We have all heard the old adage regarding the federal government and Washington bureaucrats picking winners and losers in the economy and private sector. There is no better example of this very thing than in our nation’s current sugar policy. It’s the epitome of government intrusion into a market and serves as a clear contradiction between our nation’s free-trade rhetoric and its protectionist practices.
Within the current policy framework, Washington has the ability to dictate the exact weight and price of sugar in the U.S. – far removed from any free market, capitalist mentality. The government can guarantee up to 85 percent of the total U.S. market, using a complicated combination of import restrictions, production quotas and a government backed, guaranteed price. This is the type of policy that thwarts competition, in addition to greatly distorting the cost of sugar to consumers.
One would think, in a time where families are trying to make each dollar and cent stretch in this stagnate economy, this would be an area ripe for bipartisan reform. So the question is, why is this unwarranted policy continued?
The most prominent argument against reform is that the current sugar program is of no cost to the taxpayers. I cannot stress enough that this simply isn’t true. First, it has been reported just the other day that USDA intends to purchase sugar off the domestic market, estimating that the U.S. government could remove around 300,000 tons costing approximately $38 million. With the current sugar policy in place, the U.S. government risks having to spend taxpayer dollars to actually buy sugar off the market utilizing the Feedstock Flexibility Program, to limit supply and prevent producers from defaulting on loans. Further, USDA would have to sell this sugar at loss back to companies that make ethanol. Guess who ultimately is paying the bill when USDA buys sugar off the market and sells it at a loss? The American taxpayers. This is in addition to the fact that these current policies act as a tax on nearly all food and beverage products. Essentially controlling, subsidizing and manipulating the market, the U.S. sugar program serves as a hidden tax that inflates the cost of nearly everything we eat, drink and consume. And this is no small amount either – an estimated $3.5 billion annually.
Moreover, approximately 125,000 American jobs in the food production industry have been lost due to inflated U.S. sugar prices – all to protect 4,700 sugar beet and sugar cane farms. Mr. George Will said it best in his column earlier this June that current sugar policy simply “transfer(s) wealth from 316 million American consumers to a few thousand sugar producers …”
If the above points are not enough to demand reform, the next illustration will undoubtedly turn heads. Foreign governments, with official brochures, are actively trying to lure U.S. manufactures abroad, including one from my district, because of their lower sugar prices. An official Canadian government brochure states: “Canadian sugar users enjoy a significant advantage — the average price of refined sugar is usually 30 to 40 per cent lower in Canada than in the United States. Most manufactured products containing sugar are freely traded in the NAFTA region.”
How can we justify a government program as it becomes a recruitment technique for other countries trying to lure away our jobs and manufacturers from the United States? This alone should warrant instituting reform. It is not only necessary, but essential. Unfortunately, we are talking about Washington, D.C., where politics trumps common sense and special interests all too often win the day.
Yesterday, I was proud to join 205 of my colleagues in supporting a bipartisan amendment that would have scaled back our nation’s Soviet-style sugar policy. Unfortunately, this amendment failed, leaving these anticompetitive and costly policies in place.
As our national debt approaches $17 trillion, I believe it is well past time to enact reforms that make sound economic sense for our nation’s long-term fiscal security. Cutting wasteful, outdated spending should be the first place Congress looks and the current United States sugar program should be first in line.
Rep. Scott DesJarlais, a Tennessee Republican, is a member of the House Committee on Agriculture.