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Federal crop insurance subsidies went to billionaires, according to a new report from the Government Accountability Office (GAO).
The U.S. Department of Agriculture’s (USDA) program provides subsidies to cover the crop losses for farmers, regardless of their income. The GAO report, released Wednesday, found that thousands of individuals with incomes over $500,000 have received $317 million in subsidies over five years, and not all were farmers.
“Some of the highest income participants received income from operating large farms, but others received some of their income from nonfarming sources, according to our analysis,” the GAO said. “For example, more than 70 of the crop insurance participants we identified as among the highest income during 1 or more years from 2009 through 2013 were managers or professionals, including attorneys, executives, or physicians.”
The GAO also found four billionaires who received $118,400 in subsidies, and collected about $38,300 in claims payments over five years. Each billionaire insured an average of 18,200 acres.
“Four others, who had net worth over $1.5 billion each in 2013, earned their wealth from a variety of sources in addition to farming, such as mining, real estate, sports, and information technology, according to publicly available information,” the report said.
Overall, an average of 7,460 high-income earners received subsidies each year between 2009 and 2013. The GAO identified high-income earners as those who are ineligible for other USDA subsidy programs for making more than $500,000 in nonfarm income, or $750,000 in farm income.
Those earners received an average of $8,500 in subsidies each year, amounting to $317,050,000.
The government watchdog said the USDA could save at least $70 million by reducing the amount of subsidies for the well off.
“Reducing crop insurance subsidies for the highest income participants would have a minimal effect on the program and save millions of dollars,” the GAO said. “[The USDA’s Risk Management Agency] RMA is directed by law to adopt rates and coverages that will improve the actuarial soundness of the crop insurance program.”
“Also, the highest income participants account for only about 1 percent of the premiums in the program,” they said. “As a result, their decisions to stay in or leave the program would likely not affect the crop insurance program’s actuarial soundness at the national level. If premium subsidies had been reduced by 15 percentage points for the highest income participants from 2009 through 2013, the federal government would have saved more than $70 million over the 5-year period, according to GAO’s analysis of agency data.”
The USDA’s crop insurance program budget has “increased substantially” since President Barack Obama took office, from a $3.8 billion program between 2004 to 2008, to $8.5 billion between 2009 to 2014. About 1 million Americans participate in the program.
“Those costs are expected to average $8.9 billion per year for fiscal years 2015 through 2024, according to the Congressional Budget Office,” the GAO said.