Golden Hammer: Easter candy bitter taste for taxpayers?

Sugar subsidies cost millions each year

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This Easter season, Americans will buy an estimated $2.26 billion worth of such candies as chocolate bunnies, jelly beans, and marshmallow Peeps, the National Confectioners Association estimates. But a key ingredient of candy makers’ sweet success comes courtesy of U.S. taxpayers.

Each year, the U.S. Department of Agriculture supports the sugar growers with generous subsides and loans, and last year taxpayers bought nearly $300 million in sugar in an attempt to prop up the industry.

Advocates for such farm subsidies argue that the problem lies south of the border, but critics point to the sugar industry as another example of powerful lobbyists who have persuaded Congress to help their clients at taxpayer expense.

“The American sugar market can only be described as a government-mandated cartel, which would likely be deemed illegal if it had arisen without government assistance,” wrote Luke Gelber, a media/policy manager at Citizens Against Government Waste. “In today’s climate of slow job growth and fiscal constraint, any program that is regressive, kills jobs and costs taxpayers money should be repealed.”

While pleading that their industry is in danger, sugar growers have found plenty of money to keep lobbying and making political donations, creating little sympathy among those looking to save money in a bloated federal budget. In 2013, one of the largest organizations, the American Sugar Alliance, spent nearly $2.5 million lobbying Capitol Hill.

For continuing to provide taxpayer support to a multibillion-dollar business and failing to enact policies that could protect the industry for less money, Congress and the Agriculture Department share this week’s Golden Hammer, a distinction awarded by The Washington Times to examples of fiscal waste and unnecessary spending.

The government regularly gives out loans to sugar producers to try to support production. According to the USDA’s Economic Research Service, federal loans and price supports for growers were worth 18.75 cents per pound for raw cane sugar in 2013, while refined beet-sugar producers received roughly 24 cents per pound.

The U.S. also heavily restricts most sugar imports from overseas in an attempt to protect American companies, which critics argue hurts consumers at the cash register. The protectionist policies and taxpayer-funded government support have led the U.S. to sport some of the highest sugar prices in the world.

As of March, the USDA reported, the price of raw sugar worldwide was 17.58 cents per pound, compared with 22.03 cents per pound in the U.S. The price of refined sugar was 21.17 cents per pound worldwide but 26.50 cents per pound in the U.S.

Two studies, one by the American Enterprise Institute in 2013 and one by Iowa State University in 2011 estimated that consumers could be paying around $3 billion a year extra from inflated prices.

In May 2013, an effort to reform sugar subsidies was narrowly defeated in the Senate on a 53-46 vote, which left some senators upset.

“We subsidize a handful of wealthy sugar growers at the expense of everybody in America,” said Sen. Patrick J. Toomey, a Pennsylvania Republican whose state includes the headquarters of chocolate company Hershey’s. “It’s heads they win and tails we all lose.”

The USDA said it can do little without changes in the law.

Congress reauthorized the sugar program in the 2014 farm bill,” agency spokeswoman Gwen Sparks told The Washington Times. “The USDA is required to operate the sugar program under the requirements set forth by Congress and to implement the program at the least possible cost.”

Part of the problem, critics argue, is a piece of the legislation that allows sugar companies to take loans from the federal government and repay them in sugar — leaving the government with stockpiles of the sweet white powder instead of cash.

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