Food Fight

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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National Security

High Stakes and the Sequester Squeeze

When defense budgets get tight, politics can get a little complicated.

It's all about national security, isn't it? Or is it? Rick's back room is alive and well in Washington, D.C. And it is shocking, just shocking, to learn that as the defense drawdown continues, not a single player at the defense table has stopped placing bets, stopped trying to fix the outcome of the game, or tried another role of the dice to end-run the impact of the sequester.

The past few days have seen a lot of these political games. The Washington Post is only the latest media source to rediscover the ancient verity: cherchez l'argent. (That's "follow the money" for those who do not consume snails and garlic butter with gusto.) The Post headline said it all: "Defense cuts pose an economic quandary for liberals."

Anyone who has heard President Dwight Eisenhower's 1961 farewell address knows that there is a political nexus that links the Defense Department to its contractors. But Ike conveniently left out the middle player who makes the game possible: Congress. Go ahead, add them back in, making an "iron triangle," as I coined it more than 30 years ago, standing around the table in the back room.

But perhaps it's some shock that congressional liberals might find themselves in a little bind between supporting stimulus for economic recovery and jobs, and seeking budget discipline for DOD -- or at least greater discipline than it has had for the last 12 years. And that contradiction can become stressful when the jobs are in a member's home state or district.

See, for example, Sen. Carl Levin (D-MI), who supports keeping an unneeded M-1 tank production line open, with subcontracting jobs in Michigan, while he supports lowering the defense budget $100 billion below the level proposed by the administration.

Indeed, the smell of pork is thick in congressional backrooms. While the Post leaned on the Democrats, Sen. Rob Portman (R-OH) has also been lobbying hard for the M-1, as has Republican Rep. Jim Jordan, and their fellow Ohio senator, the Democrat Sherrod Brown. Seems the main production plant is in Lima, OH, making the stakes very local, indeed.

Next door in Pennsylvania, Democrat Robert Casey and Republican Pat Toomey are equally convinced that stopping work on the Bradley Fighting Vehicle would be a bad idea for American national security. Never mind that the Army sensibly upgraded and modernized all the M-1s and Bradleys they need (and bought over 15,000 MRAP vehicles and all the Stryker light vehicles they wanted, to boot) spending all those additional dollars for the wars in Afghanistan and Iraq to do so, as my colleague Russ Rumbaugh demonstrated more than 18 months ago. Never mind that cuts are bringing the Army down by 100,000 people over the next couple of years, making the equipment inventory more than satisfactory. And never mind that the tanks and personnel carriers it has are more than adequate today against any known or likely military threat.

Let's be clear: Congress is worried about jobs, campaign contributions, and reelection -- even when they cloak the argument in national security verbiage. The defense budget is one of the biggest political games in town. When every contract has subcontractors peanut buttered across the country, the politics can be very persuasive, even when the national security argument is not.

To be fair, it is not just the elected members of Congress who play the game and sometimes feel the conflict between their policy goals and local interests. Playing the politics of defense goes well beyond the Congress into the other corners of the triangle.

Take the endless rumble about sequestration, for example. Supporters of the military's tuition assistance program pushed Congress to pass legislation safeguarding that program from the sequester, which in turn created precedent for a country riled by flight delays blamed on furloughed air traffic controllers. So, why wouldn't other well-endowed interests try the same?

Here's how the game of "Washington Monument" works: pick the most visible, symbolic target, make sure it is in the sights of the sequester gun, pull the trigger, and then see if the Congress draws back in horror. This is a game the military corner of the iron triangle plays very well.

Rest assured, the lesson was not lost on DOD, which, as I pointed out last week, has the greatest sequestration flexibility in the federal government.

The Washington Monument game at DOD began early, with the threat of furloughs for civil servants and the high visibility announcement that a second carrier would not be deployed to the Gulf. It continues: In a striking blow to our national security, for example, the Navy's Blue Angels and the Air Force's Thunderbirds have been grounded. Local air shows will no longer be able to attract the thousands of visitors who came to see the extraordinary flight routines these acrobatic wings produce. Grounding these elite flyboys is a national story, however; their contribution to national security is, at best, minimal.

We haven't heard as much recently from the third corner of the triangle -- the defense contractors. Well, that's not entirely true; they are out front for the M-1 tank and the Bradley, for example. And last year, the Aerospace Industries Association put high stakes on the table to exempt defense from sequestration or, failing that, eliminate the sequester altogether.

Industry has been relatively spared from cuts up to now. But it is not business as usual, not when the U.S. defense market is shrinking -- down 20 percent over the past three years, while the overall defense budget has declined only 10 percent (pre sequestration). Contractors have been responding for two years already, by consolidating businesses, hiving off unwanted capacity, and laying off workers. But the sequester rules did not take money away from existing contracts, somewhat delaying the impact.

That impact will come, however. The Pentagon, of course, is already making it clear that the business base is shrinking. As Brett Lambert, the Pentagon's industry guru says, "there's going to be a lot of bad news that's given out to companies."

And you'd better bet that the industry is already working overtime to close the loop with the other two corners of the triangle.

We are a defense drawdown. Nobody should be shocked that less cash means more political tokens on the gaming tables, amplifying the noise coming from the back room. It always has, and only some of those punters will walk away with winnings when the wheel stops spinning. Game on.

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