November 25, 2008 / 9:45 PM / 11 years ago

Too many rich U.S. farmers get subsidies: GAO

WASHINGTON (Reuters) - Too many rich farmers continue to receive U.S. farm subsidies in spite of income caps designed to restrict their participation, and the Agriculture Department needs to do more to enforce the rules, the auditing arm of Congress said on Tuesday.

A farmer inspects a soybean head before the John Kuhfuss farm equipment auction in Mackinaw, Illinois June 28, 2008. REUTERS/Mark Weinraub

More than 2,700 people whose gross income topped $2.5 million — making many of them ineligible for farm programs — received more than $49 million in payments between 2003 and 2006, the Government Accountability Office said in a report.

“If this is true, it is a prime example of the kind of waste I intend to end as president,” President-Elect Barack Obama said in a news conference on Tuesday.

Obama has complained about subsidies to “millionaire farmers” during his campaign, and said he would like a “hard” cap of $250,000.

About 2 million farmers and farm entities receive about $16 billion per year in programs designed to help stabilize incomes when prices fall or to help protect sensitive land.

The farm programs have long been criticized for spurring overproduction and hurting world markets, as well as for giving money to people who don’t need it.

For example, the GAO previously rapped the USDA for paying $1.1 billion between 1999 and 2005 to more than 170,000 people who were no longer alive.

The GAO used tax filer data to see how well the USDA enforced the cap — giving the GAO a “distinct advantage” over the USDA, which lacks the power to access the same data, USDA official Teresa Lasseter said in a letter responding to the GAO report.

A USDA spokesman could not be reached for further comment.

The report recommended the USDA should work with the Internal Revenue System on a new verification system.

“The bottom line is if the department feels it needs more authority to access IRS data, it ought to come to Congress and ask me for more authority,” said Iowa Senator Chuck Grassley, the ranking Republican on the finance committee who asked for the GAO audit.

Grassley told reporters he was most troubled that the GAO found 87 people who received payments despite being flagged in the USDA’s own database as being ineligible.

Other potential infractions included a former insurance company executive who received more than $300,000, an owner of a professional sports team who received $200,000, and a top financial services executive who got $60,000, the GAO said.

The $49 million in potential overpayments is a small percentage of total farm payments, but “that’s a lot of money that can go for school lunch programs for low-income kids, or it could be a bottom-line on the deficit,” Grassley said.

Earlier this year, the new farm bill lowered the cap for farm subsidies, denying all payments to people grossing more than $500,000 and “direct” payments to people with more than $750,000 in farm income.

The GAO said the new caps increase the risk that the USDA would pay people who don’t qualify.

If the new rules had been in place in 2006, it’s likely the USDA would have paid as much as $90 million to 23,500 people who didn’t qualify for payments, the GAO said.


* GAO report on federal farm programs

additional reporting by Christopher Doering; Editing by David Gregorio

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