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Sweet and Sour Valentine’s Day
Wednesday was Valentine’s Day and many were hoping to woo their sweethearts with candy bars and chocolate tarts. But, that’s easier said than done with the lingering impact of inflation. Candy bars are already headed toward $3, and record cocoa prices are not-so-sweet for all the suitors. Unfortunately, government policies are largely to blame for blunting Cupid’s arrow. The New Deal-era U.S. Sugar Program has long overstayed its welcome, making it all-but-impossible for inexpensive sugar imports to make their way onto American shores. And, because of these Stalin-style price controls, consumers spend up to $4 billion more than they should on confectionary treats. Policymakers should spread the love this Valentine’s Day by finally ditching the Sugar Program and getting a lid on inflation.
Since the Roosevelt era, America’s not-so-sweet sugar policy has inflicted significant costs on consumers, taxpayers, confectioners, and food producers. The infamous 1934 Sugar Act laid the groundwork for a sprawling import, allotment, and quota scheme that froze markets and calcified high sugar prices. America’s disastrous flirtation with price controls has cost consumers dearly. According to a 2023 report by the Government Accountability Office (GAO), the “U.S. sugar program creates net costs to the economy, because higher sugar prices created by the program cost consumers more than producers benefit.” The watchdog notes that program costs extend beyond higher prices for consumers. According to the GAO, “the number of employees in sugar and confectionary product manufacturing declined by 18% from 1990 to 2022, while the number of employees in other food manufacturing increased by 15% during this period…studies estimate that the program leads to declines in U.S. employments in industries that rely heavily on sugar.” These byzantine price controls force Americans to cut back on their purchases, to the detriment of thousands of small businesses across the country. Baltimore, Maryland-based Wockenfuss Candies owner and president Paul Wockenfuss expressed concerns that strict import restrictions create an “unlevel playing field” that is “just hurting the smaller businesses.” And when businesses can’t sell their products due to dubious government programs, jobs are inevitably lost. According to a 2013 Iowa State University study, the U.S. sugar program costs up to 20,000 jobs per year even considering employment in the “protected” domestic sugar industry.
Yet, advocates for the broken status-quo warn of the dire consequences of the U.S. opening its markets to cheap foreign competition. They’ve even adopted the reasonable-sounding position that the U.S. sugar program can go – so long as other countries ditch their sugar subsidization schemes first. This concept, known as “zero-for-zero,” is in fact an unattainable ideal that all-but-ensures that sugar protectionism will remain a staple of U.S. policy. Claims abound that the U.S. “unilaterally disarming” on sugar policy is only a sweet deal for foreign companies and the governments subsidizing them. The European Union proved these “zero-for-zero” proponents wrong in 2006 when it implemented a wide-ranging quota relaxation and target price reduction scheme. Sugar prices have fallen considerably since reform, and, despite recent price increases, are still significant lower than they were pre-reform. And, due to further farming-related liberalizations, European production relative to consumption is growing and will likely continue to grow. Europe ended its longstanding lover’s quarrel with consumers, and there’s no reason why the U.S. cannot do the same. By ending the Sugar Program and tampering inflation by reducing spending, policymakers can keep confectionary prices sweet and low. It’s time for sweeties to have a delectable Valentine’s Day without having to empty their wallets.
The Cost of Biden’s Clean Energy Handouts Are Growing
President Joe Biden has hailed his signature subsidization of clean energy as “historic.” According to a new report from the Congressional Budget Office (CBO), Biden’s investments (read: taxpayer subsidies) are proving far larger than even the President knew. The CBO now says the Inflation Reduction Act’s (IRA) clean-energy tax credits will cost $428 billion more over a decade than it previously estimated. Analysts have warned that the IRA’s true price tag would dwarf initial estimates. A 2023 report from Goldman Sachs pegged the law’s total clean-energy costs at $1.2 trillion — more than triple CBO’s originally projected $391 billion. Worse still, this profligacy will do little for the environment since EVs’ benefits remain difficult to measure and likely negligible. In short, the IRA’s clean-energy “investments” foist massive costs on taxpayers — particularly objectionable as the National Debt speeds towards $35 trillion — yet they offer no discernable benefits.
The economic dynamics causing these overruns are simple. Government subsidies that lower a good or service’s price invariably increase consumers’ demand for it. Consider a simple hypothetical. If a grocery store were to sell quality beef at $40 per pound, only certain subset of well-to-do shoppers would buy it regularly. Were the government to subsidize these steaks and cut their consumer price in half, many more shoppers would consider it a financially viable dinner option. In economic terms, demand would rise sharply — perhaps doubling. The store’s pre-subsidy stock (20 lbs. per week, say) would suddenly become insufficient; the grocer would order and sell more beef to meet its customers’ subsidy-heightened demand.
When drafting legislation, political incentives drive politicians to underestimate proposals’ costs and overestimate their revenue potential. This minimizes the nasty challenges responsible budgeting poses. Further, economic models that neglect to incorporate human behavioral patterns make conveniently deceptive tools for spendthrift politicians to pitch new spending to their constituents.
