Stossel: Sugar’s Sweetheart Deal

Sugar subsidies are welfare for the rich. They cost consumers billions a year.

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The U.S. sugar program is "Stalin-style price controls," Ross Marchand of the Taxpayers Protection Alliance tells John Stossel.

The U.S. government uses a complex system of loans, domestic quotas, and limits on how much sugar we can import. The goal is to control the price of sugar.

Stossel calls it "welfare for the rich." Economists say the program costs consumers billions a year. And yet the sugar industry makes videos that say "it costs taxpayers nothing."

Economist Vincent H. Smith writes that the "Stalinist-style," supply control, "substantially increases U.S. prices–on average U.S. sugar prices are about twice as high as world prices."

Yet politicians from sugar-producing states defend the program. "It basically allows our sugar industry to compete with other countries that are heavily subsidized by their home countries," Senator Marco Rubio said in an interview with Fox News.

Stossel takes Rubio's claim to Marchand, "It's only fair to our sugar producers who don't get subsidized, who can't compete with these subsidized countries."

Marchand replies, "Is it fair for customers to pay double the world rate for sugar? Is it fair for taxpayers to have to bail out a handful of super rich super-connected sugar processors? No."

Ryan Weston, representing the Sugarcane Growers, goes on TV programs and says, "we are a no cost program, no cost to the taxpayer."

"That's absolutely bogus, taxpayers do pay the cost," retorts Marchand. When sugar prices drop, "Government will buy sugar from the sugar processors and sell it to ethanol producers at a below market rate. Who's paying the difference? Who's footing the bill? U.S. taxpayers."

Why aren't people upset with these crony capitalists?

In a video produced by Learn Liberty, Economist Diana Thomas explains that the U.S. sugar program cost each of us "about $10 more on sugar products a year. So we don't even notice it." But sugar producers will lobby hard for their special deal because "each American sugar farmer made roughly $3 million dollars a year extra."

The people who do notice the price controls most are candy makers. According to an Iowa University study, 20,000 American jobs a year are lost because of high sugar prices. Marchand says, "there is one candy cane producer left in Ohio. That's absolutely ridiculous. And look at all those jobs."

Stossel challenges Marchand by saying that it's probably good that we eat less sugar and candy. Marchand replies, "the fact that sugar is in everything means that healthy and unhealthy products alike are going to cost more."

The views expressed in this video are solely those of John Stossel; his independent production company, Stossel Productions; and the people he interviews. The claims and opinions set forth in the video and accompanying text are not necessarily those of Reason.