Campaign for Liberty supports AFIRM Act

Campaign for Liberty is supporting the Assisting Family Farmers through Insurance Reform Measures Act (AFIRM) Act (HR 3973). The AFIRM Act makes a series of pro-taxpayer changes to the crop insurance program.

Specially, the bill institutes a $40,000 annual payment limit, forbids "premium" support payments to anyone with an adjusted gross income of over $250,000, places a $900 million cap on payments to private crop insurance providers, eliminates the provision that automatically increases subsides if the prices at harvest are higher than the prices at planting. The AFIRM Act also increase transparency by making the name of recipients of subsidies public.

Campaign for Liberty members who support reducing payments to well-to-do farmers and large agribusiness should call their Representatives and tell them to cosponsor the AFIRM Act (HR 3973).

Here is the text of the collation letter in support of the AFIRM Act Campaign for Liberty has signed:

Dear Member of Congress,
On behalf of the millions of Americans represented by the undersigned organizations, we encourage you to support the recently reintroduced bipartisan Assisting Family Farmers through Insurance Reform Measures (AFFIRM) Act.

Introduced by Representatives Ron Kind (D-WI) and Jim Sensenbrenner (R-WI) in the House and by Senators Jeff Flake (R-AZ) and Jeanne Shaheen (D-NH) in the Senate, the AFFIRM Act places strong, sensible taxpayer protections upon our nation’s unaccountable and expensive federal crop insurance program.

With the demise of direct payments, crop insurance has become the largest and most important support for farms. Unfortunately, the program’s expansion has put the taxpayer at risk and distorted agriculture markets. Currently, the federal government subsidizes crop insurance premiums by 62% on average, regardless of whether the farm is a small, family operation or a multi-million dollar agribusiness. Premium support payments are unlimited, resulting in a handful farms receiving over $1 million in federal support while 80% of farms receive $5,000 or less. Subsidizing farms regardless of size or income skews the playing field toward large agri-business, driving up land costs and encouraging those with the means to over-insure and lock in high revenues.

In addition, subsidies flow to overly generous insurance policies, namely, the policies with a harvest price option. The harvest price option, which fast is becoming known as the “Cadillac” coverage option of federal crop insurance, differs from standard insurance by paying farmers using either the standard locked-in price or the market price at harvest, whichever is higher. HPOs actually can result in a farmer's revenues exceeding the expectations when the crop was planted.
The program also generates large revenues for the companies that administer the policies, with a 14% guaranteed rate of return and $1.3 billion annually in
payments to cover administrative costs.

Without proper restrictions to limit these overly generous subsidies, the crop insurance program repeatedly comes in above spending projections. Taxpayers are on the hook, and most egregiously, they can’t even know what they are paying for, as crop insurance subsidies are not transparent.

The AFFIRM Act would address each of these important issues by instituting a payment limit of $40,000 annually, a means test that ends premium support at an adjusted gross income of $250,000, a reduction in annual payments to crop insurance providers to $900 million, lowering the guaranteed rate of return to 8.9%, elimination of support for harvest price option policies, and finally, putting crop insurance subsidies in line with all other agriculture subsidies by making recipient information transparent and available to the American people.

Congressional Budget Office predicts these changes would save the taxpayer $24.4 billion over the next ten years. We commend Reps. Kind and Sensenbrenner and Sens. Flake and Shaheen for continuing to sound the alarm regarding the egregious taxpayer abuses embodied in the federal crop insurance program. With most Americans still digging out from the Great Recession, it’s patently unfair to ask them to subsidize our nation’s largest and richest agribusinesses and crop insurance providers. We encourage all members of Congress to join with the Representatives and support these sensible solutions.

Sincerely,
R Street Institute
Campaign for Liberty
Center for Individual Freedom
Coalition to Reduce Spending
Council for Citizens Against Government Waste
FreedomWorks
Less Government
National Taxpayers Union
Taxpayers for Common Sense
Taxpayers Protection Alliance

Tags: farm subsidies