The Crop Insurance Subsidy Reform Act

Congressmen Jeff Flake (R-AZ) and Jason Chaffetz (R-AZ) have introduced the Crop Insurance Subsidy Reform Act (H.R.6098), which would save taxpayer money by significantly reducing crop insurance subsidies. Specifically, it takes the percent of crop insurance premiums paid by taxpayers across various coverage levels back to what they were in 2000, before the Agriculture Risk Protection Act (ARPA). That bill essentially put subsidies for crop insurance premiums on steroids. Estimates suggest Flake-Chaffetz would save billions a year.

Representative Flake released a statement upon introduction of this bill:

“Given our country’s fiscal crisis, we simply can’t afford irresponsible crop insurance subsidies, particularly given the strength of the agriculture sector. This Farm Bill reauthorization is an opportunity to put federal farm policy on a fiscally sustainable path.  Congress must resist the temptation to create new subsidy programs.”

Just like Obamacare, the farm bill currently in the House does not actually reduce spending, because it uses the savings created by ending some wasteful programs to fund entirely new programs, expands crop insurance subsidies and contains some creative accounting mechanisms.

A new, Orwellian sounding crop insurance program – basically a taxpayer-guaranteed price for certain crops – would actually increase the subsidy that farmers receive. The Senate’s misguided shallow-loss scheme was tweaked in the House bill, but under some circumstances it could still ensure corporate farmers an 85% revenue guarantee. No other industry in the country receives a revenue guarantee even if they don’t produce a product.

After the passage of ARPA, premium subsidies for crop insurance coverage levels greatly expanded. In some cases, the premium subsidies (essentially taxpayer liabilities) doubled or tripled. Last year alone, taxpayers paid nearly $7.4 billion to foot the bill for crop insurance subsidies, up from $1.3 billion in 2000.

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