Tuesday, November 25, 2008

Obama Uses Farm Program Payments as Example

From Obama's press conference today:
"Let me give you one example of what I’m talking about. There’s a report today that from 2003 to 2006, millionaire farmers received $49 million in crop subsidies even though they were earning more than the $2.5 million cutoff for such subsidies. If this is true, it is a prime example of the kind of waste I intend to end as President."
He's referring to a GAO report.

I'm rather impressed [I'm sure people are surprised] by the FSA response.

But that's a side issue, and I want to hit two points:
  • Part of the problem is that FSA accepts certifications that a person's adjusted gross income is $2.5 million or less, without having routine access to the IRS data which would allow for checking the certifications. As FSA points out, in accepting the GAO recommendation, Congress needs to permit this if they want effective administration.
  • Another part is that legal entities "farm" and get program payments. So if ABC corporation is half-owned by Joe Croesus and half by John Empty pockets, and Joe is over the $2.5 limit and John isn't, FSA is supposed to make payments to ABC corporation reduced by half (representing Joe's share). GAO claims (in their response to FSA's comments) that they accounted for this.
As a former FSA employee, I can only imagine the anger I would be feeling--GAO had access to IRS data, which was how they did the report, but refuse (i.e., is not legally permitted) to provide the data to FSA so FSA can efficiently correct the overpayments. Almost a Catch-22, and certainly dispiriting to someone who wants to enforce the law.

Finally, I suspect this is just the beginning of what's going to be a hot and hard time for USDA and FSA.

1 comment:

Anonymous said...

Why not, as with deceased people, pass a data file over to IRS and let them tell us any ID that got a FSA payment that is over the AGI limit. That way FSA does not have the data but IRS can tell us potential issues with ID's that have earned too much money to be AGI eligible. This should become easier as we move to direct attribution.