COLUMN ONE : An Agency Too Big to Change? : The Agriculture Dept. has grown into a behemoth of entrenched interests and overlapping bureaucracies. But if problems are easy to spot, reformers have found weeding them out is not.

Critics quickly dubbed it the “Let’s Kill Bossie Program,” and it has become a standing joke among reformers who want to downsize the U.S. Department of Agriculture.

In 1985, milk prices were slumping, and dairy farmers demanded help. Congress and the Agriculture Department came up with an extreme solution: Under the Dairy Termination Act, the government, in effect, paid producers about $2,000 for each cow they slaughtered or exported to reduce the surplus milk supply.

Unfortunately, the program went awry. Farmers near retirement or in financial trouble jumped at the buyout, disposing of 1.5 million cattle at a cost to taxpayers of $1.8 billion. The mass slaughter caused beef prices to crash, forcing the government to buy up extra beef for its school lunch program. The beneficial effect on dairy prices proved only temporary.

“The herd buyout program,” admits one department official, “got a black eye.”

Alas, black eyes are not that uncommon at the USDA, a place where billions of dollars are doled out each year to a dwindling population of commercial farmers through programs that haven’t undergone serious review in four decades. Over the years, the department has added layer upon layer of bureaucracy, saddling it with a roster of 43 agencies, a budget of $67.5 billion and a work force of 113,000.

But even if the illogic of some federal policies is easier to spot in Agriculture than in most departments, rooting it out is another matter. Some lawmakers say the department is a case study of the kind of political and bureaucratic difficulties the Clinton Administration faces as it tries to implement Vice President Al Gore’s “reinventing government” campaign.

While the Gore initiative proposes some genuine reforms, Administration officials concede the task force did not even attempt to question the validity of many longstanding and widely criticized USDA programs. “The focus of reinventing government wasn’t about cutting existing spending programs at USDA, it was to address systems that badly needed overhaul to make them more efficient,” observed department spokeswoman Mary Dixon.

Yet even the Administration’s modest proposals may not stand up to the USDA and its fierce defenders.

The problem, critics say, is as old as Washington itself: Behind every program is an entrenched interest, and behind most is a powerful member of Congress willing to fight off spending cuts.

Of course, that’s not to say that the department and its programs provide no benefits for the nation. The government’s involvement has tended to stabilize American agriculture, eliminating the boom and bust cycles and wild price gyrations that unregulated markets occasionally produce.

“A lot of farmers don’t like to be in these programs, and more and more of them are dropping out,” noted Dean Kleckner, president of the American Farm Bureau. “But you have to remember that with these programs, U.S. food prices, relative to disposable income, are the lowest in the world.”

Yet even staunch defenders acknowledge that occasional stumbles like the “Bossie” program would be less embarrassing if all of the department’s energies were directed at preserving traditional farm operations. But this is the department that gave McDonald’s nearly $500,000 to advertise Chicken McNuggets in Asia, and provided Paul Newman with $50,000 to market salad dressing. It subsidizes cheap electricity to keep ski lifts humming at Vail, Colo., and to air-condition posh hotels in Hilton Head, S.C.

“Preserving the family farm hasn’t been a part of these programs for a very long time,” observed Dale Hathaway, a former Agriculture Department official who heads the National Center for Food and Agriculture Policy in Washington.

Like so much of the federal bureaucracy, the Agriculture Department had humble beginnings. Established by Abraham Lincoln in 1862 in the midst of the Civil War, its initial goal was modest: To foster agricultural education and research among farmers. It remained relatively small until the 1930s, when the Great Depression and the Dust Bowl combined to decimate the nation’s rural heartland. The new threats to America’s agrarian way of life--and food independence--forced Franklin D. Roosevelt to take dramatic action.

Agriculture and rural development policy, in fact, played a central role in the New Deal. Immediately after World War II, federal involvement in crop management mushroomed with the creation and rapid expansion of a broad array of subsidy programs to support prices and limit production of major crops.

Washington has been the dominant player in American agriculture ever since. Almost all of the programs that were institutionalized in the 1947 Farm Bill remain on the books to this day. And just about all of them have become more complex with each passing year, making them even harder to eradicate.

Their very complexity has, in fact, become an important defense mechanism. “A lot of these things have been around for so long that most people forget why they are there,” noted Rep. Dick Armey, (R-Tex.), a leading congressional critic of farm programs.

And the long years since the creation of the programs in the ‘30s and ‘40s have given agriculture’s special interests plenty of time to dig nearly impregnable political fortifications around each program. As the agency expanded, so did the roster of farm trade associations, which now number in the dozens; they are there to make sure the department and its programs never go away.

Even Republican-leaning groups like the American Farm Bureau, the largest farm group in the nation, ardently defend even the most controversial subsidies, such as those received by beekeepers and mohair producers.

No matter how good the initial intentions, one end result is that American farmers have gone from being fiercely independent entrepreneurs to among the nation’s most heavily subsidized business operators.

One result, critics argue, has been to retain a price support and production restraint system that does not fully reflect the increasingly global nature of the agricultural marketplace.

To be sure, American agriculture remains the envy of the world, a highly productive system that sells one-third of all it produces overseas. Yet critics say U.S. farmers could sell even more without restraints.

The federal government, through its many land set-aside programs, is paying farmers not to grow anything on nearly 60 million acres--an area roughly the size of all the active farmland in Iowa and Illinois.

This is occurring at a time when global demand for food is soaring, especially in newly developing nations in Asia. While foreign trade barriers and farm subsidies in Europe and Japan hold back American exports, many U.S. farmers have also resisted proposals to drop all U.S. subsidies in return for the potential of greater trade liberalization.

