House Republicans could recover their fumble of the farm bill by blocking a job-killing protectionist scheme that adds to the grocery bill of every American family.
The sugar subsidy program is a gooey mix of Depression-era price supports and import quotas, with a separate sugar-for-ethanol boondoggle thrown in for good measure.
The program is one of Washington’s sweetest examples of corporate welfare. It walls off 85 percent of the American sugar market for the exclusive enjoyment of 4,700 domestic beet and sugar cane growers and forces foreign competitors (whose sugar sells for nearly 50 percent less) to fight with one another over what’s left.
The scheme was threatened when, under NAFTA, Mexico was given unlimited access to the U.S. sugar market, creating a sugar glut that has caused prices to fall below the targets of the USDA’s central planners.
Not to worry. Always eager to hand a sweet deal to well-heeled sugar growers, Congress jerry-rigged a separate sugar-support program that will force taxpayers this year to buy 400,000 tons of the unprofitable domestic white stuff at inflated prices so the USDA can sell it to ethanol producers at a loss to the taxpayers of about $80 million. Sweet, huh?
The result is a market distortion that would be the pride of the Politburo. Sugar producers’ profits are propped up to the tune of $1.4 billion a year regardless of their global competitiveness, while American households pay $2.4 billion more for nearly everything they eat and drink.
If Congress really wants to stretch the value of its food stamp dollars, killing the sugar program would be a sure-fire way to do it.
In each of the last four years, domestic sugar prices have been directly inflated by 64 to 92 percent, and nearly every year since 1970, Americans have paid almost twice as much for sugar as they would in an open marketplace.
As Pennsylvania Senator Pat Toomey observed, “We subsidize a handful of wealthy sugar growers at the expense of everybody in America.”
The program has also forced thousands of good-paying American factory jobs to move offshore. One 2006 study estimated that the sugar program cost 10,000 jobs between 1997 and 2002 alone, with three confectionery manufacturing jobs lost for every one created in the sugar cane and beet fields. Needless to say, there ain’t much comparison between a decent factory job and work in the sugar canes.
Like most of Washington’s experiments in economic planning, this one ultimately owes its survival to the campaign donations of the sugar industry. Democrats and Republicans alike live in a Candy Land of Big Sugar cash that Willy Wonka could only dream of.