Friday, November 28, 2008

Letter to the Editor re: Farm Subsidies
Last updated November 24, 2008 8:48 p.m. PT

Millionaires reap farm payments; nobody checking incomes
Investigators say the problem will get worse

WASHINGTON -- A sports team owner, a financial firm executive and residents of Hong Kong and Saudi Arabia were among 2,702 millionaire recipients of farm payments from 2003 to 2006 -- and it's not even clear they were legitimate farmers, congressional investigators reported Monday.
They probably were ineligible, but the Agriculture Department can't confirm that, since officials never checked their incomes, the Government Accountability Office said.
The Agriculture Department cried foul: It said the investigators had access to Internal Revenue Service information on individuals that the department is not permitted to see.
John Johnson, deputy administrator in the department's Farm Service Agency, said officials there are in touch with the IRS to devise a system for including tax information in its sampling program to determine eligibility.
He added that 2,702 recipients cited by the GAO was a small percentage of the 1.8 million recipients of farm payments from 2003 through 2006.
The investigators said the problem will only get worse, because the payments they cited covered only the 2002 farm bill subsidies.
The 2008 farm legislation has provisions that could allow even more people to receive improper payments without effective checks, they said.
There are three main types of payments: direct subsidies based on a farmer's production history; countercyclical payments that kick in when prices are low and disappear when they recover; and a loan program that allows repayment in money or crops.
The 2002 farm bill required an income test for the first time.
An individual or farm entity was ineligible if average adjusted gross income exceeded $2.5 million over three years -- unless 75 percent or more of that income came from farming, ranching and forestry.
According to the report, the 2,702 recipients exceeded the $2.5 million and got less than 75 percent of their income from these activities.
The payments to them totaled more than $49 million.
"USDA has relied principally on individuals' one-time self-certifications that they do not exceed income eligibility caps, and their commitment that they will notify USDA of any changes that cause them to exceed these caps," the GAO said.
The report said Agriculture field offices have been able to request that recipients submit tax returns for review.
But the administrator in charge of the payment programs, Teresa Lasseter, told the GAO, "Requiring three years of tax returns initially from over 2 million program participants was not a viable option or cost-effective alternative."
The GAO said 78 percent of the recipients resided in or near a metropolitan area, while the remaining 22 percent resided in large towns, small towns and rural areas.
Further, the investigators said the Agriculture Department should have known that 87 of the 2,702 recipients were ineligible because it had noted in its own databases that they exceeded the income caps.
The GAO said it was prevented by law from identifying individuals cited in its report, but the investigators offered these examples of likely improper payments:
· A founder and former executive of an insurance company received more than $300,000 in farm program payments in 2003, 2004, 2005 and 2006 that should have been subject to the income limits.
· An individual with ownership interest in a professional sports franchise received more than $200,000 for those same years that should have been barred by the income limits.
· A person residing outside the United States received more than $80,000 for 2003, 2005 and 2006 on the basis of the individual's ownership interest in two farming entities.
· A top executive of a major financial services firm received more than $60,000 in farm program payments in 2003.
· A former executive of a technology company received about $20,000 in years 2003, 2004, 2005 and 2006 that were covered by the income limits.
This individual also received more than $900,000 in farm program payments that were not subject to those limitations.
The investigators also found nine recipients resided outside the United States -- in Hong Kong, Saudi Arabia and the United Kingdom, for example.
The remainder resided in 49 of the 50 states, the District of Columbia and the Virgin Islands.
Five states -- Arizona, California, Florida, Illinois and Texas -- accounted for 36 percent of the recipients and 43 percent of the $49.4 million in farm program payments.

(Letter to the Editor, By Theodore M. Wight, Seattle Post-Intelligencer, November 27, 2008 P. B7)

Democrats continue to reward farmers

Farmers, as a group, were one of the core targets for Franklin Delano Roosevelt's strategy to win election and re-election during his presidency beginning in the 1930s. Although about only 1 percent of the population, farmers continue to be rewarded by the Democratic Party in exchange for support and votes. Over the years, the various farm bills expand the reach of government throughout our economy, way beyond "farms." The bill passed in May 2008 contained 15 different titles and 600 provisions, up 50 percent from the Republican-controlled Congress in 2002.
The bill spends $286 billion of taxpayers' money through 2012. In today's bailout mania, I guess that's not so much. Every once in a while when there is space a newspaper will run a little "outrage" piece on parts of the bill, then will go silent for another four years. The only way to cure these outrages is to diminish the power of Democrats in Congress. Well, maybe in two years.

Theodore M. Wight

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