(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) and a coalition of taxpayer groups sent the following letter to Speaker of the House Dennis Hastert, Senate Majority Leader Bill Frist, and members of the House and Senate Budget Committees regarding the Milk Income Loss Contract (MILC) Program:

Dear Mr. Speaker:

On behalf of the undersigned groups, we are writing in opposition to the resurrection of the Milk Income Loss Contract (MILC) program (also known as the National Dairy Market Loss Payment program), which is included in the Senate version of the Deficit Reduction Act.

We particularly object to your plan to “instruct House conferees to secure an extension of a MILC program through September, 2007.”  Helping the dairy lobby secure this subsidy, rather than having an up or down vote on the program in the House, is a betrayal of the taxpayers.

When the MILC program, which expired on September 30, 2005, was created as part of the 2002 farm bill, the Congressional Budget Office (CBO) estimated that the four-year cost of the program would be only $1.3 billion.  However, the program cost taxpayers more than $2 billion.  Now, CBO is estimating that a scaled-back two-year version of MILC will cost slightly less than $1 billion.  If they are as wrong now as they were in 2002, this new two-year program could actually cost taxpayers closer to $1.5 billion.

There is no justification for a return of the MILC program.  The dairy industry is already subsidized through the Dairy Price Support Program (DPSP), which cost taxpayers an average of $500 million per year from fiscal 1999 to fiscal 2004 for the purchase of surplus dairy products. 

Demonstrating how ludicrous it is to have both of these programs, the MILC program subsidizes dairy farmer income through production-linked payments, which leads to expanded production and lower milk prices.  Then, the DPSP purchases the surplus milk production caused by the MILC program.    

We urge you to reconsider your promise to resurrect the MILC program in the Deficit Reduction Act.  Taxpayers deserve respect, rather than be milked dry by back-room deals using deficit reduction legislation to create unjustified subsidy programs.

Sincerely,

Council for Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement, and abuse in government.