Dennis Avery, a former assistant secretary of agriculture who works as a conservative agriculture analyst at the Hudson Institute in Indianapolis, argues that the United States is missing out on as much as $100 billion in potential food exports because of production and price restraints in this country and trade barriers abroad. USDA officials dismiss Avery’s numbers as “wild estimates.”

It is perhaps no coincidence that those elements of the U.S. agriculture industry that are the most competitive--fruits, vegetables, beef and poultry, for example--are largely free of government production limits and price support programs.

“It’s self-defeating to keep prices high and limit production when one-third of what we grow is exported,” said Robert Thompson, a former assistant agriculture secretary for economic policy in the Ronald Reagan Administration.

Many critics argue that federal agriculture policy fosters the increasing concentration of agribusiness in the hands of fewer and fewer producers, who are growing increasingly wealthy with the help of the subsidies they receive.

While the nation has about 2.1 million farms, many of those are weekend hobby operations; only about 700,000 of the biggest ones are commercially viable and receive federal subsidies. And about 80% of those subsidy payments, which will total about $17 billion this year, go to the top 20% of that 700,000.

“In all of agriculture, maybe the top 300,000 to 400,000 of the largest farmers are doing well, and they don’t need federal farm programs,” said Thompson. “To be viable in agriculture today, you have to have assets of at least $1 million, and that means you are running a good-sized business. The problem is that between that group and the weekend hobby farmers you have the small, full-time farmers, making between $40,000 and $100,000 a year, who are struggling. But they aren’t the ones who get much from these programs . . . “

Congress has set a $50,000 limit on the annual subsidy payments that one farmer can receive, but it has left so many loopholes that any big farmer with a good lawyer can find a way around the ceiling. “Effectively, there is no limit on payments,” observed one Agriculture Department official. “Congress wanted to leave the appearance that they had imposed limits without really doing it.”

The Inspector General of the Agriculture Department came to the same conclusion in a recent report, arguing that farmers . . . “structure their organizations as needed to receive all program benefits their land can earn.”

What makes the Agriculture Department such a sprawling bureaucracy is that farm-related programs represent just a small part of its operations, accounting for only 25% of its work force. Over the years, Congress has dumped almost every program targeted at rural America into its lap, transforming the department into a hodgepodge of agencies that go their own way with little central control, and with civil service rules protecting almost everyone. “I had 110,000 employees, and I could only fire 300 of them,” recalled former Secretary Ed Madigan.

The U.S. Forest Service accounts for roughly one-third of the department’s work force. Food and nutrition services for the poor, such food stamps and school lunches, take up 60% of the annual budget. Its Rural Electrification Administration is involved in the electrical power and telephone businesses, while the Farmers Home Administration provides cheap loans and rent subsidies for housing projects. And for some reason, the Department of Agriculture handles payroll processing for 36 other federal agencies.

With each arm of the department doing its own purchasing, the department operates at least 10 computer systems that have only a limited ability to talk to each other. The REA and the FHA are examples often cited by critics of waste, fraud and abuse at the USDA--as well as by advocates of department downsizing. The REA provides cheap loans for “rural” electrical cooperatives. But some of the utilities that get the money serve areas that include posh resorts like Vail, or suburban bedroom communities.

The FHA has its own deep problems. The General Accounting Office warned last year of a looming financial crisis at the agency. Of $24 billion in outstanding loans, $15 billion involved “problem” borrowers whose ability to repay was questionable.

In a damning summary judgment, the GAO stated flatly that “the USDA’s organizational structure, essentially unchanged since the 1930s, is not responsive to the new challenges facing the department.”

All this suggests that the USDA should have been a prime target for the waste-busters from Vice President Gore’s government reform team.

But critics say the Gore group pulled its punches. Instead of proposing a bold overhaul of federal agriculture policy, the Gore report offered little more than an updated recommendation by the George Bush Administration to consolidate the more than 3,780 USDA field offices, many of which are now in urban and suburban counties. The Clinton Administration proposes to close 1,215 of them, and merge the three USDA agencies that oversee them into a single farm service administration.

“Basically, Gore wants to make life more convenient for farmers who now have to go to more than one office to pick up their subsidy checks,” said James Bovard, author of “Farm Fiasco,” a critique of U.S. farm policy. Although they would take issue with Bovard’s characterization, even USDA officials refer to the Gore proposal as “one-stop shopping.”

The Administration also proposes to merge and consolidate other USDA agencies, reducing the total to 30 from 43, cutting at least 7,500 jobs from the department’s payrolls over the next five years, mainly through attrition, retirements and buyouts. Perhaps the most controversial proposal calls for the transfer of meat and poultry inspections from the Agriculture Department to the Food and Drug Administration.

Yet even if the Administration advocated more dramatic downsizing, the House and Senate Agriculture Committees, which are stacked with rural lawmakers, are unlikely to accept more.

Administration officials confirm, in fact, that Gore’s review of the Agriculture Department had very limited objectives from the start. It never intended to take on the biggest potential targets, said Agriculture Undersecretary Gene Moos, who has been intimately involved with reorganization plans at the USDA.

“This was aimed at reinventing government in terms of streamlining and making government more efficient,” Moos said. “It was generally not a question of trying to alter program policy. When you try to change programs and policies you get bogged down with Congress, and it will never get done. If you are going to make government more efficient, you don’t want to get in a dispute with Congress.”

For now, at least, the basic rule of thumb remains unchanged: Unlike those hapless dairy cows, federal agriculture programs tend to live forever.