Wednesday, May 13, 2009

Don’t Want No Sugar in My Coffee

I was wandering through the blogosphere this morning. Clicking on a link here and a blogroll there, just reading about what was on people’s minds. This garden of forking paths led me to Eric Dondero’s site, “Libertarian Republican”.

His top post concerned the newest legislative scheme -- a “sugar tax” that would be imposed by Congress on soft drinks as a way to raise money for health care.

Here’s how the Wall Street Journal sees it:

Senate leaders are considering new federal taxes on soda and other sugary drinks to help pay for an overhaul of the nation’s health-care system.


…Early estimates put the cost of the plan at around $1.2 trillion. The administration has so far only earmarked funds for about half of that amount.


The Congressional Budget Office…estimated that adding a tax of three cents per 12-ounce serving to these types of sweetened drinks would generate $24 billion over the next four years.

Hmm…$24 bn isn’t going to cover the shortfall for this unhealthy idea about medical coverage for everyone.

Mr. Dondero calls his post on this tax the “NANNY-STATE UPDATE”. For back-up he cites Kent McManigal of the Albuquerque Libertarian Examiner:
- - - - - - - - -
If the mobsters of the federal government get their way and start stealing even more money, every time I buy a Dr Pepper, Mountain Dew, or Coke, with their “soda tax”, I see a market niche for unsweetened soft drinks. That’s right: no sweeteners whatsoever.

I know where the sugar and Karo syrup are in the grocery store and would be happy to sweeten my own soft-drinks “to taste” in order to avoid “paying” even more money. Money that will be used to finance the further destruction of my liberty. I’d be willing to be I am not the only one.

Are you listening, soft drink manufacturers?

I started thinking about this idea and realized how oppressed we truly are by Congress’ ever-increasing bloat. As I said to Mr. Dondero in the comments:

If you want to get really ticked off about the gangsta gummint’s intrusiveness, read up on the sugar subsidies. As you walk over to get that sugar to put in your drink, contemplate the larceny already being committed via the taxes you pay right now to subsidize that corn syrup and sugar you're going to buy to get around the problem.

Running into his post was synchronicity. Earlier in the day, I’d done some research on Mark Groombridge, the policy analyst who appears on the video in the post preceding this one.

Mr. Groombridge knows the sugar industry well. While a fellow at the Cato Institute he’d written a twelve page paper on the problem, “America’s Bittersweet Sugar Policy”. Even though Groombridge wrote it back in 2001, it’s still relevant. Here’s a snip of the summary:

Nowhere is there a larger gap between the U.S. government’s free-trade rhetoric and its protectionist practices than in the sugar program. Through preferential loan agreements and tariff-rate quotas, the U.S. government thwarts price competition to maintain an artificially high domestic price for sugar--a price that can be twice the world market price or higher.

The program benefits a small number of sugar producers, but virtually every governmental and non-governmental survey concludes that the program results in a net loss of welfare for the U.S. economy, with U.S. consumers suffering the most. Direct costs to consumers due to higher prices could be as much as $1.9 billion a year and the net welfare loss to the U.S. economy nearly $1 billion. Moreover, the U.S. government spends close to $1.68 billion a year buying and storing excess sugar to maintain those artificially high domestic prices[…].

So where does that lead us? Well, guess which senators from which states are up in arms about this sugar tax? You got it: the corn states. Man, are they mad. I’ll bet they quash this one, and here’s why, in three words: Archer Daniels Midland.

To get this sugar legislation passed, the corrupt and imperial Congress will have to cross swords with Archer Daniels Midland. In that fight, the deck is stacked because ADM is bigger and meaner. Again, from the Cato Institute:

[You know for certain that when a Cato paper ends up quoting “Mother Jones” magazine that this is a BIG problem. The paper is from 1995, but even if the names have changed, the sad reality of ADM’s reach has only grown. Notice how both papers -- the one on sugar subsidies and this one on ADM -- remain relevant despite their age. In other words, no matter what politicians say, government's slice of your pie continues to increase. Funny how that works.]

