Yesterday, I reported that top Bush administration officials have been openly discussing deep cuts in farm commodity subsidies. But the program, a $14.5 billion per year cash cow, is also a sacred cow.

Farm-state politicians, and the agribusiness giants that love them, speciously portray farm subsidies as a “safety net for the family farm.” In reality, the program helps push commodity prices down — and arguably helps drive farms out of business. In 1935, around the time the program started, there were 7 million farms in the U.S. By 1997, the USDA reports, only 1.9 million remained. Some safety net.

Well yesterday, Sen. Saxby Chambliss (R.-Ga.), a man who reveres the free market so long as it doesn’t impede his state’s beloved cotton trade, lashed back.

The Bush administration has been forced to reconsider the subsidy system by a recent judgment from the WTO, which ruled that generous cotton payouts give U.S. farmers an unfair advantage over producers in Brazil and other countries. Canada is bringing a similar case to the WTO regarding corn, the most prolifically subsidized U.S. crop.

Nonsense, retorts Chambliss, chair of the Senate Agriculture Committee. “I will always advocate we should support agriculture,” the chairman fumed to Reuters yesterday. “I just think it’s good federal policy and we can continue to do that notwithstanding what happens at the WTO.”

According to this Reuters article, Chambliss dashed off an angry letter to USDA chief Mike Johanns detailing his demands for supporting a WTO agreement on agriculture subsidies.

Here’s how Reuters describes one of his key conditions:

“No net reduction in the farm safety net,” meaning funding for U.S. agriculture programs would not be reduced, although the United States “should commit to reduce trade-distorting domestic support in exchange for other forms.”

This is precisely where I see a small opening for a new subsidy system geared toward sustainable agriculture, not gross output of commodities. What if to qualify for subsidies, farmers had to sell at least half their produce for consumption within a 50-mile radius — say, to schools, hospitals, and nursing homes? Or had to agree to reduce pesticide use?

Surely the WTO wouldn’t object to such a framework. Granted, though, it would be a tough sell, with guys like Bush and Chambliss running the show.