The Dumbest Public Policies

The Farm Bill

Farm Bill

• 1996 FB: Promised drastic future reduction in Farm aid in exchange for one time payments.

• 2002 FB expired in September, 2007. If no new FB, reverts to permanent 1949 FB

• Farm Bill contain authorization for Agriculture and Food Stamps.

• 2007 Farm Bill (one a one-week extension)

2007 Farm Bill

• Add (at least) $10 Billion to President’s budget• New subsidies for Fruits, Nuts and Vegetables• Adds $2 billion for permanent disaster

assistance.• Crop loans and disaster payments for wheat,

corn and soybeans.• Market controls for oranges, sugar, hops, and

milk

• $2.4 billion in tax cuts (timber industry and horse-racing investors)

• Senate Finance Committee chairmen Baucus receives $83,000 from timber industry. Is that a birbe? "Absolutely not," Baucus aide says. "That's never the case with Max Baucus.“

• $5.2 billion in direct payments to farmers(mostly, corn, soybeans, cotton and wheat)

• Income caps?– Current $2.5 million income limit– Bush: $200,000 limit (saves $1.5 billion per year)– House $1 million ($2 million per family)

The Sugar Subsidy

• Loan program guarantees sugar producers a set price

• Import restriction: 15% of the domestic market

• 42% of sugar program benefits go to just 1% of sugar growers.

Beneficiaries

• 54% sugar beet production is in Minnesota, Idaho, North Dakota, Michigan and California

• 46% sugarcane production is in Florida and Louisiana.

• 17 cane sugar growers get 58% of the benefits(one received $68 million)

• Corn farmers – as HFCS replaces sugar

Losers• $2 Billion cost to US Consumers• Sugar-using companies moving to Canada or

closing (price per .lb US: 21¢ CA: .9¢ per lb.)– Fannie May (Chicago) closed– Brachs (Chicago) moved to Mexico– Life Savers moved to Canada– Hershey (CA, CO, PA) to Canada

• Florida Everglades• Sugar can producers in third world countries:

Haiti, Philippines, Mexico• Sugar refiners: 1/3 have closed

Problem: NAFTA and CAFTA

• Would allow Mexican and Central American sugar imports

• Proposed Solution:extra $1-per-gallon subsidy to make sugar-based ethanol (on top of the 51¢ subsidy)

• 100 million gallons per year