The Death of a Farm Program Reform
In advance of this year's farm bill debate, The Washington Post reported that 16 private crop insurance companies made $3.1 billion in profits from the heavily subsidized program over the past eight years while the government lost $1.5 billion. Rep. Henry A. Waxman (D-Calif.), citing findings of the Government Accountability Office and the Agriculture Department's Inspector General, dubbed the crop insurance program "a textbook example of waste, fraud and abuse in federal spending."
But last week, in one of several examples of the farm lobby's ability to beat back reform, an amendment reducing industry subsidies by $2 billion over 10 years was soundly defeated, 63 to 32. The proposal from Sens. Sherrod Brown (D-Ohio) and John Sununu (R-N.H.) would have cut federal administrative contributions and required the industry to share slightly more of the underwriting gains in good insurance years. To block it, farm organizations and well-heeled crop insurance lobbyists pulled out the stops. It is a familiar outcome to anyone who followed the debate over the last farm bill.
One example: Both Maine senators voted "no" after local insurance agents protested their margins would be trimmed and blueberry and potato farmers raised concerns that insurance might no longer be available.
This year alone, the American Association of Crop Insurers, representing most private crop insurance companies and hundreds of large agents, has distributed nearly $80,000 to 40 members of Congress. The group's executive director, Michael R. McLeod, called the defeated legislation "the Brown amendment to terminate crop insurance." Big reinsurance companies that backstop the program would have refused to share its risks if the Brown-Sununu trims had gone forward, he contended.
On the contrary, Brown contended, revenues to crop insurance companies would actually increase under the Senate bill, in part because of a new provision requiring farmers and ranchers seeking federal aid after weather losses to have purchased crop insurance. Senate Agriculture Committee Chairman Tom Harkin (D-Iowa), whose campaign fund collected $9,000 from McLeod's group in January, wasn't swayed by the crop insurers' logic. He voted for the amendment.
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