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Federal Sugar Boondoggle

Most taxpayers are probably familiar with the crop subsidies handed out by members of Congress. But sugar subsidies? Not so much?

In his Washington Examiner column today, Tim Carney spells out just how much of a boondoggle the federal sugar subsidies really are:

"In America's panoply of pork, corporate welfare and special-interest boondoggles, perhaps few programs are less defensible than the federal sugar program. So it was dispiriting, but no surprise, that the Senate voted last week to preserve it.

"The sugar program drives up prices for American consumers, kills U.S. jobs, distorts markets and enriches a few well-connected companies. Here's how it works:

First, the U.S. Department of Agriculture guarantees a minimum price for sugar growers through a special loan program. The USDA lends money to growers, with sugar as collateral -- about 18 cents per pound for cane sugar and about 23 cents per pound for beet sugar. The easy financing is sweet, and it gets even sweeter: Sugar growers can surrender their collateral and welch on their loan from taxpayers, at no penalty.

"In effect, the USDA is always willing to buy the sugar from growers at 18 or 23 cents a pound if prices fall too low.

"But the second aspect of the sugar program guarantees that U.S. prices rarely fall that low.

"Washington artificially keeps the U.S. sugar price high by limiting how much sugar can be imported. Crimping supply boosts the price, hurting consumers -- including candy and soda makers -- and helping producers."

Mr. Carney writes that a GAO study in 2000 pointed out the sugar subsidies may cost Americans about $2 billion annual. He also writes:

"The case against the program is clear. It would save consumers money. It would save American jobs. It would end unfair corporate welfare. It would reduce unnecessary federal bureaucracy. That was the argument of Sen. Jeanne Shaheen, a New Hampshire Democrat, who brought an amendment to the Senate floor last week to end the sugar program. It's why her co-sponsors include conservatives like Sen. Pat Toomey, moderates like Richard Lugar and liberals like Dick Durbin.

"But the lobby for the sugar program is strong. Most famously, the Fanjul family in Florida, owner of Florida Crystals, are deeply embedded in Washington politics . . . ."

The amendment to phase out the Federal sugar program was brought to the Senate floor by Sen. Shaheen (D-New Hampshire). It met an unfortunate death when it was tabled by a 50-46 vote (Roll Call Vote No. 119, June 13), generally along a bipartisan basis with 35 Democrats and 15 Republicans voting to table the amendment while 16 Democrats and 30 Republicans voting against tabling the amendment. Four senators did not vote. Congratulations to Virginia Sen. Jim Webb (D) who voted against the motion to table. Unfortunately, Virginia's other senator, U.S. Sen. Mark Warner (D) did not vote. Call Sen. Webb on Capitol Hill (202-224-3121) to thank him for voting not to table the amendment.

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