ADM: A Case Study in Corporate Welfare

Executive Summary

The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history. ADM and its chairman Dwayne Andreas have lavishly fertilized both political parties with millions of dollars in handouts and in return have reaped billion-dollar windfalls from taxpayers and consumers. Thanks to federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports, and various other programs, ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM’s annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM’s corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30

One of the most politically charged debates in Washington revolves around business subsidies known as “corporate welfare.” A number of policy organizations have published studies examining the corporate welfare phenomenon: what qualifies as corporate welfare, how much it costs taxpayers, and how much it damages the economy. This study examines the dynamics of corporate welfare somewhat differently by investigating ADM as a classic case study of how those subsidies are obtained, how the welfare state encourages such “rent seeking,” and how such practices fundamentally corrupt the political life of a nation. Congress’s expressed desire to foster a free marketplace cannot be taken seriously until ADM’s corporate hand is removed from the federal till.


ADM is certainly the nation’s most arrogant welfare recipient. And it is one of the few welfare recipients that spend millions of dollars each year advertising on Sunday morning television shows populated and watched by politicians. Chairman Dwayne Andreas’s and ADM’s success in farming Washington represents the rational result of contemporary government policies that turn elections into “an advanced auction of stolen goods,” as H. L. Mencken quipped. Thanks to its multi-million-dollar hustling in Washington, a company that lives and dies on the generosity of the American taxpayer has managed to get itself revered as a great public servant. Although ADM is not the only corporation with its hand out in Washington, it is easily one of the most successful beggars on the block.

Andreas recently told a reporter for Mother Jones, “There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country.” Andreas’s comment about “no free markets” is like the old joke about the son who murdered his parents and then asked for the court’s mercy because he was an orphan. ADM champions political control over markets and then invokes that control as an excuse for its continued political manipulation. Andreas has exerted his influence in Washington to ensure that the U.S. form of “socialism” resembles 1930s’ Italian corporate statism: the government plunders the citizenry for the benefit of politically connected corporations. And, though Andreas does not like to admit it, there are many markets in the world for agricultural products that are not controlled by politicians.

My points to Mr. Dondero were these:

  • This new sugar tax is just the frosting on the huge lumps we already take for sugar anyway -- and have for years.

  • Robber barons in ADM are not going to permit this one to pass. They don’t care about the other “sin taxes”-- e.g., the one on tobacco, but sugar is theirs and no mere legislative body is going to interfere.

  • ADM has already bought most of them anyway. This sugar tax nonsense is just a kabuki dance for our entertainment.

That’s why you and I are libertarians, Mr. Dondero. We’re trying to beat back the slimy ocean of government with our brooms. But no matter how hard we sweep, that tide is bound to wash us all out to sea.

I suppose if you wanted to really make a dent, you could give up sugar, but if you start reading the labels on your food you'll quickly realize it's in about ninety per cent of processed foods so escaping it would take some thought and work.

Maybe we could grow our own sugar cane. I wonder if that's legal? Seems like the things our benevolent uncle permits us to do legally shrink a little more every year.

Remember the old blues tune, “Don't Want No Sugar in My Coffee”?

I don’t want no sugar in my coffee
Makes me mean, it makes me mean
I don’t want no sugar in my coffee
Makes me mean, makes me mean


Anonymous said...

The nanny statist sometimes comes up with silly arguments to bolster their case.
Such as equating gun ownership with racism, yeah really.

Eric Dondero said...

Please don't call me "Mr. Dondero." I reserve that for my political enemies.

For friends and allies, it's "Eric."

Thanks for the link. The favor shall be returned.

EscapeVelocity said...

I have it on high authority that this tax will only be levied on "the rich," not Americans, in the bottom 95 percent of income.


heroyalwhyness said...

On the horizon . . .More controls on consumption :

Charge your iPod, kill a polar bear?

babs said...

