Mike Shedlock
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Proving that neither party really wants to do anything about escalating costs of anything, in typical D.C. compromise action, the House Passes $956B Farm Bill in a bipartisan vote.

Speaker John Boehner (R-Ohio), and Majority Leader Eric Cantor (R-Va.), and Minority Leader Nancy Pelosi (D-Calif.) all voted for the bill.

Democrats are howling over miniscule cuts in SNAP (food stamps). For example, an inane headline on the Daily Koz reads House passes food stamp-slashing farm bill.

Supposedly there will be $8.6 billion in devastating food stamp cuts. Even if that happens it is less than a 1% cut in an economy that is supposedly in recovery.

Contrary to Popular Belief, No Cuts in Food Stamps

Will there be any cuts? I rather doubt it. In the "too stupid to make up category", this is how they determined the cuts.

The bill finds $8.6 billion in savings by requiring households to receive at least $20 per year in home heating assistance before they automatically qualify for food stamps, instead of the $1 threshold now in place in some states.

Amazing!

Now what do you think will happen? If you can't figure it out, I will tell you. States will give $20 per year in home heating assistance to everyone currently getting $1 per year in annual home heating assistance.

There will be miniscule (if any) savings at all at the federal level, and small increases at the state level.

Crop Subsidies Preserved

Next consider House passes farm bill, crop subsidies preserved.

After more than two years of partisan squabbles over food and farm policy, the House passed and sent to the Senate Wednesday an almost $100 billion-a-year, compromise farm bill containing a small cut in food stamps and preserving most crop subsidies.

The measure, which the House approved 251-166, had solid backing from the Republican leadership team, even though it makes smaller cuts to food stamps than they would have liked. The bill would cut about $800 million a year from the $80 billion-a-year program, or around 1 percent. The House had sought a 5 percent cut.

The legislation also would continue to heavily subsidize major crops for the nation’s farmers while eliminating some subsidies and shifting them toward more politically defensible insurance programs.

House Agriculture Chairman Frank Lucas, R-Okla., who has been working on the bill since 2011, called the compromise a “miracle” after years of setbacks.

For those seeking reform of farm programs, the legislation would eliminate a $4.5 billion-a-year farm subsidy called direct payments, which are paid to farmers whether they farm or not. But the bill nonetheless would continue to heavily subsidize major crops — corn, soybeans, wheat, rice and cotton — while shifting many of those subsidies toward more politically defensible insurance programs. That means farmers would have to incur losses before they could get a payout.

Miracle Not

It is beyond idiotic to call this do-nothing compromise a "miracle". It's a do-nothing bill for which D.C. is famous.

It would have been a miracle had there been any real cuts.

Actual CBO Estimated Savings

The facts speak for themselves.

In spite of the trumped up $8.6 billion in savings in food stamps and smaller savings on farm subsidies, "The bill would save around $1.65 billion annually overall, according to the Congressional Budget Office."

Assuming the CBO is correct, the actual savings on the bill is $1.65 billion out of $956 billion. In percentage terms (drum roll please) .... the devastating cutbacks amount to 0.17%!

Oh! The Horror!

Republicans and Democrats alike should both be ashamed, not only for doing virtually nothing, but also for howling at the moon as if they did.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/#wYQM8iHCJbdPjhD1.99

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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.