Consider the subsidy to the U.S. sugar industry that the House continuously approves.
The U.S. sugar program is subsidized through the Department of Agriculture (USDA) which provides loans to the nation's sugar farmers. According to a report published by Economics21, here's the deal:
- If sugar prices fall below 20.9 cents, farmers can repay the federal loans with raw sugar.
- With the federal goverment purchasing massive amounts of sugar and keeping them out of the free marketplace, the price of sugar to consumers increases, providing the sugar industry another subsidy.
- The USDA then sells the sugar at a discount to ethanol producers, providing them a federal subsidy. Because ethanol cannot be produced at a competitive price, this subsidy keeps it artificially low.
- The federal government imposes sugar tariffs and quotas, limiting the amount of cheap sugar that can be imported into the U.S.
A recent Iowa State University study found that abolishing the program would offer a number of benefits:
- Sugar consumers would purchase sugar from abroad at lower prices, dropping the domestic price of sugar by 33%. Consumers would save anywhere from $2.9B to $3.5B.
- Businesses that are dependent on sugar--confectioners, for example--could add ~20k new jobs. How so? American confectioners are moving abroad to take advantage of lower sugar prices in order to make their products more competitive.
- Employment would increase in the sugar industry. Refineries would use imported, cheap sugar, expanding output by 24%.
In 2013 spent $53.3M on the sugar industry, excluding loans that could not be repaid. That's a total of $171.5M. In addition, the nation's 20k sugar farmers received $1.7B in government transfers, equivalent to $85k/farmer.
Not if you happen to be a member of the U.S. House of Representatives.
Consider one example of how the sugar program really works: In the current election cycle (2014), the American Crystal Sugar Company donated $1.3M+ to 221 member of Congress. Last year, the company spent $1.4M lobbying on Capitol Hill. Where did that money come from? The very people they're giving it to!
Why is the sugar subsidy program still in place?
The simple answer, of course, is that the U.S. House of Representatives isn't controlled by the conservative party but by a party whose members masquerade as conservatives but acts as liberals.
Let the discussion begin...
To read the Economics21 report, click on the following link:
"Sugar Subsidies Are A Bitter Deal For American Customers."