The three cents per can on soda is the same as the "fat tax" that the state of NY sent up as a trial balloon. It was shot down with much screaming and howling.
The Feds seem to ram things through at a quicker rate these days, leaving the electorate in their wake...
It might pass but then, I would never drink another soda again. Unless I was out of the country. Can you imagine Americans abroad wanting to drink copious amounts of soda?

Anonymous said...

(Off-Topic, but interesting, here's what happened when I stood up for Geert Wilders):

Little Green Flatballs: What Fritz Katz Said to Piss-Off the King of All Lizards and How He Got His Gamey Buttocks Banned Off the Little Green Footballs Blog …

EscapeVelocity said...

Controlling and manipulating people via the tax code is nothing knew. These authoritarian Leftists will nickle and dime your liberties until you are an infantilized automaton.

. said...

Interesting, Dymphna, that you bring up the issue of a "sugar tax."

We all pay a "sugar tax" in the form of higher prices for sugar. This is because the U.S. has import quotas and tariffs on foreign sugar, so as to prop up otherwise uneconomic U.S. sugar producers.

Funny how the "less government" types in Congress don't complain much about this "sugar tax." Perhaps because the domestic sugar industry contributes heavily to their political causes?

Dymphna said...

You have it partly right, Nodrog -- as I thought I made clear in my post.

The quotas and tariffs do more than "prop up" sugar producers here. They allow for a kind of monopoly.

And yes, Congress is to blame, as it has been for decades. We could save money if we'd just throw away the excess sugar instead of storing it.

But don't forget who is behind Congress, shoving this agricultural welfare: Archer Daniels Midland. I'd love to know how much they manage to shovel into the pockets of key legislators...ADM is world-wide and it's an octopus.

Congress needs to be dumped, and we could use a serious down-sizing of the perfidious Department of Agriculture.

Dymphna said...

BTW, this move to tax soft drinks, chips, and cigarettes will hit hardest on some of Obama's strongest supporters: the underclass.

The further down the food chain you go, the more of those three items you see.

I'm looking forward to the uproar when cigarette prices go up. The tobacco companies have lost much of their former clout, so that one will probably pass. You'll be able to hear the screaming when reality hits Obama's boyz.

The sugar tax will probably not make it. Too much pressure from the corn states and from ADM. At least those two groups know how far down the socialist road we really are.

Dymphna said...


You can give up soda (I did years ago) but in order to escape the tentacles of the sugar industry, you'd have to give up processed foods: high fructose corn syrup (HFCS)-- the worst offender -- is in cereals, salad dressings, deli meat, crackers, yogurt (unless you buy PLAIN), bread, including many "health" breads, cough syrups, sausage, and so on. Even "sugar free" bread has sugar alcohols.

It's hard to find a processed product that doesn't have HFCS. I read somewhere on WebMD that high fructose corn syrup may contain mercury.

So the only processed things I buy are canned and frozen vegetables (you have to be careful there, too, esp. with tomatoes), organic milk and butter, plain cheeses, and yogurt. Taco sauce (w/o sugar).

I buy canned salmon and other fish, but they're sugar free. And not from China.

We don't eat much starch but for those who do, pastas are sugar free (so far!) However, pasta sauces are *not*.

We don't use juices except the ones with nothing but that particular juice -- no other ingredient except water. And we do buy lots of seltzer. (Tonic water isn't sugar free). I use the seltzer to cut the juice by at least 3/4ths. It's just too sweet otherwise. But one bottle lasts months.

One thing the Baron buys that has sugar is the various chutneys he uses for curry.

You *can* extricate yourself from the claws of the sugar bear, but it ain't easy.

Giving up soda is the least of I found out the hard way.

EscapeVelocity said...

While I have strong libertarian propensities.....I favor agriculture subsidies. Food security is one of the most important national security and economic considerations for any country. The strong agricultural sector is the foundation of US power.

Interestingly enough, if you follow Europe post WW2, one of the first priorities was food security and that is where their strongly subsidized food industry comes from. This is actually a good model for African and other developing countries to follow.

Dymphna said...

