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U.S. Sugar Policy: A Bitter Pill for Americans

(Pixabay)
Subsidies and favors for producers cost consumers and workers alike — but that may be about to change.

In Washington, D.C., “special interests” are like the weather: Everyone talks about them, but rarely does anyone do something about them. Politicians campaign against special interests and run ads promising to “drain the swamp” and “end corporate welfare.” And yet, again and again, small groups wield great political muscle to win subsidies and special deals for themselves at the expense of taxpayers and consumers in the 50 states. The special interests work Washington like an ATM: We pay; they walk away with the cash.

But every once in a while, the good guys win. The special interests get too greedy. The backroom deals are opened to view. Taxpayers, consumers, and honest dealers in Washington focus on the money grab, and they decide — this time — to do something about it.

One big victory for consumers was won in Great Britain in 1848. (Sadly, we have to go back a long time and look thousands of miles overseas to find a good example.) The Corn Laws of that day limited grain imports, freeing domestic landowners to hike the prices paid by British consumers. Food prices were skyrocketing, manufacturing was suppressed, and the pocketbooks of citizens were being drained as their cost of living became unbearable.

In response, the Anti–Corn Law League was launched as a crusade against the skewed policy that ensured the profits of one small but powerful group of large landowners. It took a while and a great deal of work and focus, but eventually the Corn Laws were repealed, and the league’s legacy continues to this day.

The nearest rival today of those one-sided 19th-century Corn Laws is the U.S. sugar program. The program utilizes a variety of price supports, supply controls, and tariffs to achieve one goal — an inflated, guaranteed price for a handful of big sugar processors. It mandates the United States Department of Agriculture (USDA) to wall off imports of sugar, subdue domestic production, and safeguard processors’ profits by bailing them out if the USDA miscalculates.

Roughly $3 billion in costs are shifted to manufacturers in the form of a hidden sugar tax annually, forcing consumers to pay more for food.

The downstream effects of this program are disastrous. Roughly $3 billion in costs are shifted to manufacturers in the form of a hidden sugar tax annually, forcing consumers to pay more for food. The processors’ guaranteed profit makes the dredging up of pristine lands irresistible, harming conservation efforts. Taxpayer-funded bailouts have occurred as recently as the last farm-bill debate, in 2013, and government projections predict that they will continue.

But the sugar program costs some Americans more than higher grocery prices: it costs them their jobs. As the U.S. International Trade Administration found, the program kills three manufacturing jobs for every sugar-producing job that it protects.

Let’s look at a few painful examples. The Spangler Candy Company reports, “Today, we have about 150 people making candy for us in Mexico. In 2017, Spangler had 900 people apply for jobs at our Ohio factory. I would love to offer 250 of them a job as a candy cane maker, but our government insists that sugar processing jobs are more important than manufacturing jobs. They are picking winners and losers and our town has been the loser for many years now.”

The Atkinson Candy Company moved 80 percent of its peppermint-candy production to a factory in Guatemala that opened in 2010.

And the makers of President Reagan’s favorite candy, Jelly Belly, had to build its new 50,000-square-foot plant in Thailand thanks to the high sugar price driven by U.S. policy.

The evidence is overwhelming — this is an expensive and damaging special-interest giveaway and it must be stopped.

History has a habit of repeating itself, unless we take action and stand against this reverse Robin Hood program. Fortunately, a grand coalition of economists, manufacturers, small businesses, and consumer advocates has formed to rein in the sugar program and bring it into the 21st century.

With consideration of the 2018 farm bill approaching, Congress has the opportunity to change the course of history now. Reforms outlined in the Sugar Policy Modernization Act (H.R. 4265/S. 2086) will provide market-oriented changes that will begin to undo this damage by moving to a consumer-driven, free-market set of reforms where prices are set competitively, not through monopoly power. This legislation has support from both Republicans and Democrats in both the House and Senate. It will begin to bend American policy towards proven economics and away from a small club of vertically integrated processors.

We can learn from history.

Virginia Foxx (@virginiafoxx) represents North Carolina’s 5th congressional district in the House of Representatives and is the chairwoman of the House Committee on Education and the Workforce. Grover Norquist (@GroverNorquist) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the president of Americans for Tax Reform.

 

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