Bridges Weekly Trade News Digest • Volume 12 • Number 41 • 3rd December 2008
US Govt Mistakenly Giving Millions in Farm Subsidies To Millionaires, GAO Finds
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The US government gave over US$ 49 million in subsidies from 2003 to 2006 to farmers whose incomes exceeded US$ 2.5 million in contravention of US farm spending law, a non-partisan government watchdog has found.
In a report released on 24 November, the Government Accountability Office (GAO), the investigative arm of Congress, found that the US Department of Agriculture (USDA) had given subsidies to some 2702 farmers whose income crossed the US$ 2.5 million threshold, with less than 75 percent of income coming from farming. These subsidies go against the 2002 farm act, which limited the eligibility of farmers receiving these subsidies.
The GAO cited the USDA’s lack of proper management controls as the source of the problem. “The sample that the USDA draws does not test for income eligibility; instead, the USDA reviews compliance with eligibility requirements other than income, such as the amount of farm program payments a farming operation received in the previous year, and whether it experienced a change in ownership,” said the report. The GAO argued that it is this lack of oversight that makes the USDA unable to ensure that only individuals who meet the income eligibility caps are receiving farm payments.
Of the 2,702 ineligible individuals, nine were living outside of the US, and most of them lived in or near metropolitan areas, the report found. And compared with other taxpayers, people who participated in the farm program were three times more likely to report incomes over US$ 500,000.
US President-elect Barack Obama pointed to the US$ 49 million as “a prime example of the kind of waste” he intends to end as president, in a speech the day after the report was released.
In a response to the report, the USDA noted that only a small percentage of the total farm program payouts were made to people who did not meet the requirements. But the GAO countered that this number will grow when the 2008 farm bill goes into effect. With eligibility set to be limited further, “the USDA could be at greater risk of making these improper payments unless it has better management controls in place,” it warned. If the 2008 farm bill guidelines are used to calculate the number of ineligible people paid in 2006, as many as 23,506 farmers who were paid would have been ineligible.
The GAO recommended that the USDA work more closely with US tax authorities to better monitor the incomes of their recipients. In the most recent farm bill, the USDA is given a mandate to establish statistically valid procedures of auditing. Though the Internal Revenue Service is not authorised to provide tax information without a waiver from the individuals being audited, the GAO suggested that the USDA find a system of obtaining waivers from all recipients, or if they do not have the authority to carry that out, ask Congress for the authority.
ICTSD reporting; “President-elect Barack Obama announces Office of Management and Budget Director and Deputy Director,” CHANGE.GOV, November 25, 2008.
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This is an example of the kind of thing that makes me as an US citizen sick to my stomach. I watch as my country spirals into economic disaster and then find out that there was a 49 million dollar “mistake”. The other question I have is I wonder why are there no criminal penalties for taking the subsides when a persons/companies income is over a certain amount? It makes sense to me.