TPA Joins Forces to Urge Congress to Support the Crop Insurance Subsidy Reduction Act

Today, the Taxpayers Protection Alliance joined with 16 other free market and taxpayer groups to urge strong support of S. 446 and H.R. 943, the “Crop Insurance Subsidy Reduction Act,” sponsored by Sen. Jeff Flake (R-AZ) and Rep. John Duncan (R-TN), respectively. This common sense legislation would scale back crop insurance premium subsidies, the cost of which has skyrocketed in recent years, to the more responsible levels that prevailed prior to a massive expansion in 2000. In doing so, it would provide a modest down payment on desperately needed fundamental reforms to U.S. agricultural policy.  In 2011, taxpayers paid an average of $62 out of every $100 in crop insurance premiums, with farmers only needing to cover the remaining $38 out of pocket. This extraordinarily generous subsidy has led to extremely high costs for taxpayers.  From 2001 to 2012, the total cost of premium subsidies jumped four-fold from $1.8 billion to $7.5 billion. The Congressional Budget Office projects even higher costs in the future, averaging $9.1 billion annually.  Limiting these subsidies to the levels that prevailed in 2000 would essentially reverse the aforementioned ratio, with taxpayers covering an average of $37 out of every $100 in premiums and farmers covering the remaining $63. Even a modest reform like this yields huge savings, as CBO estimates the Crop Insurance Subsidy Reduction Act would reduce the burden on taxpayers by $40.1 billion over the next decade.

Read the full letter below:

March 5, 2013

An Open Letter to the United States Congress: Support the Crop Insurance Subsidy Reduction Act!

Dear Member of Congress,

On behalf of the millions of Americans represented by the undersigned organizations, we write to urge your strong support of S. 446 and H.R. 943, the “Crop Insurance Subsidy Reduction Act,” sponsored by Sen. Jeff Flake (R-AZ) and Rep. John Duncan (R-TN), respectively. This common sense legislation would scale back crop insurance premium subsidies, the cost of which has skyrocketed in recent years, to the more responsible levels that prevailed prior to a massive expansion in 2000. In doing so, it would provide a modest down payment on desperately needed fundamental reforms to U.S. agricultural policy.

In 2011, taxpayers paid an average of $62 out of every $100 in crop insurance premiums, with farmers only needing to cover the remaining $38 out of pocket. This extraordinarily generous subsidy has led to extremely high costs for taxpayers. Unlike several other agriculture subsidies, crop insurance premium subsidies are not means-tested or otherwise substantially limited, which is why 26 large agribusinesses received more than $1 million each just to subsidize their crop insurance premiums in 2011, and more than 10,000 received in excess of $100,000. From 2001 to 2012, the total cost of premium subsidies jumped four-fold from $1.8 billion to $7.5 billion. The Congressional Budget Office projects even higher costs in the future, averaging $9.1 billion annually.

Limiting these subsidies to the levels that prevailed in 2000 would essentially reverse the aforementioned ratio, with taxpayers covering an average of $37 out of every $100 in premiums and farmers covering the remaining $63. Even a modest reform like this yields huge savings, as CBO estimates the Crop Insurance Subsidy Reduction Act would reduce the burden on taxpayers by $40.1 billion over the next decade.

Given near-record commodity prices, near-record farm incomes, and staggering fiscal challenges, the time has never been better for serious farm policy reform. Agricultural subsidies long have been criticized by watchdog groups and members of Congress from across the ideological spectrum. Though we’d like to see premium subsidies eliminated entirely, the time has come to address some of the “lowest-hanging fruit” in the federal budget and the Crop Insurance Subsidy Reduction Act is a terrific first step.

We commend Sen. Flake and Rep. Duncan for their leadership and urge you to sponsor this important legislation and support swift action on it.

Sincerely,

Andrew Moylan, R Street Institute

Phil Kerpen, American Commitment

James Valvo,
Americans for Prosperity

Grover Norquist, Americans for Tax Reform

John Tate,
Campaign for Liberty

Jeff Mazzella,
Center for Individual Freedom

Chris Chocola, Club for Growth

Fran Smith,
Competitive Enterprise Institute

Rob Sisson, ConservAmerica

Mattie Duppler,
Cost of Government Center

Tom Schatz,
Council for Citizens Against Government Waste

Matt Kibbe, FreedomWorks

Mike Needham,
Heritage Action for America

Seton Motley, Less Government

Duane Parde,
National Taxpayers Union

Ryan Alexander,
Taxpayers for Common Sense

David Williams,
Taxpayers Protection Alliance