Despite all the discussion of corporate welfare and cronyism in recent GOP presidential debates, one of the most dramatic examples of corporate welfare, U.S. Sugar Subsidies, has gone unmentioned. That is until last night’s debate in Milwaukee when Republican presidential candidate Senator Ted Cruz valiantly called for an end to the taxpayer funded “corporate welfare” that is the U.S. Sugar Program.
What most Americans don’t realize is that the price they pay for sugar and related consumer goods in the U.S. is kept artificially high by the government. In fact the average wholesale price of U.S. domestic sugar is more than twice that of the average world price. For example, in August of 2015 U.S. sugar was priced at 33.13 cents per pound, while the world price was a mere 15.57 cents per pound.
The reason U.S. sugar prices are so high is due to a laundry list of protectionist policies put forth under the Federal Sugar Program that serve only the interest of the sugar industry at the expense of American consumers and taxpayers.
Currently the Federal Sugar Program imposes a minimum price for U.S. sugar and sets a limit on the amount of sugar domestic processors are allowed to sell. The Sugar Program also sets import quotas on sugar that limit the amount that can be imported. Taken together these policies keep prices artificially high while also preventing competition, amounting to a massive handout to “Big Sugar.”
As Senator Cruz pointed out in Tuesday night’s debate, sugar subsidies are one of the most egregious examples of “corporate welfare” in the U.S. and are the type of cronyism that is “bankrupting our kids and grandkids.” And Senator Cruz is exactly right, as the cost of supporting such corporate welfare falls squarely on the backs of American consumers and taxpayers.
Studies show the Federal Sugar Program cost U.S. consumers and businesses up to $3.5 billion annually. For taxpayers, the program cost almost a half a billion dollars between 2000 and 2001, and nearly $300 million in 2013. For 2015 the Congressional Budget Office predicts the sugar program will cost taxpayers an additional $115 million over the next 10 years.
While Senator Cruz’s vocal calls for an end to sugar subsidies in Tuesday night’s debate stood out, he is not the first presidential candidate to do so. In fact, last month Republican presidential candidate Jeb Bush argued for a phase out of U.S. sugar subsidies. A Bush spokesperson noted that Bush “believes we should constantly be moving to reduce government interference and create a level playing field for all commodities on the world market.”
It is clear that more and more candidates for president are realizing just how detrimental U.S. sugar subsidies are to American consumers and taxpayers, and anti-sugar subsidy rhetoric will likely be an increasing theme going forward. The disturbing truth is the Federal Sugar Program is now one of the most onerous examples of crony capitalism, rivaled only by that of the Ex-Im Bank, and until it is repealed Americans will continue to suffer from artificially high prices and billions in wasted taxpayer dollars.
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