Politics As Usual
Shining a Light on Power and Policy
Tom Shine covers congressional politics for ABC News.
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"Compensation to insurance companies has been excessive."
May 03, 2007 10:20 AM
"COMPENSATION TO INSURANCE COMPANIES HAS BEEN EXCESSIVE"
That is what the GAO will tell congress today. The agency is talking about the TAXPAYER FUNDED CROP INSURANCE PROGRAM. GAO witness Lisa Shames in her prepared testimony says, "WE CANNOT AFFORD TO CONTINUE BUSINESS AS USUAL, GIVEN THE NATION'S CURRENT DEFICIT AND LONG-TERM FISCAL CHALLENGES."
According to the GAO, a big part of the problem is excessive compensation to insurance companies to administer the program. "40 CENTS OF EVERY TAXPAYER DOLLAR SPENT ON THE FEDERAL CROP INSURANCE PROGRAM WENT TO COMPANIES TO DELIVER THE PROGRAM WHILE LESS THAN 60 CENTS OF EVERY TAXPAYER DOLLAR WENT TO THE FARMERS."
That is $10.9-BILLION over a 10-year period.
The report says USDA has paid insurance companies $2.8 BILLION in underwriting gains over a 5 year period which amounts to a 17.8% RETURN. U.S. insurance companies that sell private property and casualty policies got a 6.4% RETURN during that same period.
According to Shames' higher crop prices for corn and soybeans will be among the factors that result in INSURANCE COMPANIES and THEIR AGENTS getting MORE TAXPAYER DOLLARS in the future even though their cost to administer the program will not increase, "PROVIDING THESE COMPANIES AND THEIR AGENTS WITH A KIND OF WINDFALL."
In 2000, congress REFORMED the program to help farmers better manage their financial risks and ELIMINATE the need to pass expensive supplemental disaster assistance programs.
GUESS WHAT? According to Bruce Babcock, an expert on farm programs, REFORM will cost TAXPAYER $5 BILLION PER YEAR OVER THE NEXT 5 YEARS -- THAT IS DOUBLE WHAT THE PROGRAM WOULD HAVE COST TAXPAYERS WITHOUT REFORM.
And as for those crop disaster supplementals that were supposed to go away with reform -- a $3.5 BILLION CROP DISASTER ASSISTANCE PROVISION WAS INCLUDED IN THE IRAQ WAR FUNDING BILL.
May 3, 2007 in Congress | Permalink | User Comments (1)
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A recent ABC News online poll about the republican debates was completely absent of Ron Paul's name!
They really should fix that. Leaving out the one candidate that sounded the most different from all the rest is very poor reporting.
Posted by: bob | May 5, 2007 2:11:34 PM
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