Will Farm Bills Save Taxpayers Money?

July 17, 2012

The Congressional Budget Office’s score of the farm bill passed in the Senate estimates that it would save $23 billion (versus the current baseline) over ten years. It’s score of the bill that came out of the House Agriculture Committee estimates savings of $35 billion. However, the previous three farm bills ended up costing more than the CBO originally estimated:

  • The 1996 farm bill was supposed to phase out farm subsidies. Instead, crop prices fell and Congress responded with multiple “emergency” bailouts. From a 2001 paper on farm subsidies written by Chris Edwards and me:

When the FAIR Act was passed, the Congressional Budget Office projected that $47 billion would be spent on direct farm subsidies during its seven-year authorization. Instead, direct farm subsidies will end up costing $118 billion, including projected spending for fiscal 2002, over seven years.

  • The CBO estimated that the six-year cost of the 2002 farm bill’s major provisions would be $264 billion. According to the Congressional Research Service, the actual cost was $270 billion. That’s pretty close, but only because much larger outlays for food stamps exceeded much lower outlays for farm subsidies.
  • The CBO estimated that the five-year cost of the 2008 farm bill’s major provisions would be $272 billion. A Congressional Research Service report from December 2010 estimated that the bill would end up costing $402 billion. Commodity programs came in lower, but crop insurance and, in particular, food stamps, came in much higher. Whatever the actual final tally ends up being, it will certainly be higher than what was originally projected.

The point isn’t to beat up on CBO. The point is that trying to project how much a bill is going to cost over ten years – let alone one year – is an inexact science. The cost of farm subsidies depends in part on commodity prices and yields. The cost of food stamps depends in part on the condition of the economy. And Congress can decide to facilitate more spending on these programs whenever it wants. Thus, claims made by members of Congress that either farm bill will save taxpayers X amount of money over the next ten years should be met with the rolling of eyeballs.



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