At his news conference yesterday to introduce Peter Orszag as his budget director, President elect Obama singled out some waste in farm subsidies as an example of the kind of government waste he wants Orszag to find and eliminate:

Obama cited a GAO report out yesterday that said from 2003 to 2006, “millionaire farmers” got $49 million in farm subsidies despite earning more than the $2.5 million cutoff in annual income.

The headlines I’ve seen on this are a bit misleading. A Washington Post blog carries the headline, “Obama goes after farm subsidies”  and ABC says, “Obama Points to Farm Subsidies for Budget Cuts”. Finding $49 million in fraud in a $300 billion program is not exactly going after farm subsidies. The fact is that Obama was absent for the vote on the last farm bill but endorsed it on the campaign trail. I suppose it is possible that he was just worried about farmer votes, but I’ll need more evidence than this.

A President as concerned about poverty in the developing world as Obama claims to be should want to eliminate farm subsidies altogether. While Americans are hurt by farm subsidies through higher prices, it is the poorest farmers of the world who are hurt the most by the subsidies paid by the US and Europe. Farm subsidies keep prices high in the US through price supports and results in over-production which lowers the price outside the US. Farmers in Africa can’t compete without access to our markets and fair prices for their goods. Rather than send them aid, why not end the subsidies and let the world’s farmers raise their own standard of living?

Eliminating farm subsidies would also move the DOHA round of trade talks forward. Those talks stalled precisely because of the developing world’s opposition to farm subsidies in the developed world. Free trade has done more to reduce poverty than any foreign aid program. Ending farm subsidies and trade barriers should also be attractive to environmentalists. End sugar subsidies and ethanol tariffs and Brazil will provide us with both products cheaper and we could end the damage to the Everglades. End price supports and we would reduce the acreage devoted to farming in the US and move it to areas of the world more suited for it. 

Reduce world poverty, reduce environmental damage, reduce the cost of ethanol, increase world trade and reduce the budget deficit. What is not to like about ending farm subsidies?