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Meeting Our Challenges With Serious Reform

Editors Note: The column this week is written by U.S. Congressman Paul Ryan.

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December 11, 2008 | comments

Wisconsin faces unprecedented economic challenges as we look ahead to 2009. The effects of our recession continue to hit workers and families throughout the state, and Wisconsin farmers are no exception. Just as Wisconsin farmers rely on the demand and vibrancy of the global economy, our economic strength is heavily dependent on the strength of our agriculture sector.

At the federal level, the most important piece of legislation affecting our nation’s farmers is the farm bill. As most readers are well aware, Congress passed a new farm bill this past June, setting federal agriculture policy for the next five years. This landmark legislation covers a wide range of programs, including price supports, conservation initiatives, and nutrition assistance.

The importance of agriculture to Wisconsin’s economy cannot be overstated. Several specific programs important to Wisconsin’s dairy program were changed n the milk income loss contract program (MILC); the dairy price support program (DPSP); and the federal milk marketing order program.

Unfortunately, many of the ‘reforms’ touted by supporters of the 2008 farm bill were deceptive at best, perpetuating policies that make it more difficult to open foreign markets for our agricultural exports. Much was made of the adjusted gross income limits placed on subsidies. The reality is that one can combine on- and off-farm income in such a way that households making up to $2.5 million can remain eligible.

The subsidy program provides a number of egregious examples of wasteful and poorly targeted spending. In 2005, for example, the USDA disbursed farm subsidies to over 300 wealthy Manhattan residents. Among the recipients were at least two billionaires and numerous Wall Street power brokers. Additionally, a member of the prestigious Rockefeller family has received $228,000 in subsidies over the past 5 years. It is unacceptable for our farm policy to subsidize wealthy urban dwellers in Manhattan at the expense of rural family farms in the Midwest and American taxpayers.

What is more troubling than taxpayer subsidies to non-family farming multimillionaires is the fact that the design of the subsidy programs discourages the opening of new markets for Wisconsin producers. A prosperous future for our farmers requires the opening up of world markets for our goods and growing demand for our products. With 97 percent of the world’s consumers outside the United States, our family farmers must have access to world markets to ensure a stable commodity market.

In fact, recent trade negotiations have repeatedly broken down as the result of widespread refusals to take subsidy reform seriously. These negotiations provide an important opportunity for the U.S. to secure access to foreign markets for our farmers by helping reduce tariffs and the heavy farm subsidies that the European Union provides to its farmers. Both tariffs and subsidies put our farmers at a major competitive disadvantage. In part, because of our failure to lead in reforming trade distorting subsidies, the Doha Round of the WTO negotiations broke down, thereby denying U.S. farmers greater access to foreign markets.

Unfortunately, the 2008 farm bill continues to protect certain commodities at the expense of others. Most egregious are sugar producers, who, at a cost of billions of dollars to the U.S. consumer as well as thousands of jobs in the food manufacturing industry, received an increase in their subsidy as well as a guaranteed portion of the market. The failure to take meaningful action on these trade distorting subsidies in the 2008 farm bill was a major setback for increasing the global consumer base for Wisconsin producers.

I believe a farm bill should be designed to assist family farmers in times of need, and Congress missed a golden opportunity this year to enact meaningful reforms to strengthen our agriculture sector for the 21st century.

As Congress is home to enough critics and cynics, I think it is irresponsible to simply oppose legislation without proposing meaningful alternatives. When the farm bill was brought to the floor of the U.S. House of Representatives last year, I was proud to fight for a better farm bill along with a bipartisan coalition of reformers, including fellow Wisconsinite Representative Ron Kind of LaCrosse.

