Heritage Foundation Raps Senate Aid Hard

September 2, 1999

The Senate's version of emergency farm relief "makes a mockery" of the recent tax reduction package and threatens any commitment by Congress to protect the budget surplus for Social Security, the Heritage Foundation charged. Peter Sperry said that farmers with a household net taxable income of more than $50,000 a year do not need "tax subsidies" through emergency farm aid.

"Although the Congressional Budget Office projected a $14 billion on-budget surplus available for allocation for fiscal year 2000, many members of Congress have already indicated that all or most of an on-budget surplus will be used to fund the 13 regular appropriations bills," Sperry writes. "Consequently, any `emergency' spending will exhaust the on-budget surplus and eat into the Social Security surplus."

Congress should not "abuse" taxpayers' generosity by extending "emergency" assistant to those who don't need it, Sperry says. Not only do those with $50,000 incomes not need it, neither do farmers who derive less than 25% of their household incomes from agriculture.

Says Sperry, "Congress should restrict emergency agricultural assistance to only those farmers who demonstrate a loss of income that threatens the survival of their family or business. Middle-income taxpayers should not be forced to subsidize someone else's `lifestyle' choices or six-figure incomes."

Although a few senators suggested that only farmers who can demonstrate a real income loss should receive emergency assistance, says Sperry, 89 voted to provide a 100% increase in the market transition payments farmers receive, effectively doubling the payment, "without regard to income level, crop loss, revenue fluctuation or the effect farming has on their incomes."

Limiting emergency assistance to farmers with net taxable incomes of less than $50,000 who derive a minimum of 25% of their incomes from farming "would at least target the taxpayers' resources rather than simply giving away their tax dollars to wealthy corporate or hobby farmers," Sperry said.

Sperry is the Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage foundation. His entire report is available on the Internet at http://www.heritage.org/library/execmemo/em621.html