Corporate Welfare Handouts Growing

Taxpayers for Common Sense is the best organization that monitors excessive government spending, corruption and corporate welfare. Here is their latest news update.

Taxpayers Sour On Sugar Subsidies Taxpayers will have to fork out more than $1 billion to prop up a wasteful and failing U.S. sugar program, according to statements last week by government economists.

Speaking before the Senate Agriculture Committee, U.S. Department of Agriculture (USDA) economists disclosed that it will cost taxpayers $1 billion through 2005 to bail out the sugar industry, which has been plagued by low market prices.

Recent events indicate that the sugar program is becoming increasingly unmanageable and that reforms are urgently needed. A combination of a massive U.S. sugar surplus and low prices have prompted the government to spend $54 million to purchase 132,000 tons in order to combat the sugar glut.

But the purchase failed to solve the problem. The USDA estimates it will spend at least $86 million more this year to bail out the sugar industry. Subsequent handouts through 2005 will total more than $1 billion in taxpayer money.

The sugar program is partly comprised of government-backed loans and trade initiatives that impose tariffs and fees on imported sugar and artificially limit the amount of foreign sugar that can enter the U.S. The domestic sugar program also includes price supports.

Under the program, farmers are loaned 18 cents per pound for cane sugar and 22.9 cents per pound for beet sugar. During the nine-month period they have to repay the loans, farmers usually sell the sugar for about the loan price.

Ordinarily, the government does not have to take ownership of the sugar that’s pledged as collateral for the loans. This means generally the cost of the sugar price-support program giveaway is mostly borne by consumers who buy sugar or products containing sugar, in the form of a hidden tax.

The program artificially creates a price for sugar that is substantially higher than other countries -- about three times the price of sugar sold on the world market.

As a result, U.S. consumers already pay $2 billion a year too much for sugar-rich foods, according to a recent report by the U.S. General Accounting Office (GAO). This is a hidden tax, handed out to uncompetitive sugar corporations.

Furthermore, the program’s beneficiaries are not exactly small farmers. The GAO estimates that 42 percent of all sugar subsidies go to only one percent of farmers, benefiting mainly large corporations.

Domestic sugar producers have worsened the welfare abuse by increasing sugar cane and sugar beet acreage in recent years. So the government’s piles of sugar could be growing and the taxpayer liability increasing.

It is time to end big sugar’s corporate welfare program.

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For more information, contact Keith Ashdown at (202) 546-8500 x110 or e-mail keith@taxpayer.net ; TCS is at www.taxpayer.net

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