WASHINGTON – Senator Chuck Grassley today released a report by the Government Accountability Office that said the U.S. Department of Agriculture has made nearly $50 million worth of potentially improper payments to farmers who exceed income eligibility limits put in place by Congress. The 2002 farm bill prohibited payments to individuals or entities whose income exceeded $2.5 million and who derived less than 75 percent of that income from farming, ranching or forestry operations.
Today’s report is the second report requested by Grassley on improper farm payments. Last year, he released a Government Accountability Office report on farm payments going to dead people.
“It’s hard to have faith in USDA’s ability to police these income limits. Unfortunately, it’s one thing after another. One year we have payments going to dead people, now we have payments going to owners of professional sports teams. I hate to think what might be next,” Grassley said. “What’s most disconcerting is that USDA had noted in its own database that nearly 100 people exceeded the income limits, but did nothing about it. Now, with tighter income limits from the new farm bill, not only does the federal treasury stand to lose a good deal of money, but the taxpayer will be helping big farmers get bigger, which is not who the farm payment system was intended to help.”
Grassley noted that the report was also referenced in a press conference held this morning by President-elect Barack Obama as the type of wasteful spending that needs to end. Grassley has worked to put a hard cap on farm payments at $250,000 in order to ensure that the farm program payments go to those who need it most, small- and medium-sized farmers.
A copy of a story in the Des Moines Register about the report and a copy of the portion of the transcript of the president-elect’s press conference when the report was mentioned are pasted here.
A copy of the GAO report can be found on Grassley’s website, http://grassley.senate.gov.
Rich get $49 million in farm aid
By PHILIP BRASHER • pbrasher@dmreg.com • November 24, 2008
http://www.desmoinesregister.com/article/20081124/BUSINESS01/811240319/1030
Washington, D.C. -
People too rich to get farm subsidies are collecting payments anyway because of the Agriculture Department's lax oversight, government investigators say.
The founder of an insurance company collected more than $300,000 a year in farm subsidies from 2003 through 2006 despite exceeding a $2.5 million income eligibility limit. The part-owner of a professional sports franchise got more than $200,000 a year.
They were among 2,702 rich individuals who collected $49 million in farm subsidies over the four-year period in apparent violation of the income limit, according to the Government Accountability Office, the watchdog arm of Congress.The GAO did not release the names, citing privacy rules, but said wealthy subsidy recipients were scattered among 49 states and that nine of the people lived overseas, including in Britain, Saudi Arabia and Hong Kong. More than one-third of the individuals lived in five states: Arizona, California, Florida, Illinois and Texas.
The U.S. Agriculture Department's failure to catch those violations raises concerns about its ability to enforce the tighter, more complex income limits Congress enacted in the 2008 farm bill, according to the report.
The investigators estimated that 23,506 people who received farm subsidies in 2006 could be ineligible for payments under the new income caps, which range from $500,000 to $1 million and vary according to which farm programs are affected. The new rules increase "the risk that USDA will make improper payments to more individuals," the report said.
"It's hard to have faith in USDA's ability to police these income limits," said Iowa Sen. Charles Grassley, who requested the GAO investigation.
"Unfortunately, it's one thing after another. One year we have payments going to dead people; now we have payments going to owners of professional sports teams. I hate to think what might be next," he said.
In 2007, the GAO reported that the USDA had paid $1.1 billion in farm subsidies to more than 170,000 dead individuals over a seven-year period. Although such payments could have been legitimate so long as the dead farmer's estate hadn't been settled, the USDA often didn't know when a farmer had died and didn't monitor estates sufficiently, the investigators found.
Chuck Hassebrook, executive director of the Nebraska-based Center for Rural Affairs, said the USDA "has consistently failed to limit payments to their intended beneficiaries" and doesn't try to get the funding it needs to do a better job.
The income limits affect several USDA programs, including crop subsidies and land-conservation programs. Payment recipients either own land or operate farms. People who apply for subsidies are required to certify that they meet the income limits.
Even the USDA wasn't allowed to see the names of the people caught by the GAO, because the study required using private tax records on file with the Internal Revenue Service.
In a letter accompanying the report, officials with the USDA's Farm Service Agency expressed frustration at being unable to get the names and said they needed the power "by whatever means necessary" to obtain them.
Grassley, the ranking Republican on the Senate Finance Committee, said if USDA officials think they need more authority, "then they need to come to Congress so we can discuss it."
FSA officials blamed their failure to catch ineligible recipients on a lack of funding and an inability to use IRS records. They also said the amount of money those people collected - $49 million over four years - represented a tiny fraction of the $16 billion in farm payments the department makes annually. A total of 1.8 million people received payments from 2003 to 2006.
The USDA samples recipients for eligibility, but it doesn't necessarily check them for income eligibility. Instead, the USDA looks at other factors, such as the amount of payments received the previous year or whether there was a change in a farm's ownership, the GAO said. The new farm bill requires the USDA to use statistical methods to identify ineligible recipients.
The old income limit, set in 2002, was fairly simple. The law cut off individuals who had an average adjusted gross income of more than $2.5 million and derived less than 75 percent of their earnings from farming.
Under the 2008 farm bill, people with nonfarm income of more than $500,000 would lose crop subsidies and disaster payments, but someone with nonfarm income of as much as $1 million a year could still get conservation payments.
