GAO, Obama Hit Farm Subsidy Abuse
The U.S. Department of Agriculture wrongly paid over $49 million in farm subsidies to ineligible wealthy individuals from 2003 through 2006 because it lacks the management conrols to enforce rules on means testing, according to a newly released Government Accountability Office report.
President-electBarack Obama cited the report today in laying out the need to scrub the federal budget to eliminate wasteful spending.
"Let me just give you one example of what I'm talking about," Obama said in a press conference where he announced his choice for White House budget director. "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."
Wasteful farm program spending was detailed in a two-year Post investigation in 2006 and 2007.
In the study cited by Obama, the GAO found that 2,702 subsidy recipients had adjusted gross income above $2.5 million and derived less than 75 percent of their income from farming - criteria that should have made them ineligible. The IRS provided the GAO with access to the tax returns of the farmers, on the condition that the names would remain private and not be shared with the USDA.
"USDA does not have management controls, such as reviewing an appropriate sample of recipients' tax returns, to verify that payments are made only to individuals who do not exceed income eligibility caps and therefore cannot be assured that millions of dollars in farm program payments it made are proper," GAO concluded.
The recently enacted five-year farm bill sets a tighter means test. It bars farm couples making more than $1.5 million in adjusted gross income from certain farm program payments. Those with more than $1 million in non-farm income could not receive any subsidies. The new farm bill also closed a loophole that had allowed farm families to set up as many as three corporate entities to receive payments.
But GAO said USDA was not set up to enforce the stricter law, raising the possibility that "USDA will make improper payments to more individuals." As many as 23,000 individuals who have received payments in the past will become ineligible under the new farm program, GAO reported.
It also noted that farm families as a group are richer than most Americans. Twelve of every 1,000 individuals receiving farm program payments report adjusted gross income between $500,000 and $1 million. That compares with about four in 1000 for all tax filers.
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Posted by: eglobegus | November 26, 2008 3:23 AM