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2012 Drought Cost Taxpayers $14 Billion

Taxpayers for Common Sense (TCS) reported last week that droughts last year "cost taxpayers a record $14 billion. TCS further reported:

"This week, the U.S. Department of Agriculture (USDA) confirmed what taxpayers have feared for months. After tallying losses from last year’s drought, the highly subsidized federal crop insurance program will cost at least $14 billion in FY12, shattering 2011’s record cost of $11.3 billion by 25 percent. In the hardest hit states of IL, MO, KS, and IA, insurance payouts far exceeded premiums, meaning that producers in these states received up to $5 back for every $1 they paid into the program. Taking the nation as a whole, crop insurance participants received $3 back for every $1 paid out of their own pockets for a second year in a row. That’s a great deal for agribusinesses, but not for taxpayers." (emphases added)

From 2003 through 2008, taxpayer subsidies did not exceed $4 billion. TCS's reporting went on to say:

"Federal crop insurance masquerades as a free market program—private crop insurance companies sell and administer policies purchased by farmers and ranchers—but closer inspection reveals a government program. The government approves both the companies that sell crop insurance and the policies that they can sell. Taxpayers also pay private companies for administrative expenses, cover the majority of losses in poor growing years, and subsidize nearly two-thirds of every dollar of insurance coverage to the tune of $7 billion last year.

"The explosion in costs of the crop insurance program over the last two years is something taxpayers cannot afford. If we’re going to rein in our trillion-dollar deficits, Congress must start with these kinds of out-of-control programs."

Kudos to Taxpayers for Common Sense for such reporting. Read their entire report for other highlights.

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