The amount of farm income also could make a difference for some wealthier people. Individuals with more than $750,000 in annual farm earnings would lose one type of subsidy - fixed, annual payments.
The Bush administration proposed a much stiffer means test for all recipients of $200,000 in average annual income, but farm groups complained that the proposal was far too restrictive.
Organizations that want to reduce subsidies or target them toward smaller farms say the new limits don't go nearly far enough and will be hard to enforce. For example, the income limits can be doubled for married couples.
Ferd Hoefner, policy director for the Sustainable Agriculture Coalition, said the USDA has long lacked the will to enforce the rules it already has.
"Excuses abound, some with more merit than others, but the crux of the matter is putting a team in place that actually believes in the mission as stated in the statute," he said.
Income limits typically fall the hardest on Southern cotton and rice farmers who have higher revenue per acre, but some corn farmers could be caught, too, when prices are high, said Bob Young, chief economist for the American Farm Bureau Federation.
The complexity of the new limits will force farmers to consult with lawyers and accountants to stay eligible for payments, he said. "The lawyers and the CPAs are the ones who make out best."
TRANSCRIPT
November 25, 2008
NEWS CONFERENCE
PRESIDENT-ELECT BARACK OBAMA
CHICAGO
PRESIDENT-ELECT BARACK OBAMA HOLDS A NEWS CONFERENCE
CQ Transcriptions, LLC
Copyright 2008 CQ Transcriptions, LLC
SPEAKER: PRESIDENT-ELECT BARACK OBAMA
OBAMA: Good morning, everybody.
Yesterday, we talked about the need to jump-start our economy. I
speak to you today mindful that we meet at a moment of great challenge
for America, as our credit markets are stressed and our families are
struggling.
But as difficult as these times are, I'm confident that we're
going to rise to meet this challenge, if we're willing to band
together and recognize that Wall Street cannot thrive so long as Main
Street is struggling; if we're willing to summon a new spirit of
ingenuity and determination; and if Americans of great intellect,
broad experience, and good character are willing to serve in our
government at its hour of need.
Yesterday, I announced four such Americans to help lead the
economic team that will advise me as we seek to climb out of this
crisis. Today, I'm pleased to announce two other key members of our
team: Peter Orszag as director and Robert Nabors as deputy director
of the Office of Management and Budget.
Now, before I explain why I selected these outstanding public
servants, let me say a few words about the work that I'm asking them
to undertake.
As I said yesterday, the economic crisis we face demands that we
invest immediately in a series of measures that will help save or
create 2.5 million jobs and put tax cuts in the pockets of the hard-
pressed middle class. Many of those new jobs will come in areas such
as energy independence, technology, and health care modernization that
will strengthen our economy over the long term.
But if we are going to make the investments we need, we also have
to be willing to shed the spending that we don't need. In these
challenging times, when we're facing both rising deficits and a
shrinking economy, budget reform is not an option. It's a necessity.
We can't sustain a system that bleeds billions of taxpayer
dollars on programs that have outlived their usefulness or exist
solely because of the power of politicians, lobbyists, or interest
groups. We simply can't afford it.
This isn't about big government or small government. It's about
building a smarter government that focuses on what works. That's why
I will ask my team to think anew and act anew to meet our new
challenges.
We are going to go through our federal budget -- as I promised
during the campaign, page by page, line by line -- eliminating those
programs we don't need and insisting that those that we do need
operate in a sensible, cost-effective way.
Let me just give you one example of what I'm talking about.
There's a report today that, from 2003 to 2006, millionaire farmers
received $49 million in crop subsidies even though they were earning
more than the $2.5 million cutoff for such subsidies. Now, if this is
true -- and this was just a report this morning -- but if it's true,
it is a prime example of the kind of waste that I intend to end as
president.
We're also goi
ng to focus on one of the biggest long-run
challenges that our budget faces, namely the rising cost of health
care in both the public and private sectors. This is not just a
challenge, but also an opportunity to improve the health care that
Americans rely on and to bring down the costs that taxpayers,
businesses and families have to pay.
Now, that's what the Office of Management and Budget will do in
my administration: It will not only help design a budget and manage
its implementation, but it's also going to make sure that our
government -- your government -- is more efficient and more effective
at serving the American people.
And there's no better person to help lead this effort as director
of the OMB than my friend, Peter Orszag. Peter has been one of our
nation's leading voices on budgetary issues.
It's said that a nation's budget reflects its values and its
priorities. I believe that's true. And I know that Peter will bring
to his work at the OMB a set of priorities that I and the American
people share.
Throughout his career, he's made significant contributions in our
understanding of all the major economic challenges that we're now
confronting, from reducing medical costs to saving Social Security to
fighting global climate change to helping put the dream of a college
degree within the reach of more students.
As director of the Congressional Budget Office, he re-energized
and reinvigorated the agency, while shifting its focus to confront the
health care crisis that is not only a cause of so much suffering for
so many families, but a rapidly growing portion of our budget and a
drag on our entire economy.
But it's not simply that Peter's past caree
r makes him qualified
for this new appointment; it's also that he has a vision for the
future that I share.
He believes, as I do, that even as we take steps to restore
discipline to our budget, we also have to take the steps right now
that are necessary to solve our immediate crisis.
Peter doesn't need a map to tell him where the bodies are buried
in the federal budget. He knows what works and what doesn't, what's
worthy of our precious tax dollars and what is not.
Nov 25, 2008 12:17 ET