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Press Release

Opposing the Milk Income Loss Contract (MILC)

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The Honorable J. Dennis Hastert, Speaker
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Speaker:

On behalf of the undersigned groups, we are writing in opposition to the resurrection of Milk
Income Loss Contract (MILC) programthe (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.


J. William Lauderback, Exec. Vice President
American Conservative Union
Grover Norquist, President
Americans for Tax Reform
Thomas Schatz, President
Council for Citizens Against Government Waste
Matt Kibbe, President and CEO
Freedom Works
John Berthoud, President
National Taxpayers Union
cc: The Honorable Bill Frist
Members of the Senate and House Budget Committees