Tuesday, July 24, 2007

Grassley Prefers to Keep Farm Subsidies Alive Only for Dead People

Dead people are receiving farm-subsidy checks long after they've bought the farm.

That news created a stir this week as the 2007 Farm Bill goes up for a critical vote on Thursday amid intense scrutiny of farm-program payments.

The Government Accountability Office recently released a report showing that during a six-year period, nearly $1.1 billion was distributed through farm programs to those who were not among the living. The revelation of the checks to the dead made the front page of Tuesday's Des Moines Register, and has been discussed widely in nationwide news media.

On Tuesday, Iowa Sen. Chuck Grassley told reporters on a conference call that the mess needs to be cleaned up quickly, and it could be handled by simply having the U.S. Department of Agriculture work with other departments. "There's a whole bunch of checks going out to farmers on Oct. 1, and I think now would be the time for me to get a hold of the secretary of agriculture and say, 'Why don't you do like the Veterans Affairs and Social Security does? They notify each other that somebody's died so they can stop payments after death. Why don't you compare our farmers getting these checks with the people on Social Security, just to make sure we don't continue what the GAO has found that was wrong. Because there's billions of dollars worth of payments going out of the federal treasury to farmers on Oct. 1.'"

One of the reasons that deceased individuals continue to receive subsidy checks involves the rules that deal with estates, said Grassley, a Republican. Sometimes, farmers' estates are not settled quickly, so subsidies often legitimately continue in their name. But Grassley said that such estates only account for a small percentage of the situations where dead people are receiving checks, "and it should only be in estates that it would be legitimate that they be kept open."
If a farmer's estate is kept open simply to continue receiving farm-program payments, Grassley believes that is fraud.

The most common situation, Grassley said, has been when individuals within corporations die but continue to receive payments. Other examples involve the many complicated forms of business partnerships such as irrevocable trusts, limited partnerships and joint ventures. "In all of these other instances, once a person dies, except for the year in which they died, there shouldn't be any other payments made," he said.

The Senate Finance Committee, on which Grassley is the ranking member, is now holding hearings to look into ways to stop people from receiving improper farm-program payments. "We need to be cutting waste, fraud and abuse when it comes to government programs and not raising taxes to find more to spend."

Part of the problem rests with the lack of enforcement of a law that was enacted in 1987, which requires that a farmer must be "actively engaged in the business of farming" to be eligible for farm-program checks. "I think that it shows that the Department of Agriculture isn't doing their job," said Grassley. "It's quite obvious, if you pay dead people."

There has been an effort to push the USDA to enforce that provision, but, Grassley said, "We have not found them very receptive to that point of view."
He noted one example of a Florida individual who had been dead for five years, and the company that was managing the estate "kept certifying that the person was actively engaged in the business of farming," said Grassley. "Pushing up flowers, obviously."

As debate on the 2007 Farm Bill continues and moves to the Senate, these kinds of problems will be addressed, said Grassley. This kind of waste, fraud and abuse "strengthens the hand of anybody that's cynical about farm programs and helping small and medium-sized farm operations" with the farm program safety net.
And, he said, "It obviously hurts the taxpayers because there's been $1.1 billion going out the back door."

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