Friday, June 20, 2008

That Golden Corn

Fire of Liberty
Now while various news reports on the most recent floods in Iowa which note the lose of 1.19 million corn acres(About 202 million bushels) due to the rising waters, but few ever noted that such a heavy loss could have been mitigated if the federal government wasn't subsidizing the use of corn for ethanol. Though such a quest for a "miracle" alternative fuel is a noble effort to move us away from our dependency of imported oil , I'm angered(and lots of other Americans) that we keep on paying farmers to divert precious food stuffs into fuels. I believe that a lot of American taxpayers will be pushed into the anger column if they take a gander at this most recent op/ed in the NY Sun by Patrick McIlheran, columnist for the Milwaukee Journal Sentinel, and discover how much money we're dropping down the money hole. Here's a look:

Suppose, though, that ethanol is harmless to Third World food supply: It still costs us plenty. The federal government has mandated that we use 9 billion gallons of it this year and 15 billion gallons by 2022. This forces people to use an inferior fuel, one costlier to make, to ship, to run a car a mile on.

Besides the up-ratcheting mandate, taxpayers must fund several tax credits, the big one being about 51 cents a gallon to companies that mix the stuff into gasoline. This cost about $2.5 billion in 2006.

Ethanol's defenders point out that the federal government offsets this blender's credit by reducing crop price supports, but this raises the bigger question: Why are we paying those to begin with?

The ethanol subsidies are political kin to all the subsidies, tariffs, and market fiddling that make up the government's decades-old money pipeline to farmers. This was spigoted off briefly in a Gingrich-era burst of fiscal sense and has been reopened by degrees since.

The result is the $289 billion farm bill that President Bush vetoed for the second time on Wednesday. Congress overrode the veto within hours, and so you'll pay at least $5 billion a year in automatic payments to farmers growing staples such as wheat, cotton, corn, and soybeans, even if prices stay at record levels. You'll pay an extra $410 million to dairy farmers, who have been enjoying record prices. You'll pay new subsidies to vegetable growers, horse breeders, and salmon farmers. But for a bipartisan minority of budget hawks, Congress resoundingly endorsed this.

Why? To go on insulating the agricultural sector from economic reason, as the federal government has done since the Depression — to act as a fiscal levee that lets farmers flourish on the floodplain, economically speaking.

My biggest beef with such subsidies is that the American taxpayer gets hit by a double whammy in the pocketbook via the federal tax to pay for the subsidies and the increase in prices of consumer products that are made out of corn. So when you sit down this 4th of July and there's no corn to grill or eat because it's too expensive, just thank most of the spend-thrift politicians in D.C.

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