Budget watchdogs lay out principles for crop insurance reform
WASHINGTON (May 9, 2013) – As both the House and Senate agriculture panels prepare to mark-up their respective versions of a five-year Farm Bill next week, the R Street Institute and a coalition of 16 other taxpayer and free-market groups have sent a joint letter to Congress calling for transparency, accountability and billions of dollars in cuts to the federal crop insurance program.
While appreciative of the emerging congressional consensus that the misguided $50 billion “direct payments” program should be slashed or eliminated, the groups expressed concern that its likely replacement – vastly expanded crop insurance subsidies – lacks some of the taxpayer protections that historically have been tied to direct payments.
In particular, the groups called for holding recipients of crop insurance subsidies accountable by linking the program to “conservation compliance” provisions that long have been attached to direct payments.
“These standards reduce current and future costs for taxpayers by ensuring that marginal or environmentally sensitive lands aren’t broken in at taxpayer expense, which would create dependency on handouts and result in more insurance subsidy payouts,” the groups wrote.
Crop insurance subsidies also should be subject to the same transparency standards that currently apply to direct payments, the groups added, including public disclosure of the names of premium subsidy recipients and the amounts they received.
In addition, the groups expressed support for proposals to means-test premium subsidies, limit the overall amount of subsidies any individual producer could receive in a year, and eliminate annual subsidies that go directly to the insurance industry.
A proposal to cap premium subsidies at $40,000 per year is estimated to save $5.2 billion, while a steeper cap could yield an additional $40 billion in savings. A 15 percent reduction in subsidies to farmers with adjusted gross incomes of more than $750,000 would cut $1.2 billion, while a more stringent means test proposed by Sen. Rand Paul, R-Ky., would bar subsidies to those with incomes over $250,000. The roughly 9 percent of farmers who would lose subsidies under the Paul plan currently combine to receive roughly one-third of crop insurance benefits.
The full letter can be found here:
http://www.rstreet.org/wp-content/uploads/2013/05/L13-05-08-Crop-Insurance-Coalition-UPDATED.pdf
In addition to R Street, other signatories to the letter include American Commitment, Americans for Prosperity, Americans for Tax Reform, Campaign for Liberty, Center for Individual Freedom, Club for Growth, Competitive Enterprise Institute, ConservAmerica, Cost of Government Center, Council for Citizens Against Government Waste, FreedomWorks, Heritage Action for America, Less Government, National Taxpayers Union, Taxpayers for Common Sense and the Taxpayers Protection Alliance.
