The cotton influence index: an examination of U.S. cotton subsidies.

The Farm Security and Rural Investment Act of 2002 provides financial support to producers of corn, wheat, rice, soybeans, and cotton. Among commodities covered by the bill, the support given to cotton is by far the highest (Gardner 2006, pp. 14-19). Yet, there is no empirical political economy analysis of the cotton subsidies program, perhaps for good reason. The cotton subsidies program is embedded in the Farm Security and Rural Investment Act of 2002. There is no separate cotton bill or amendment and, thus, no explicit cotton influence to be analyzed. To deal with this absence, in this study we introduce a Cotton Influence Index to capture legislators' influence in championing the cause of the cotton growers during the hearings of the Farm Security and Rural Investment Act of 2002. Constructing this index allows us to examine the relationship between legislative influence and campaign contributions, the presence of cotton constituency, partisanship, and ideology.

First, we briefly introduce the U.S. cotton subsidies program. Second, we present the literature on the relationship between special interest and protectionist policies. Third, we identify different "actions and participations" by members of Congress to advance the interests of cotton farmers and construct an aggregate Cotton Influence Index. Fourth, we examine the relationship between the proposed index and campaign contributions, the presence of a cotton constituency, partisanship, and ideology. Fifth, having recorded contributions from cotton political action committees (PACs) in two election cycles--one before the passage of the Farm Security and Rural Investment Act of 2002 and one after--we offer observations on whether cotton PACs rewarded legislators according to their influence, actions, and participations. Finally, we provide concluding remarks.

The U.S. Cotton Program

In May 2002, Congress passed and President Bush signed into law the Farm Security and Rural Investment Act of 2002, replacing the 1996 Freedom to Farm Law. (1) The 2002 bill provides support to producers of corn, wheat, rice, soybeans, and cotton. (2) As noted, cotton receives the highest support. The cotton target price of The Farm Security and Rural Investment Act of 2002 guarantees $0.724 a pound to growers of upland cotton. How much has the program cost? According to a World Bank estimate, for its initial two years, the total budgetary transfer to cotton farmers was $3.9 billion in 2002 and $2.6 billion in 2003 (Baffes 2005). To put the estimate into perspective, the United States sent roughly twice that amount in foreign aid to Africa in the same years. Gardner (2006, pp. 14-19) provides the following for the cost of the cotton program in 2004 and 2005. For crop year 2004, cotton farmers received $3.8 billion in support payments. Given the total value of production of $5.7 billion, these payments were 64% of the total market value of cotton production (the average agricultural protection rate was 6.9%). In 2005, the total expenditure on cotton farm support reached $4.2 billion, and the corresponding nominal rate of assistance implied by this spending (dividing the level of spending by the market value of cotton production) was 77% (in 2005, the average nominal rate of assistance for the commodities was 31%--e.g., corn [28%], wheat [17%], rice [28%], cotton [77%], and soybeans [6%]).

Special Interest and Protectionist Policies

Grossman and Helpman (1994) advance a model where special interest groups provide campaign money to influence the legislator's vote on trade policy bills. The interest groups offer contributions as a function of trade policy implementation. Politicians, to safeguard their self-interests--that is, reelection--set policies accordingly. Baldwin and Magee (2000) also analyze contributions and trade policy by studying voting behavior on three important trade bills: NAFTA in 1993, the 1994 law to implement agreements reached at the Uruguay Round, and the 1998 House bill to renew the presidential "fast-track" agreement. The authors find that interest-group contributions influence how legislators vote, but contributions were not the only factor: the economic situation in the legislators' districts and the ideological leaning of the legislators also play a role. They find it more likely for legislators to vote positively (thus favoring protrade votes) if contributions largely come from business PACs, as opposed to labor PACs.

