A back-room deal to restore crop insurance companies' sky-high guaranteed rate of return won't stand if Senate Minority Leader Harry Reid (D-Nev.) has anything to say about it.
The budget deal signed by President Obama earlier this month would save taxpayers $3 billion over the next decade by lowering the companies' government-guaranteed rate of return from 14.5 percent to 8.9 percent. But behind closed doors, lawmakers promised the end-of-year spending bill will restore the cut – a promise some, including Reid, are opposed to.
Last week The Washington Post noted that after the Senate passed the budget deal, Reid expressed disinterest in helping members of Congress who made this backroom deal at the expense of the taxpayer:
“The farmers haven’t been hurt at all,” Reid said in October after the budget legislation passed the House. “I want to give them nothing, so we’ll see what happens in the process.”
Reid is right. Despite claims from the crop insurance industry that the cuts would devastate the rural economy, this cost-saving measure would in no way harm farmers’ bottom line or their ability to purchase crop insurance.
As EWG reported last week, companies' guaranteed profits would be a bit lower, as would their agents' commissions. But 8.9 percent is still almost three times the average rate of return in other sectors of the insurance industry, so despite the Chicken Little alarms of the crop insurance crowd, the sky is not falling.
