Stimulus to Hunger

Great. Now USDA head Tom Vilsack is saying the US ethanol industry needs to be protected in the borrow-and-spend bill, and beyond:

“The ethanol industry is under particular strain,” Vilsack said in a
conference call with reporters.

Loan guarantees for the industry, distributed by the USDA as part of the
2008 Farm Bill, “can help more of these companies stay in business,” Vilsack
said, though he warned that “there will be a premium on ethanol producers who
can stay efficient,” a clear warning that there is overcapacity in the US

Vilsack expected more aid to the industry would be forthcoming in a later
energy package, though he said that aid from the Farm Bill provisions for the
ethanol industry “would be the first step in stimulating the economy.” The
grant program guarantees loans up to $250 million, the USDA said.

Hang on, if there’s overcapacity, doesn’t that mean that some firms need to go under or all firms need to cut back? So there should be less spending, not more, on ethanol. It’s not as if they haven’t got a bundle of mandates subsidies already.

But the stark fact is that every bit of public money that goes into supporting the ethanol industry artificially raises the price of corn, which in turn artificially raises the price of food around the world, which in turn artificially raises the level of hunger in the world. This isn’t stimulus, it is close to murder.

UPDATE: Note also Jonathan Tolman’s post below about taking farmland out of production, and his noting that the bill also includes relief to the elderly on account of rising food prices. There is plainly no “joined-up thinking” going on in the drafting of this pathetic bill.