CRITIQUE THE CRITICS by National Crop Insurance Services
10 Sep 2023
This week, the American Enterprise Institute (AEI), a conservative think tank, took a few more swipes at the policies on which America's farmers depend. That includes the very crop insurance system helping the men and women who grow our food get back on their feet after an historic drought. Of course, this isn't the first time AEI has criticized agricultural policy—which accounts for less than one percent of the federal budget.
The expected costs of the House and Senate bills have been well documented by the Congressional Budget Office (CBO), which is much more experienced, capable and balanced in cost estimation than AEI. Rather than estimating the effects of an improbable price scenario, CBO uses stochastic scoring, which takes into account the probability that some years will have high costs and some years will have smaller costs over time. CBO has estimated the expected annual cost of the House bill’s PLC to be $1.6 billion per year on average over the next 10 years. CBO estimates that the expected costs of the SCO program are $300 million per year in the Senate version of the Farm Bill and $400 million per year in the House version. Combined, CBO projects that PLC and SCO are expected to cost $2.0 billion or less over the next 10 years, taking into account the probability of both high and low cost years.
This is far below the $20 billion per year trumpeted by AEI. In addition, AEI ignores the fact that when all the farm safety net provisions in the House and Senate bills are combined, they result in a large reduction in spending, not an increase.
Read more about AEI's most recent faulty analysis.
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