Hall and Wayman (1990) offer a study on how PAC contributions affect the influence that legislators exert to support a bill. Testing three different issues in three different committees, they find PAC contributions correlated positively with the time, energy, and legislative resources committee members who received PAC funds demonstrated in those PACs' favor. Gibbs, Gokcekus, and Tower (2002) explore the Steel Import Quota Bill of 1999. The authors similarly capture the influence of contributions. With the number of lines in the Congressional Record that legislators have devoted to supporting the bill as the dependent variable, the authors show the number of lines is an increasing function of political contributions from both the steel industry and steel unions. Magee, Brock, and Young (1989) find that industry representatives strategically provide campaign funds to candidates just prior to an election, a time when legislators formulate their trade policies. PACs contribute to the candidate who best reflects their industry's interests with regard to trade policy. Thus, the authors render a strong link between contributions and trade policy positions. (3)

A number of studies discuss the political economy behind the legislation linked to the protection of specific commodities. For example, Gokcekus, Knowles, and Tower (2004) show how the sugar industry systematically contributes to senators based on their power and willingness to protect sugar. Harper and Aldrich (1991) find that senators vote for sugar subsidies if they receive large contributions from sugar producers. Stratmann (1995) studies the timing of campaign contributions to determine whether they are meant for the purposes of influencing a specific bill or for reelection. He finds that farm PACs increased the number and amount of contributions around the time of discussion of the farm bills in 1981 and 1985. However, larger increases in contributions are evident before the general election than before the Farm Bills. He concludes that contributions are given for both purposes.

Analysis and Findings

The studies mentioned above concern the political economy of trade policy, and some offer a model to measure the influence of interest groups over the passing of laws. In the next section, we present a new approach for measuring the influence legislators had in championing the cotton growers' cause.

Cotton Influence Index

Because the cotton subsidies program is embedded in the Farm Bill of 2002 (H.R. 2646), there is some difficulty in a straightforward measurement of legislative influence. The roll call vote on the entire Farm Bill, for instance, is not an appropriate indicator to measure Congress members' legislative participation on behalf of the cotton constituency, as it is unclear for which commodity or commodities they are voting. Accordingly, we introduce an approach that combines three factors: actual votes, participation, and talking.

We focus on the involvement legislators demonstrate in pushing through the cotton portion of the Farm Bill from the introduction of the bill to its final passage. In this manner, it is possible to measure the effort more accurately and, hence, the influence of legislators in passing the cotton-subsidies-program part of the bill. Hall and Wayman (1990) propose a model to measure legislative involvement. In their study the authors offer a scale from a factor analysis of activities such as attendance, speaking, negotiating behind scenes, offering amendments during committee mark-ups, and their role in authoring the legislative vehicle.

We offer a more explicit and process-driven approach for measuring influence. Specifically, we propose a Cotton Influence Index, comprising the elements contributing to legislators' involvement in the legislative process. The process is described here briefly. A congressperson sponsors a bill and then, as the bill's sponsor, refers it to the pertinent congressional committee, which then debates its details in mark-up sessions. The resulting bill is introduced on the House floor. Amendments are typically discussed, debated, and then voted on. On the bill's passing, it is sent to the Senate whose members deliberate it, vote on amendments, and pass a version of it, which could differ from the original House bill. To reconcile the differences, a conference is set between House and Senate conferees. During the conference, House members can issue "motions to instruct conferees" once a congressional majority supports a version of the legislation that the conferees agree to consider. Finally, a conference report is issued that reconciles the bills. The conference report is voted on by the House and the Senate; once passed at this level, it is presented to the president, who ultimately signs it into law or vetoes the bill. (4)

According to the process described above, the first component of the influence index is "voting." Four votes are a part of this component. The first vote is dated 3 October 2001, on amendment H.AMDT.325, which provides caps on price-support payments to commodity producers. (Amendment 325 is in table 1.) (5) H.AMDT.325 failed in a roll call vote of 238 nays to 187 yeas (Roll Call No. 365). A yea vote on this amendment would be most detrimental to the largest recipients of these subsidies. Because cotton producers receive more subsidies per acre than producers of wheat, corn, and soybeans, cotton growers stood to lose the most if this amendment was included in the final version of the bill. Consequently, we include this vote in the Cotton Influence Index.

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