The Government Accountability Office took a look at the federal government crop insurance program and the result isn’t pretty. We effectively waste $1 billion a year providing corporate welfare to very large agribusiness operations. From the GAO:
If a limit of $40,000 had been applied to individual farmers’ crop insurance premium subsidies, as it is for other farm programs, the federal government would have saved up to $1 billion in crop insurance program costs in 2011, according to GAO’s analysis of U.S. Department of Agriculture (USDA) data. GAO selected $40,000 as an example of a potential subsidy limit because it is the limit for direct payments, which provide fixed annual payments to farmers based on a farm’s crop production history. Had such a limit been applied in 2011, it would have affected up to 3.9 percent of all participating farmers, who accounted for about one-third of all premium subsidies and were primarily associated with large farms. For example, one of these farmers insured crops in eight counties and received about $1.3 million in premium subsidies. Had premium subsidies been reduced by 10 percentage points for all farmers participating in the program, as recent studies have proposed, the federal government would have saved about $1.2 billion in 2011. A decision to limit or reduce premium subsidies raises other considerations, such as the potential effect on the financial condition of large farms and on program participation.
The federal government’s crop insurance costs include subsidies to pay for (1) part of a farmer’s crop insurance premiums, which averaged about 62 percent of the total premiums in 2011, and (2) administrative and operating expenses (administrative expenses)—provided on behalf of farmers—to insurance companies to cover their expenses for selling and servicing crop insurance policies. The amount of subsidies—for premiums and administrative expenses—is not limited for individuals or legal entities.
As you can see, one third of this particular subsidy goes to less than 4 percent of “farmers.” Having what is effectively an unlimited corporate welfare program for agribusinesses regardless of how big or profitable is unjustifiable.
If we had a sane political system an official report like this would be treated like a whole scandal and dealt with quickly. Given that almost everyone in Congress pretends to be very concerned about the deficit, giving a billion dollars a year to huge companies should cause massive outrage.
Of course we don’t have a sane political system so the chances of this program being fixed are small. We have a Senate and an electoral college that radically favors small rural areas. In addition, our campaign donations system means those small state senators depend on getting large checks from the same huge agribusinesses that get this corporate welfare worth billions.
Another reminder of why we need public financing of campaigns and a real democracy that treats all votes as equal.