In today’s Wall Street Journal, an editorial sharply criticizes the U.S. sugar program and urges Congress to vote on amendments that would significantly rein in this complex system that doubles the cost of domestic sugar over the world price.
The sugar producers brag that the program operates at “no net cost to the government.” But the government guarantees prices, restricts domestic supply, and imposes stiff tariffs on imported sugar except for quota-holders.
The WSJ notes that the program provides concentrated benefits to sugar producers and dispersed costs to consumers and sugar-using companies:
The program provides about $1.4 billion each year to fewer than 5,000 large and mostly prosperous beet and sugar cane producers. But according to a 2011 American Enterprise Institute study by North Carolina State economist Michael Wohlgenant, it costs consumers about twice that amount, mostly in higher food prices. It’s a conveniently hidden tax and a regressive one too. When Big Sugar says the program imposes “no net cost” on the budget, they’re not talking about the family budget. Americans pay about 50% more than the world price of sugar.
While attempts to cut back on this program have failed in the past, the time may be now when real reform can occur, the WSJ said, and pointed out the bipartisan sponsorship of the Senate amendment.
In these tough economic times, with high unemployment levels, consumers deserve a break from the hidden taxes of the U.S. sugar program. At a minimum, policymakers should insist on reforms that will open the sugar market, help save and create jobs in the U.S. food industry and help consumers by keeping food prices down.