In the never-ending fight against corporate welfare, the forces of fairness and economic rationality may have found a winning strategy: Divide and conquer.
Sometimes business lobbies leave one another’s subsidies and tax benefits alone, for fear that a general rout of all rent-seekers might ensue. This is why, for example, we have an annual “tax extenders” bill, which simultaneously renews a few dozen special breaks in the Internal Revenue Code that could never survive politically on their own.
In the battle over reauthorizing the Export-Import Bank, however, Delta Airlines broke with much of the rest of corporate America and began lobbying against the bank, out of annoyance that state-owned airlines abroad were using Ex-Im subsidies to buy Boeing passenger jets, thus gaining an unfair competitive advantage over Delta.
Exploiting this crack in the K Street community, free-market Republicans opposed to Ex-Im cited Delta to illustrate their argument that any jobs Ex-Im supposedly creates may come at the expense of jobs at businesses that don’t enjoy its largesse.
Result: Ex-Im’s legal mandate expired at midnight Tuesday, for the first time in 81 years. Though likely to be reversed when Ex-Im’s supporters regain control over the legislative agenda later this summer, this victory still sets a precedent for future interruptions in the log-rolling that gives Washington such a bad name out there in Taxpayerland.
And now comes news of more blessed discord, this time among the agriculture lobbies. The Corn Refiners Association, headed by giant grain processors such as Cargill and Archer Daniels Midland, is taking aim at the federal sugar subsidy program — which shares both Ex-Im’s birth year, 1934, and its propensity for wasting resources and distorting markets.
Perhaps you did not know that it is unambiguously in the public interest for the United States’ sugar farmers and refiners to make a profit, even though many other countries produce this fungible, but dietarily dubious, commodity at a lower cost.
Well, Congress, well-lubricated by the sugar lobby, believes that it is, and hasn’t really revisited that conclusion for decades. And so we have country-by-country quotas on imports, buttressed by domestic price supports.
The net effect is to soak U.S. consumers every time they buy sugar-containing products, from soda to Snickers bars. The industry used to boast that its government protection does not cost taxpayers anything directly, but that claim has been exploded due to recent market developments that forced the federal government to, in effect, buy up tons and tons of sugar and sell it to ethanol refiners at a loss — so as to prop up prices. Taxpayers took a hit of some $258 million in fiscal 2014.
So now the Corn Refiners Association is throwing its high-powered lobbying operation behind a bill that would, for the first time, cap taxpayer exposure to sugar-market ups and downs, with votes on the floor of the House looming later this summer.
There’s actually a chance that sugar program reform, a cause heretofore supported by the candy and cake makers, plus a few hardy environmentalists, will finally have enough muscle to prevail.
Perhaps the best sign that the Corn Refiners’ position has already made an impact is that Big Sugar’s backers are resorting to the same old specious arguments that rent-seekers, and their friends in Congress, always trot out. The sugar program, which subsidizes cane growers in the Florida Everglades and sugar-beet growers in Minnesota, is “critical to jobs and economic development,” Sen. Al Franken (D-Minn.) told the Minneapolis Star-Tribune.
Tell that to the candy-factory work force, which shrank from 70,500 to just under 55,000 between 1998 and 2011, due in large part to the high cost of sugar inputs, according to the Wall Street Journal.
To be sure, the Corn Refiners’ motivation is a tad obscure. By raising the price of sugar, the federal program encourages use of the substitute they produce, high fructose corn syrup. The Corn Refiners say that they’re taking a stand for free-market principles, and that the sugar program has finally become an unsustainable political burden for the agriculture industry as a whole.
More likely, they’re engaging in a bit of payback for the sugar industry’s competitive bad-mouthing of high fructose syrup’s allegedly negative impact on consumer health.
But who cares why they’re fighting? The important thing is that they are. With any luck, the sugar industry will respond by training its lobbying guns on the lavish subsidies that some other commodity — I hereby nominate corn — receives from the federal taxpayer.
Before you know it, there will be general strife on K Street, which would not only weaken the rent-seekers but also be exactly what they so richly deserve.