We put forth a comprehensive reform amendment to the Farm Bill n the “Fairness in Farm and Food Policy Amendment” n to ensure that there is a fair and effective safety net for family farmers during difficult times, while also tackling abuses within the present system and exercising greater care with taxpayer dollars. This amendment would have:

  • Replaced Depression-era price guarantees with a modern revenue-based safety net that better protects family farmers from declines in crop prices and crop yields compared to the current price-based payments. Price protection programs ignore key factors that affect farm income, such as yields and input costs like fuel and fertilizer;

  • Denied subsidies to large commercial farmers with average annual adjusted gross income greater than $250,000 and limited annual subsidies to $250,000 per person;

  • Gradually reduced direct payments for commodities, which were intended as “transitional” temporary payments under the 1996 farm bill, but have since been extended and increased. Limited-resource farmers would have been exempted from cuts;

  • Created optional Risk Management Accounts that would be available to every farmer and rancher and would work together with crop and revenue insurance already held by about 80 percent of producers. These “rainy day” accounts would have helped farmers set aside savings during profitable years to supplement their income during downturns;

  • Reformed crop insurance and reduced excessive payments to crop insurance companies that administer the program;

  • Reduced the deficit by $1.9 billion over five years and by roughly $14 billion over 10 years n without resorting to budget gimmicks or tax hikes;

  • Dedicated part of the savings generated by reforms to conservation and nutrition programs.

Despite failing to garner a sufficient number of votes on the House floor, I was encouraged to find growing support among a diverse coalition of reformers. I believe that by continuing to highlight the flaws with the status quo and putting forth common sense alternatives, Wisconsin farmers can get a better deal with serious farm bill reform.

The farm bill is but one of the many self-defeating economic policies imposed by the federal government. One of the most pressing problems facing farmers today is the high cost of health insurance. I have proposed legislation that provides all Americans with access to affordable health care, putting the individual and the provider at the center of health care decisions. Farmers would be able to buy insurance in nationwide purchasing pools with refundable tax credits. My reforms would make health care more affordable, more portable, and more transparent.

Another issue affecting farmers is the conduct of our monetary policy and the value of our currency. We are currently aiding a roller coaster of boom and bust cycles in commodity prices, which is largely due to Federal Reserve policy. I have introduced the Price Stability Act of 2008 to direct the Federal Reserve to focus its monetary policy on price stability, so we can reach a period of stable commodity prices that are predictable and reliable. Mother Nature throws enough challenges our way that provide uncertainty. We don’t need the federal government making matters worse.

Our current tax code is overly burdensome, discourages investment and savings, and puts American companies at a competitive disadvantage in today’s global economy. I put forth a plan that simplifies tax code for individuals, and replaces our 35 percent corporate tax n currently the second highest in the industrialized world n with a business-consumption tax. This innovative business tax would be border adjustable, removing the tax on exports and placing it on imports, as well as providing businesses the ability to write off 100 percent of their business costs in the year which they occur.

In addition to these reforms to our broken health care system and anti-competitive tax code, my comprehensive reform proposal addresses our looming fiscal crisis posed by the retirement of the baby boomers and the explosion of entitlement spending. To learn more about this proposal n called “A Roadmap for America’s Future” n I encourage you to visit: http://www.americanroadmap.org.

I remain hopeful that our best days lie ahead. We in Wisconsin not only pride ourselves on our vibrant farming tradition, but also on our celebrated reputation of reform. Since our early pioneers drafted a constitution in 1848, Wisconsinites have worked to make government more accountable to those it serves and to harness the best in its people. From the Robert LaFollette’s Progressive Movement to Tommy Thompson’s Welfare Reform, Wisconsin has put forth bold ideas that transform the relationship between the people and their government. To address our broken economic and agriculture policies, Wisconsin must build upon its forward-looking tradition and continue to lead the reform movement.

Born and raised in the community of Janesville, Paul Ryan is a fifth-generation Wisconsin native. Currently serving his fifth term representing Wisconsin’s First Congressional District in the U.S. House of Representatives, Paul is the Ranking Member of the House Budget Committee and also serves on the House Ways and Means Committee.

Paul is a graduate of Joseph A. Craig High School in Janesville and earned a degree in economics and political science from Miami University in Ohio. 

Paul and his wife Janna live in Janesville with their three children. He is a member of St. John Vianney’s Parish.

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