WASHINGTON, March 18, 2015 – A leading critic of crop insurance said he’s likely to use next week’s debate on the Senate budget resolution to test support for cuts in the program.
Sen. Jeff Flake, R-Ariz., told Agri-Pulse he was planning “a number” of amendments, which are non-binding since a budget resolution isn’t signed by the president.
Flake introduced a bill (S 463) last month to eliminate premium subsidies for revenue policies with harvest-price option (HPO), which was designed to protect farmers against losses when commodity prices spike and yields are poor. Critics say it has resulted in windfall payments to some producers.
Flake said he also may propose other amendments that would attack the insurance program, including by imposing income limits on premium subsidies.“Any of this ag subsidy stuff we’re going to go after,” he said.
Later, he will try to get the cuts attached to the fiscal 2016 appropriations bill for the Agriculture Department, he said. That bill could be on the Senate floor in the spring or summer. In the meantime, the budget resolution can provide "a good test vote, so we'll likely do that," he said.
A report issued by the Government Accountability Office on Wednesday is likely to provide Flake and his allies some ammunition in the debate. The report said that cutting premium subsidies on the highest-earning policyholders would have a “minimal effect” on the program while saving taxpayers millions of dollars.
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“Every time you have the Ag appropriations bill on the floor, House or Senate, you have an attempt to rewrite the farm bill,” said Senate Agriculture Chairman Pat Roberts, R-Kan.
“There are all sorts of folks who, under the banner of reform, aren’t aware of the unintended consequences. We look forward to that debate. I think it’s nothing that we have not expected.”
GAO examined the impact of reducing or eliminating subsidies to farmers in 2009 through 2013 with adjusted gross incomes in excess of the limits for commodity and conservation programs. About 1 percent of policy holders, or an average of 7,460 per year, would have been affected, the auditors said.
Eliminating premium subsidies for those policyholders would have saved about $290 million over the five-year period. Reducing the subsidies by 15 percentage points would have saved more than $70 million.
About half of the highest-income policyholders were in five states: Texas, Kansas, Illinois, Iowa and California.