WORLD SUGAR prices have been falling, but don't look for good news at your local supermarket. Thanks to the sugar price support program that Congress enacted last winter, the price you pay for sugar--and for all the food products it is used in --will be going up.
The sugar program is only one of many government policies that cost the public billions of dollars without adding one cent to the federal budget. In the case of sugar, this sleight of hand will be accomplished by imposing import quotas on cheap foreign sugar. Together with already existing duties and fees, the quotas are expected to drive domestic sugar prices to 20 or 21 cents a pound, compared with a world price of about 9 cents.
The president originally opposed the sugar program, but he changed his mind in order to get southern congressmen to support his economic program last summer. To avoid the accumulation of costly surplus sugar in government stockpiles--a direct budget cost--the administration has now decided to impose the quotas instead, thereby adding as much as $1 billion to consumer costs this year.
This is not a good result for anyone except 22 large sugar conglomerates. But the sugar program is far from a unique example of the large off-budget costs of government policies. Import quotas, for example, drive up the prices you pay for your clothes, your car and any item made with steel. The cost of a hospital room is higher for patients who aren't elderly because the government doesn't pay the full cost of serving Medicare patients. Hospitals have to make up the difference by charging more to other people.
Your state and local taxes are higher because Congress places expensive requirements on state and local governments to provide special services to particular groups or to clean up the environment--but fails to vote the federal money to pay for them. Then there is the increasingly popular practice of disguising federal subsidies as tax deductions or credits. These billions of dollars in preferences add just as much to the deficit as direct grants--they're just harder to spot and control. Because they enable some people to avoid paying their fair share of taxes, the cost of federal taxes goes up for everybody else.
As the budget battling intensifies this summer, you're likely to see many more suggestions for buying things off-budget for appearance's sake. When that happens, remember that unneeded subsidies still leave a bitter aftertaste.