HARVESTING CASH: Double-Dipping When Disaster Strikes
Aid Is a Bumper Crop for Farmers
Sunday, October 15, 2006
In the spring of 2000, Congress decided to do something about its costly and politically driven practice of giving farmers a disaster payment each time a storm damaged their crops.
The lawmakers voted to use $8 billion in new taxpayer subsidies to help farmers buy crop insurance to protect them against losses. The insurance would replace the disaster payments and reduce government costs.
But shortly after passing the Agricultural Risk Protection Act, Congress lost its fiscal will. One week before the presidential election, it passed a new $1.8 billion disaster bill to assist farmers hurt by bad weather. Two others followed in subsequent years, totaling more than $6 billion. Today, after a searing drought in the Plains, farm-state legislators are pushing for billions more in aid.
The result is that farmers often get paid twice by the government for the same disaster, once in subsidized insurance and then again in disaster assistance, a legal but controversial form of double-dipping, a Washington Post investigation found. Together, the programs have cost taxpayers nearly $24 billion since 2000.
The government pays billions to help farmers buy cheap federal insurance, billions more to private insurance companies to help run the program and billions more to cover the riskiest claims. And on top of all that, it spends billions on disaster payments.
"It should be one or the other," said Mark Orebaugh, a flinty 52-year-old who has suffered several years of bad crops in southwestern Kansas. "There should be a permanent disaster program or crop insurance that is enough to cover my losses."
Instead, there are essentially both.
"Everybody says the money is free, but we're all paying," said Charles Fisher, a central California farmer who helped oversee government disaster payments in his area for a dozen years. "Washington unbundles the money, opens the window and turns on the fan."
The money is blown all over the country, from New York to Nebraska to California, usually at election time, fanned by farm-state legislators.
A major share of the money goes to parched and flood-prone areas where farming is tenuous at best and "disasters" seem to happen every year, a review of thousands of records and interviews with dozens of farmers, economists, insurers and government regulators have found.
Farmers in Gaines County, a parched stretch of West Texas, collected nearly $66 million in the past five disaster bills. Cavalier County farmers in North Dakota, soaked by rain and floods, got $67 million. The money was in addition to $116 million that farmers in those two counties got in crop insurance payments.
Just four states forming a narrow swath in the middle of the country -- Texas, Kansas, South Dakota and North Dakota -- collected nearly four of every 10 dollars of the disaster aid handed out in the past decade, $3.8 billion in all, records show. Farmers in those states also collected $5.6 billion from crop insurance.