As a candidate for president, Barack Obama talked a lot about “fair trade.” Unlike free trade, which is an objective concept, fair
trade is vague and provides wiggle room to adjust to the political interests of individual politicians. President Obama’s interpretation of fair trade is shaking out, and it entails paying hundreds of millions in taxpayer dollars every year to subsidize the Brazilian cotton industry. Sending big bucks to Latin American competitors probably isn’t what most Americans consider fair.
The genesis of this example of stupid government rests with a Brazilian protest against farm support and export-credit guarantees that U.S. cotton growers get from Washington. Brazil won its case last year before the World Trade Organization, which ruled that U.S. cotton subsidies violate international trade agreements. Rather than cutting subsidies to American cotton growers, Mr. Obama’s solution was to buy off the Brazilians to drop their case. The bribe came in the form of an annual payment of $147.3 million that the United States will send to Brazil to prop up its cotton producers.
This payoff is shockingly shortsighted because other countries are opposed to U.S. cotton subsidies. India and many West African countries might be lining up to file WTO cases in hopes of big monetary payoffs of their own. There are arguments against forcing American taxpayers to be a crutch for American farmers, particularly because subsidies encourage overplanting even in down markets, which leads to a constant artificial lowering of prices. Now American taxpayers will subsidize cotton production worldwide, which further distorts the market. The insatiable subsidy monster is out of control.
Mr. Obama likes to denigrate his opponents for slavishly representing special interests over national interests. When he was ramming through the government takeover of health care, the president said, “We know the same special interests and their agents in Congress will make the same old arguments, and use the same scare tactics that have stopped reform before because they profit from this relentless escalation in health care costs.” In his current campaign to institute massive new financial regulations, Mr. Obama claims he’s fighting “the furious efforts of industry lobbyists to shape them to their special interests.”
When it comes to paying off special interests, Mr. Obama is in a league of his own, especially now that he’s putting our grandchildren in further debt to pay off cotton planters in the Amazon.