Thursday, July 20, 2006

USDA programs: multi-million dollar scams and billions in pork

Recommended at Booman Tribune. Front paged at ePluribus Media

In all of the billions of dollars wasted by government giveaways, as well as the millions of dollars scammed from government programs, there are a number of programs run by the US Department of Agriculture ("USDA") over the past few years which have not only cost taxpayers billions of dollars in unnecessary programs but also have left open the potential (which has been taken advantage of) for scams that netted the "scammers" millions of dollars, also at taxpayer expense.

To give credit where credit is due, the Washington Post has been running a number of articles over the past few weeks with respect to some USDA programs that are particularly egregious. And it only makes me wonder how much in healthcare, education, the deficit, hell, even true homeland security or any other necessary programs would benefit from a few extra hundred million dollars.

Anyway, I wanted to highlight a few of the programs since I don't think that anyone here has covered the immense waste from these programs. The amount of waste and abuse here is just staggering.

The first program, as reported by WaPo earlier this month, involves a farm subsidy program that paid out a total of $1.3 Billion (yes, that is a "B") to people that don't farm.  Yes, you read that correctly.  And the more ironic thing about this program is that one of the recipients of the subsidy actually tried to give the money back since he did no farming, but was told that it would likely go to other landowners who, incidentally don't farm either.

Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.

Some of them collect hundreds of thousands of dollars without planting a seed.

That $1.3 billion dollar number relates to payments made since 2000.  Additionally and ironically, the farm industry as a whole had near record profits in 2005, yet there was nearly 50% more in aid given out under this program than there was given to families on welfare.  Some of the money obviously goes to people who qualify for the funds AND actually do some farming, but a good percentage of this money goes to people who happen to own land that was once used for farming.  

The Post's nine-month investigation found farm subsidy programs that have become so all-encompassing and generous that they have taken much of the risk out of farming for the increasingly wealthy individuals who dominate it.

The farm payments have also altered the landscape and culture of the Farm Belt, pushing up land prices and favoring large, wealthy operators.

The system pays farmers a subsidy to protect against low prices even when they sell their crops at higher prices. It makes "emergency disaster payments" for crops that fail even as it provides subsidized insurance to protect against those failures.

And it pays people such as Matthews for merely owning land that was once farmed.

It's a long article with a lot of information and examples, but since it is a few weeks old, and there are other programs that I want to highlight, I'll just say that it a farcical program that is indicative of the Republican Congressional agenda (this program was overhauled in 1995 after the Republicans took control of Congress).

The next program, one of two that were highlighted in yesterday's WaPo, involves drought aid that provides money to those who didn't suffer from a drought.  This program was rammed through Congress in 2002, and was expanded further in 2003 when some people complained that they weren't receiving money for non-drought related disasters.  And what was that old tired meme about Republicans not wanting to expand government programs?  I guess it is all good when it goes to people that don't need the money as opposed to, oh, say healthcare, the environment, education, the deficit or true homeland security initiatives.  

This program was called the Livestock Compensation Program, and was initially a noble program designed to provide limited assistance to ranchers and dairy farmers who were affected by droughts.  But, as indicated above, "drought assistance" quickly grew to a $1.2 Billion (again with a "B") program that provided over $600 million to those who lived in areas that had little to no drought.  Even better was the verification system that the government had in place for this program:

In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003. Of that, $635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.

At first, livestock owners were required to be in a county officially suffering a drought to collect the money. But ranchers who weren't eligible complained to their representatives in Washington, and in 2003 Congress dropped that requirement. Ranchers could then get payments for any type of federally declared "disaster." In some cases, USDA administrators prodded employees in the agency's county offices to find qualifying disasters, even if they were two years old or had nothing to do with ranching or farming.

In one county in northern Texas, ranchers collected nearly $1 million for an ice storm that took place a year and a half before the livestock program was even created. In Washington state, ranchers in one county received $1.6 million for an earthquake that caused them no damage. In Wisconsin, a winter snowstorm triggered millions of dollars more. For hundreds of ranchers from East Texas to the Louisiana border, the shuttle explosion opened the door to about $5 million, records show.

