Cutting the Federal Budget To Prevent U.S. Bankruptcy Part V: Abolish the Agriculture Department

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by Jim Grichar (aka Exx-Gman) by Jim Grichar

(Author's note: I ask readers for their indulgence because of my extensive use of the b-lingo – bureaucrat-lingo – and the detail I used in presenting my arguments. I do this to reduce bureaucratic counter-arguments – which I expect to receive – to the absurdity that they invariably are.)

For those who did not read Parts I–IV of this series, total actual cuts in proposed spending (what I call the "Cut-o-meter') now amount to $259 billion. Those cuts came from Defense, NASA, HUD, the Education Department, and other agencies.

The U.S. Department of Agriculture is an anachronism that needs to be abolished. With a budget for fiscal year 2005 of $81.8 billion, it is time for the Congress to get rid of this financial millstone on the body politic. Actual spending for the current fiscal year 2004 should come in at about $77.7 billion

Ostensibly set up to protect small farmers from the vagaries of price fluctuations and crop disasters, the U.S. Department of Agriculture has grown into a multi-faceted bureaucracy that now spends more than half of its budget ($47.3 billion) on the food stamp and related food-type welfare programs. But if the taxpayers ended other farm subsidies, such as the $15.2 billion proposed for price supports, there probably would not be a need for food stamps as food prices would decline, making food affordable to poor people.

A Little Bit for Everyone

Today's Agriculture Department budget generally reads like a laundry list of welfare programs, from the various food stamp and food welfare programs to all sorts of aid for farmers, including such items as rural electrification and telecommunications programs, subsidies for renting farms and purchasing farm houses, federal crop insurance, dairy indemnities, export subsidies, etc. The list is lengthy, and it looks ridiculous. One program gets morphed into another, with a new name, but always the same purpose, protecting the farmer from the vagaries of the free market. In the real world, farmers can purchase all the protection they need by executing commodity futures contracts to protect themselves from price fluctuations. Selected forms of crop insurance might eventually be offered by private insurers, and such insurance would be better run by the private sector than the current government program.

The food stamp, school lunch, and other food welfare programs were ostensibly set up to provide subsidized food for the poor or disadvantaged or assuring that school children were not malnourished. The real rationale was to provide back-door support for food prices and assure that no one would ever attempt to abolish such welfare. Eliminate all these food welfare programs and food prices will drop. Americans were not starving before the advent of these programs, and they will not starve after these programs are abolished. Total savings from abolishing these food and farmer welfare programs would be approximately $75 billion per year!

The Forest Service

One of the more notorious Agriculture Department programs is that of managing the many forests owned by the government. The U.S. Forest Service is responsible for managing the National Forest System, which includes 187 million acres of forests and nearly 4 million acres of grasslands.

But because of lobbying and influence by the environmental movement (not allowing clear cutting, allowing buildups of dead brush, all in the name of supposedly protecting endangered species), management of the public forests has become a nightmare, leading to massive forest fires, losses of wood, and often significant and costly damage to nearby private property. Federal disaster payments to compensate losses to private property owners – such as those in the Los Alamos New Mexico area who were wiped out by an out-of-control government-initiated "controlled burn" – run into the hundreds of millions of dollars, if not more. Such payments are never anticipated nor included in the budget for the Forest Service.

For fiscal year 2005, the Bush Administration proposes spending $5.1 billion to manage the public forests and grasslands. Given the lengthy track record of mismanagement and losses and the proven stellar track record of the private sector in minimizing fires, losses of wood, damage to private property, and preserving endangered species, federally owned forests and grasslands should be put up for sale to the highest bidder. In addition to saving the $5.1 billion per year now wasted on the Forest Service, the government could sell off the lands, raising $100 billion or more that could be used to retire public debt. Some of the current employees of the Forest Service would undoubtedly find employment in the private sector with the new owners of those lands.

Food Safety

As with other so-called federal government operations that were started to protect the public from risks, it is time to privatize those operations. The current budget for the Food Safety and Inspection Service is $0.837 billion. Contrary to the alarms and panic that would be spread by those opposed to eliminating this program, the private sector would take up the burden. After all, a firm can be bankrupted by subsequent lawsuits if it is negligent in the food it sells so it is in the interest of all firms in the food business to assure safety in the food supply. Despite nearly a $1 billion per year being spent on government-paid food inspectors, Americans still experience a large number of problems with bad food. Private food concerns could hire independent testers and inspectors to assure that tainted or poisoned food did not reach consumers.

Regarding the Animal and Plant Health Inspection Service (known as APHIS), this organization is designed to prevent disease from threatening livestock and crops. The budget for APHIS is about $1 billion per year. Like food safety, food producers could purchase similar animal and plant inspection services from reputable private organizations. The recent outbreak of mad cow disease – which came from imported dairy cattle – serves as an example of the moral hazard when the government gets involved in what is essentially an insurance operation. Instead, if the risks were properly assigned to private producers, they would have every incentive to take precautions to prevent such problems.

And the Cut-o-meter Total is up to …. $337 billion!

Abolishing the Agriculture Department can save taxpayers a fortune cutting the budget by almost $78 billion from the current year. And because of the sale of public forests and grasslands, another $100–200 billion could probably be earned to pay down the public debt.

Jim Grichar (aka Exx-Gman) [send him mail], formerly an economist with the federal government, writes to “un-spin” the federal government’s attempt to con the public. He teaches economics part-time at a community college and provides economic consulting services to the private sector.

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