Dump the Sugar Subsidy

I’m glad the editors of the Wall Street Journal have gotten on board eliminating the sugar subsidy:

Cognitive dissonance is common in Washington, but some cases truly are exceptional. One is the ritual of the farm bill, when Republicans who campaign on “free markets” whoop through corporate welfare for agriculture interests. But maybe there’s a stroke of sense coming on sugar subsidies.

Republican Rep. Virginia Foxx of North Carolina is making a run at reforming the U.S. sugar program with an amendment to the farm bill that may hit the House floor as soon as this week. This program is arguably the worst farm subsidy, which is saying something, featuring a menagerie of sweetened loans, restrictions on sales and import quotas for some of America’s richest people.

The point is to keep prices artificially high and enrich large sugar producers, who aren’t paupers but nonetheless demand this help to maintain their station. Many producers live in Florida, which is why Senator Marco Rubio periodically embarrasses himself by supporting sugar welfare.

All of this is a tax on consumers. In 2015 raw sugar in the U.S. ran 24.7 cents a pound, an 84% premium over the global price. Consumers lose anywhere from $2.4 to $4 billion annually, according to an analysis from the American Enterprise Institute.

Perhaps the worst result of the program is how the effects ripple across the supply chain and kill jobs. The program drives manufacturing jobs overseas—hello there, President Trump —where sugar inputs are cheaper.

Take Ford Gum & Machine Company, the last major manufacturer of gum balls in the United States. The president of the firm has said he could double his workforce, based in Akron, N.Y., if he could pay fair market prices for sugar.

Ms. Foxx’s proposal wouldn’t eliminate the program but would curb some of its worst features, such as repealing “marketing allotments,” which are restrictions on sales. Another is ending a program that allows the Agriculture Department to buy surplus sugar and sell it to ethanol companies at a loss.

The agriculture lobby is treating the mere mention of reform as a surprise land invasion, and the politics are splitting Republicans. But this should be an easy yes for progressives who harp about corporate welfare in theory but too often vote for it in practice, and the amendment could win with a cross-party coalition.

Republicans are struggling to get the votes for their bill, in part because they have added a modest work requirement for food stamps, which eat up about 80% of farm bill dollars. This is a worthy policy change, but Republicans would have more credibility on reforming welfare for people if they did the same for politically powerful agribusiness.

We have a lot of bone-headed, counter-productive, uneconomical policies but the sugar subsidy, a Cold War relic, is one of the worst. Not only does it cost jobs, make U. S.-made products uncompetitive internationally, and raise prices for consumers, it’s environmentally damaging. We should have eliminated it 30 years ago. Carpe diem.

1 comment… add one
  • Guarneri Link

    Amen. In Florida Ron Disantis is running against a sugar daddy exec. They are running ads making Disantis out to be a child molesting communist.

    Sugar is powerful and they play for keeps.

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