Why is the agricultural lobby so mad at Obama?
We can spend a lot of time (and I do) on the politics of the defense budget and the Iron Triangle that binds the Pentagon, the defense industry, and key members of Congress, making reform in the defense world difficult to execute. But there are a lot of other triangles that close around pieces of the federal budget. One of them comes up this week as the Senate marks up the Farm Bill and addresses the administration's proposed reform of the U.S. food aid program.
Budget discipline notwithstanding, elected officials have strong incentives to support wasteful or unnecessary spending as long as it takes place in their states and districts. Beneficiaries out in the private sector thrive off the proceeds. And federal agencies fiercely defend the turf around their programs. This phenomenon gives birth to the kind of casual budgetary hypocrisy that gives members of Congress a bad name. So it is with food aid.
Congress has always loved food aid. It looks like the quintessence of American generosity: share the fecundity of American agriculture with the poor and the starving overseas. Nothing warms the cockles of American politicians' hearts like that "gift from the American people" stamped on the side of a bag of wheat being delivered to the starving people of [insert the name of your favorite "poor" country here].
Food aid costs American taxpayers roughly $2 billion every year, and, unlike most foreign aid, Congress often adds funding to the president's budget request. But it is also expensive, an inefficient way to help the starving, and an obstacle to economic development -- things the president's new proposal would begin to change.
The suggested reforms are technical, but they make sense. The budget for food aid would move from the Department of Agriculture to the U.S. Agency for International Development, which has actually implemented the program for decades. (On the way, the jurisdiction for food aid funding would pass from the Agriculture subcommittee of Appropriations to the State and Foreign Operations subcommittee).
About $1.1 billion of this funding would become part of the disaster assistance program at USAID, which deals with known food crises and humanitarian needs. Another piece would go to a new fund to address chronic poverty and programs to prevent food crises from occurring. And a third piece would support a contingency fund for unanticipated food emergencies.
Budgetary and implementing responsibility for food aid would be housed in the same organization, doing the job it is doing today and creating new, flexible capabilities. Under the proposal, USAID would have greater freedom to pick and choose the commodities being provided, depending on the specific needs of recipient countries.
An even more important reform would allow the agency to buy some of the food provided (perhaps 45 percent) in other countries, particularly those where starvation could be met by local agricultural production, stimulating development. And the reform would end the requirement that 75 percent of U.S. food aid be shipped on American carriers, thus reducing the cost of the program and allowing more of the funding to go to the food itself.
Finally, the proposal would end the current practice of "monetization," by which food shipments are sent to recipient countries where U.S. and international nonprofit organizations sell them on the local market and use the proceeds to finance their local assistance work and administrative costs. The U.S. Government Accountability Office believes this is an inefficient way to deliver development assistance and, perversely, discourages local agricultural production.
Bottom line: The proposed reforms would streamline the program and better provide food to those who need it. Instead of subsidies for U.S. farmers, subsidies for U.S. shippers, and subsidies for nonprofit organizations, which consume 30-40 percent of the food aid budget, the food and some economic stimulus might actually get to the intended recipients.
I bet you can see where this is going. The food aid Iron Triangle has come out of the box in opposition, making it clear that a good part of this apparently altruistic program is really about self-interest. Agribusiness, American shippers, some of the nonprofit world -- not to speak of the agriculture appropriators and the Agriculture Department -- don't appear warm to the idea.
I saw this Iron Triangle up close when I was at the Office of Management and Budget in the 1990s. Every year, the folks in the first corner -- the private sector -- would lobby me about the food aid program. Shippers, farm lobbyists, and the nonprofits would link arms around my conference table justifying the budget request. For agribusiness, food aid is another piece -- albeit a small one (food aid is less than 1 percent of total U.S. agricultural exports) -- of the subsidies the taxpayer provides for their crops. For the nonprofits, monetizing bags of food is an important, taxpayer-supported subsidy for their administrative costs. And the shippers, well, that's pretty clear -- the American maritime industry needs every subsidy it can get, given its inability to compete on the global market for shipping. (GAO says the number of available American ships has fallen 50 percent over the past 10 years.)
In the second corner of the triangle is the federal government. In this case, even though USAID has been administering this program for donkey's years, the budget shift would take turf away from the Department of Agriculture, which owns the budget for the program. Now, presumably, President Obama and OMB worked that out when they put the budget proposal together, but I would not be shocked to learn that some over at Agriculture are not happy and are letting it be known, end-running the president's budget proposal.
Over in the third corner we have Congress. One of USAID's authorizing committees -- the House Foreign Affairs Committee -- has already come out in favor of reform; the chair and the ranking member both say they like the proposal. But it seems the Agriculture Committee folks are unhappy about losing jurisdiction (and the accompanying budget allocation) for food aid. After all, who provides their campaign contributions? Why, it would be like breaking up a family, or, maybe, the already nearly invisible family farm. And the appropriators, who really handle the money, can get more done that way.
Meanwhile, the nonprofit world is divided. My conversations tell me some, like World Vision, have lined up behind the shippers and agribusiness. Others, like the Modernizing Foreign Assistance Network, like the proposal. No unity there.
Change is really hard in Washington, even when it makes good common sense. More food could be shipped, growers in developing countries could get a stimulus, and local famers could keep a piece of the action. The proposal even throws a bone to shippers, proposing that some of the funding be shifted to the Maritime Administration.
But Iron Triangles are hardy things; that's why and how they are "iron." They don't always respond to common sense. And Congress is particularly rigid, since the committees and members are deeply embedded with the interests that have a stake in the programs.
If "normal" congressional politics prevail, I can see who will win this fight. USAID's authorizers don't have the domestic clout the Ag committees have. Their appropriators don't get campaign contributions from the countries overseas that receive the food -- that would be illegal. So stay tuned for an outcome that doesn't change the current program very much at all.
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