
The law as passed is expected to cut spending by over $16 billion in the next ten years. The two issues with widest impact are farm subsidies and the food stamps program, which gets its funding from the farm bill.
Farm Subsidies Reformed and Expanded
The bill reforms and expands farm subsidies by eliminating direct payments and expanding crop insurance. This has long been a goal of both liberal and conservative lawmakers. Under the direct payment program Congress paid farmers approximately $5 billion a year regardless of individual need.
To replace direct payments, Congress has expanded crop insurance subsidies by over $6 billion per year. While the government currently provides federally subsidized crop insurance, the new bill will provide money to help farmers cover their deductibles as well. As with the direct payment model, this assistance will exist regardless of circumstantial need or individual wealth.
These subsidies, along with commodity programs such as price insurance, exist to stabilize the American food market. Subsidizing the cost of production helps to keep prices on staples like milk and bread low in lean years, while insuring farmers against the market helps to keep them from going bankrupt when abundant years drive prices down.
Food Stamps Cut by $8 Billion
While Congress ultimately expanded subsidies to farmers, it simultaneously cut funding to the Supplemental Nutrition Assistance Program (food stamps) by approximately $8 billion. This program sends direct vouchers to low income families to pay for food and necessities.
The $8 billion cut is the result of a compromise between House and Senate leadership. While the Senate originally wanted to cut only $4 billion from the program, the House proposed nearly $40 billion in cuts. The final deal leans heavily toward the Senate's version, and most notably avoids a House Republican proposal that would have cut aid to 1.7 million people.
Most of these savings will come from closing what has become known as the "heating loophole," a provision that allowed states to qualify applicants for food stamps if they receive any federal heating subsidies at all. The new law will require that applicants receive at least $20 per month in federal heating assistance before they can qualify for food stamps on that basis. This will reduce or remove benefits to approximately 850,000 households and is the second cut to the food stamps program in the past three months after Congress failed to renew additional funding on November 1 of last year.