Again, a long article with a lot of examples and information, so I will keep it brief here.  One more thing to point out - this program appears to have been created in order to help John Thune (R-SD) in his 2002 Senate bid against Tim Johnson.

Two more programs that I wanted to call attention to:  the first one is the 2003 Catfish Feed Assistance Program.  This program, again with a noble name and a shiny ribbon on it, provided millions to catfish farmers for "losses due to disasters and adverse weather conditions".  However, no farmer had to prove any loss occurred, and the program was inserted in to a war appropriations bill by Senator Thad Cochran (R-MS) whose state just happened to receive the most (over 50%) of the funds from this program.  Oh yeah - the program was inserted because of the "increased price of catfish feed in 2002", although the prices of feed in 2002 was near a 10 year low.

Under the 2003 Catfish Feed Assistance Program, announced in August of that year, commercial catfish farmers in Mississippi, Arkansas and a handful of other states got government credits for feed equal to $34 per ton.

All they had to do was apply at their local feed mill. The amount they received was based on how much feed they had purchased at the mill in 2002 -- not any actual losses.


To be sure, some of the states had suffered drought, but not all. Moreover, feed prices for catfish in 2002 were among the lowest in a decade, according to federal data and agricultural economists. They didn't spike again until mid-2003.

Your Republican government expanding Congress at work.  Inserting a $34 million piece of pork into a WARTIME Appropriations bill that was based on false information and happened to benefit the author/Senator's home state to the tune of $19 million.  Hmmmmm....nothing to see here, right?

Lastly, as reported in today's WaPo, a program designed to provide farmers with powdered milk (from the Government's stockpile) ended up creating a scam that had the powdered milk going not to the farmers who actually needed it, but to others (even outside the US) at a healthy profit - netting millions of dollars to those who were selling and reselling the powdered milk to third parties, people in states where there was no drought and as stated above, even outside the US.  

Estimated cost to US taxpayers - $400 million.

They decided to dip into massive stockpiles of powdered milk that the agency had stored in warehouses nationwide as part of its milk price-support program. Livestock owners could get the protein-rich commodity free and feed it to their cattle and calves. The milk would help ranchers weather the drought while the government reduced its growing stockpile.

But within months, the program spawned a lucrative secondary market in which ranchers, feed dealers and brokers began trading the powdered milk in a daisy chain of transactions, generating millions of dollars in profits. Tens of millions of pounds of powdered milk intended solely for livestock owners in drought-stricken states went to states with no drought or were sold to middlemen in Mexico and other countries, a Washington Post investigation found.

In some cases, ownership of the powdered milk changed hands half a dozen times or more in a matter of days, with the price increasing each time. A commodity that started out being sold for almost nothing was soon trading for hundreds of dollars a ton.


"The milk was being bought and sold, bought and sold. Some of it was probably ending up in dog food and pet food," said Matthew J. Hoobler, a Wyoming official who oversaw the distribution of more than 60 million pounds of powdered milk in that state. That trading was possible, he said, because "there was no enforcement."

The abuses of this program are being looked into (and have been for the past couple of years), however with the lax enforcement as well as the loopholes it is unknown how much (if any) of the money and the powdered milk will be recovered.

But it is another lesson in how quickly programs can spiral out of control when they are unchecked, not given enough thought when being implemented and when programs are needlessly expanded to cover people who have no business being covered.

Think about how many more people could have healthcare coverage with even a small percentage of the millions, make that billions of dollars wasted on people that don't need the money.

And the Democrats are the ones that are for bigger government giveaways?  


Anonymous said...

Hmm I love the idea behind this website, very unique.

Anonymous said...

Your website has a useful information for beginners like me.

Anonymous said...

Sorry for my bad english. Thank you so much for your good post. Your post helped me in my college assignment, If you can provide me more details please email me.