Stacy French - September 02nd, 2015
Doug Sachtleben - July 30th, 2015
The Sugar Scandal
Wall Street Journal (Editorial)
Americans pay nearly twice as much per pound as foreigners do for sugar, thanks to U.S. import restrictions and subsidies. We’ve tilted at this corporate welfare for decades, but new political forces are aligning to take another run.
The absurdity of the federal sugar program is legendary. Every year the government grants sugar processors nonrecourse loans linked to the amount of sugar the government says they can produce at a set price per pound: 18.75 cents for raw cane sugar and 24.09 cents for refined beet sugar. If the market price is below the loan price when it’s time to sell, the processors simply forfeit their crop to the U.S. Department of Agriculture in lieu of repaying the loan. They can still make a profit thanks to the price guaranteed by the loan.
To ensure that imported sugar doesn’t drive down U.S. prices, provoking a sugar dump on Uncle Sam, there are also import quotas. Anything above the quotas gets hit with a hefty tariff—16 cents a pound on refined sugar.
Yet all of this central planning is harder than it sounds. According to a January 2014 USDA report, for the 2013 crop year the government’s net cost “to remove” sugar from the marketplace was $258 million. But sometimes there’s not enough sugar, as in 2010, and prices skyrocket. If the secretary of agriculture decides that shortages will drive prices too high, he can increase the quota. But he has to make sure that more imports won’t mean lower prices and thus sugar forfeitures to the feds. All the risk lies with consumers or taxpayers—not producers.
The Congressional Budget Office estimates that the loan program will cost some $115 million over the next 10 years. But the greater cost is to the economy. The food and drink industry, which has sales of some $387 billion, is less competitive when it has to pay twice the world price for sugar. In a July 2 letter to U.S. Trade Representative Michael Froman, the Coalition for Sugar Reform estimated the program has cost American consumers and businesses $15 billion since 2008 and 120,000 jobs since 1997.
The relatively few sugar cane and beet producers have grown fat and happy off this racket, but they are losing support. Growers of other crops had their subsidies cut in the last farm bill, and many are asking why sugar gets a pass. Last month the Corn Refiners Association, which produces high-fructose corn syrup, began lobbying on Capitol Hill for a level playing field with sugar.
They’re allied with Republican tea party Members of Congress who dislike business subsidies, led by Joseph Pitts (R., Pa.). In 2013 he led a floor revolt with an amendment to the farm bill that would have permitted more foreign sugar to enter the U.S. and reduced the price guaranteed by the federal loan. He lost 221 to 206.
Mr. Pitts is now seeking another opportunity for a vote to limit the size of the nonrecourse loan to any single sugar processor, and we hope he gets it. This wouldn’t end all of the political help that guarantees profits for sugar producers. But it would be a start, and a sign that American democracy isn’t so calcified by special interests that it can’t reform one of Washington’s worst welfare schemes.
Stacy French - July 24th, 2015
Instead of charging motorists more to feed a broken system, let’s fix the system.
Raising the gas tax to prop up the Highway Trust Fund is like pumping gas into a junkyard car. For every $1 of gas tax, Washington wastes 20% to 30% in needless federal regulations that jack up highway construction costs.
Here’s a better idea: Instead of charging motorists more to feed a broken system, let’s fix the system. And step one is to push politicians in Washington, D.C., to the side of the highway funding road.
The current federal funding scheme for highways takes your gas tax money to Washington, lops off a big chunk to pay for federal bureaucracy, and then inefficiently redistributes some of those dollars back to the states for roads. The problem is the federal middleman.
Projects handled at the federal level are rife with costly regulations, such as the Davis-Bacon Act of 1931 that drives up labor costs. The price tag for highway work is also increased by federal environmental rules and duplicative planning studies.
Every state has its own Department of Transportation that studies, plans and executes the road projects that matter most to that state. Why do they need the waste, inefficiency and redundancy that arise from the federal layer of bureaucracy?
This year, the Highway Trust Fund will spend more than $50 billion, including billions for non-highway projects, and will run at a deficit of more than $10 billion. The primary focus in Congress — as it has been for years — is on finding new ways to fund that deficit, instead of looking for ways to stop the spending that causes the deficit.
Let’s drop this nonsense of raising the gas tax. Congress should leave the money and responsibility for road construction and repairs where they belong — back at the state and local levels. One good proposal to do that already exists; it’s the Transportation Empowerment Act, sponsored by Sen. Mike Lee, R-Utah, and Rep. Ron DeSantis, R-Fla.
Their legislation would gradually eliminate the federal gas tax, while giving states the accountability and responsibility to identify and undertake highway projects, using infrastructure funds that would be kept at home instead of wasted in Washington.
David McIntosh is president of the Club for Growth.
Barney Keller - January 20th, 2015
Barney Keller - December 09th, 2014
Senator Tom Coburn (R-OK) has released a new report called “Tax Decoder” highlighting the billions in subsidies and market distortions littering the tax code. From the summary:
As Washington politicians rush to pass another end of the year bill extending billions of dollars in tax breaks for special interests, a new report highlights over $900 billion of giveaways throughout the tax code.
More than 165 tax expenditures worth over $900 billion this year and more than $5 trillion over the next five years are revealed in Tax Decoder, a new report decoding the tax code.
Gamblers who lose at the casino or horse track can still win on their tax return by writing off gambling losses. Hollywood movie makers aren’t just collecting at the box office, they are also downloading tax subsidies from the IRS. There is no shortage of tax subsidies for the rich and famous, such as credits to renovate vacation homes and purchase luxury cars and deductions for yachts.
Ideally, Congress would throw out the entire tax code and start over, but at the very least the code should be made simpler, fairer and flatter. This report provides a list of options for Congress to streamline and simplify the tax code to achieve that goal. While many of the tax breaks identified throughout this report should be phased out or eliminated, others could also be reformed to better achieve their intended purpose.