Escape Velocity--

I think we can attain "food security" without the attendant corruption that exists in the current subsidation of corporate agri-business.

In fact, that kind of "security" is a mirage. In a crisis, how available do you think food would be?

True security is local, distributed and accountable. Our current system is none of these. It is corrupt and it sucks out great gobs of our national wealth.

That's why so many people are growing their own food in the response to the downturn. This crisis makes them nervous that when the cruch comes, there won't be anything available.

X said...

It depends on how you do the subsidies. In the EU, the CAP isn't actually designed to promote surplus production but prevent it, by... paying more money for production. I know it sounds crazy but the idea was to reduce surplus in order to maintain an artificially high price within the EU. The way this was achieved was by buying up surplus and then dumping it outside the EU zone and paying for set-aside land to be taken out of food production. It hasn't been widely reported, but the EU actually has almost no surplus staple foods left now, just in time for the coming cooling period that will massively reduce food production world wide. Clever, eh? And since most of that set-aside land is being used for the production of much more lucrative industrial crops the farmers will be loathe to return it to agricultural production and lose the double subsidy they're currently getting.

The anglo model of subsidies, which we used to use in the UK, is to guarantee a price floor. It's like a form of insurance without premium payments. By itself this means that the market isn't directly distorted - a farmer has to sell at the market price no matter what, but farmers receiving this subsidy know they're going to get topped up later so they aren't too worried. The problem comes when you combine this with protectionist practices such as tariffs and price controls, which is what the US is doing. The subsidy alone would simply guarantee food security. Import tariffs damage food security.

I know growing your own food is appealing but, unless you're in a situation where survival is the only priority, it isn't going to be that beneficial for the majority of the population. Most people can't afford the time to do it. In fact the modern age was built partly on the back of the agricultural revolutions of the 17th and 18th centuries. Without that mass food production stabilising the food supply there couldn't have been an industrial revolution.

EscapeVelocity said...

Good stuff from Graham. However, I somewhat disagree with his analysis, outsourcing food production does not lead to increased national and economic security. Although Im basically a free trader...there are interests to maintain.

Grahams last paragraph is gold. Highly productive food production leads to security and supports specialization, industrialization. It also supports liberty, as in everyone is well fed, and feels secure enough to spout off about their politics and participate in a vigorous democracy. However there is also the other side, where people that are seperated from understanding the importance of food production/security, are more likely to advocate wild policies. This is classic from leftwingers in urban areas....some of who probably think milk comes from a jug and cheese from the government.

EscapeVelocity said...

Just one more thing, I aslo support diversified growers and local growers, I think there is room for both. Local growers and small farmers are making a comeback too....filling niche markets and being driven by chefs who are supporting them, and also local coopts and food awareness by the general public.

Dymphna said...

Escape Velocity--

I agree. Both/and, not either local *or* corporate.. But we badly need reform of our agricultural subsidies. It's wasteful, corrupt, leads to bad farming practices (in some cases), and it's corporate welfar in many cases.

I had a newsfeed item the other night about people in Oklahoma City (I think it was) who were defying city regulations by keeping a few chickens for their own use.

Around here, I can buy eggs, grass-fed beef, fresh vegetables in season. And all that stuff is going to city "farm markets" also.

Know who one of the growers is? Dave Matthews -- the singing DM. Nice farm. They're getting intensely organic, which is not my bag, but people have been indoctrinated so that's what sells to the yuppies.

I have a friend who's always gardened. He gives it away just for his own pleasure.

EscapeVelocity said...

Yes the organic and hippies are involved which isnt my bag either, but Im not against it. But those knuckleheads are also supporting local salt of the earth farmers as well.

I agree that local food production increases liberty and security. Divisification is also key....and the big producers have a place.

That is all Im saying. Im sure that the subsidies are corrupted a million ways. Im not anti reform, I just support subsidies.


BTW, Im a Dave Mathews fan.

Vegetable gardens rock.

EscapeVelocity said...

PS - The silver queen sweet corn is about 3 weeks away. Local farmer. :)