The CBO notes that, of the projected IRA cost overruns, $224 billion come from EV tax credits. This stems largely from the Biden administration’s pro-EV regulation. For example, the CBO reports that the Biden administration, to widen access to EV tax credits, has loosened eligibility criteria, which increases the number of credits doled out and the public cost. The CBO also notes that the Biden administration’s regulatory crusade against gas-powered vehicles will drive manufacturers to produce more EVs. The Environmental Protection Agency “proposed more stringent vehicle emissions standards that would begin with the 2027 model year,” the CBO reports. Should subsidization prove insufficient to actualize a national EV transition, the Biden administration intends simply to disallow manufacturers to sell gas-powered cars. The EPA proposed to mandate that EVs comprise two-thirds of vehicles sold in 2032, up from 6 percent. This will, however, cause more consumers to claim EV tax credits, as the CBO notes. Such regulatory shenanigans provide further insight into the mendacity of federal budgeting estimates. When drafting legislation, Congress habitually delegates vast authorities to administrative agencies. Consequently, cost estimates are often exercised in Calvinball. Many programs’ true costs depend largely on implementation — a task done by bureaucrats, not legislators. To borrow Nancy Pelosi’s infamous (though not inaccurate) analysis of ObamaCare, Congress must pass laws, and bureaucrats must effectuate them before anybody can possibly know what’s in them or what they might cost.
For politicians who (like Biden) hope to electrify American transportation, and care little for fiscal responsibility, excessive cost overruns mean little. For taxpayers — on whom inflation and the debt burden weigh heavily — programs like the IRA portends disaster.
BLOGS:
Monday: Watchdog Slams USPS After $2.1 Billion Net Loss
Wednesday: This Valentine’s Day, Time to End Not-So-Sweet Sugar Program
Thursday: The Cost of Biden’s Clean Energy Handouts Are Growing
Friday: A Powerful Week at TPA’s Good Cop
Media:
February 9, 2024: AllAfrica.com quoted TPA in their article, “COP10 - The Apparent Link Between Taxation And Illicit Trade.”
February 9, 2024: Afrol News quoted TPA in their story, “COP10 - The Apparent Link Between Taxation And Illicit Trade.”
February 11, 2024: 24Share quoted TPA in their story, “International anti-smoking advocates defend Philippines in WHO conference.”
February 11, 2024: Metro News Central (Philippines) quoted TPA in their article, “Anti-smoking advocates dismisses as 'shameful' attack on Philippines at WHO conference.”
February 11, 2024: Business Mirror quoted TPA in their article, “Anti-smoking advocates support PHL’s position at WHO conference.”
February 11, 2024: The Manila Standard (Manila, Philippines) quoted TPA in their story, “International anti-smoking advocates condemn attack on Philippines at WHO conference.”
February 12, 2024: WJLA ABC 7 quoted TPA in their story, “Loudoun County hires lobbyists to kill travel transparency bill.”
February 12, 2024: WBFF Fox45 (Baltimore, Md.) interviewed me about legislation prohibiting tax increases.
February 13, 2024: Florida Daily ran TPA’s op-ed, “The Cost of Biden’s Clean Energy Handouts Are Growing.”
February 14, 2024: Vaping Post (Switzerland) mentioned TPA in their story, “COP10: What Do We Know About What Took Place?”
February 14, 2024: Issues & Insights ran TPA’s op-ed, “Virginia At Odds With Feds Over State’s Broadband Plans.”
February 14, 2024: The Center Square quoted TPA in their story, “Illinois legislator seeks social media ID others say could violate free speech.”
February 14, 2024: The Black Chronicle quote TPA in their story, “Illinois legislator seeks social media ID others say could violate free speech.”
February 14, 2024: News/Talk 970 WMAY (Riverton, Il.) mentioned TPA in their story, “Illinois legislator seeks social media ID others say could violate free speech.”
February 14, 2024: The Regional Media News (Blue Grass, Iowa) mentioned TPA in their stary, “Illinois legislator seeks social media ID others say could violate free speech.”
February 14, 2024: Newsburg.info mentioned TPA in their story, “Illinois legislator seeks social media ID others say could violate free speech.”
February 14, 2024: MorningSentinel.com mentioned TPA in their story, “Illinois legislator seeks social media ID others say could violate free speech.”
February 15, 2024: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about inflation and the foreign aid.
February 15, 2024: WBFF Fox45 (Baltimore, Md.) interviewed me about the taxpayer implications of the new Harborplace development.
February 15, 2024: EU Reporter quoted TPA's Lindsey Stroud in their article, "Illicit cigarettes are taking over thanks to EU Cop-Out."
February 16, 2024: TPA's Martin Cullip was quoted in a Financial Post op-ed, titled "Tax Dollars Up in Smoke to Send Public Servants to Panama Anti-Nicotine Summit."
Have a great weekend!
Best,
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
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