- Millions that might be saved by capping the adjusted income level at which farmers can collect subsidies at well under the nearly $1 million that has been proposed (income after expenses).
- The failure to fix the rules so that farmers cannot game the system by collecting subsidies and then selling commodities later when prices rise above the subsidy-linked price floor.
Finally, as much as $5 billion annually could be saved by eliminating the so-called direct payments that are paid out every year, no matter how high prices go. A version of these payments was originally created in the 1996 farm bill when the intent was to bolster farm incomes as part of a reform to gradually reduce production-distorting subsidies (for more on this, see my book, Delivering on Doha: Farm Trade and the Poor) The administration has continued to support inclusion of the direct payments because they are "non-distorting." But it is now clear that Congress has no interest in reform and, in today's market, the payments are a pure windfall for farmers already reaping the benefits of historically high prices. They should be eliminated.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.