Commentary
By James Bovard
Federal agricultural policy has been permeated by political racketeering since President Franklin Roosevelt appointed America’s first farm dictator in 1933.
Recently, the Washington Post revealed Trump’s Secretary of Agriculture, Sonny Perdue, purchased a South Carolina grain plant from Archer-Daniels Midland (ADM) for a fire sale price shortly after it became clear Trump would nominate him.
The Perdue years were good ones for ADM, one of the nation’s largest ethanol and biodiesel producers, which long been one of the most prominent recipients of corporate welfare.
The Post reports, in September 2019 Trump “added hundreds of millions of gallons of ethanol to the U.S. gas supply,” and in early 2020, “Perdue announced a $100 million subsidy of biofuels, including ethanol and biodiesel.”
‘Ethics Reform’ Misses Ethanol
“Ethics reform” is an eternal crusade in Washington, D.C., with almost every new presidential administration promising to fix it or, in Trump’s lingo, to “drain the swamp.”
Unfortunately, the media regularly ignores the huge corruption that is federal ethanol policy. Ethanol is holy water for Iowa farmers who profit from the increased demand for corn. But ethanol epitomizes the political treachery resulting from government interventions.
A 1986 Agriculture Department study concluded increased production of ethanol costs consumers and taxpayers roughly $4 for each $1 of extra farm income.
The report stated: “Consumers would be much better off if they burned straight gasoline in their automobiles and paid a direct cash subsidy to farmers in the amount that net farm income would be increased by ethanol production.”
Instead of a straight payoff to an interest group with huge clout in the Iowa presidential caucuses, politicians devised a convoluted Rube Goldberg regime that camouflages windfalls for wealthy landowners and their political allies.
Bi-Partisan Ethanol Worship
Presidents George W. Bush and Barack Obama were both champions of mandating more ethanol use.
Ethanol has long been hyped as a linchpin of national energy independence. But it routinely requires more energy to produce — including tractor fuel, the cost of shipping grain, etc. — than it generates as a vehicle fuel. Also, because ethanol contains only about two-thirds as much fuel energy as gasoline, it guarantees worse gas mileage, leading drivers to buy more gasoline. It can also damage auto engines.
Biden’s Agriculture Secretary, former Iowa governor Tom Vilsack, is one of the biggest ethanol zealots in the nation. The Biden administration jumped on the bandwagon despite 40-plus years’ evidence of its harm to the environment.
Environmental Harm
The Clean Air Act of 1977 actually banned products such as ethanol.
When the Clinton administration sought to mandate more ethanol in gasoline, a federal appeals court ruled in 1995 “the sole purpose of the Reformulated Gasoline Program is to reduce air pollution…. EPA has even conceded that the use of it might possibly make air quality worse.”
The Congressional Budget Office admitted in 1995, “Ethanol evaporates quickly, especially in hot weather, contributing to ozone pollution.” Stanford University’s Mark Jacobson estimated in 2007 the use of “E85 (85 percent ethanol fuel, 15 percent gasoline) may increase ozone-related mortality, hospitalization, and asthma by about 9 percent in Los Angeles and 4 percent in the United States as a whole relative to 100 percent gasoline.”
In 2018, when Trump sought to nullify a Clean Air Act provision limiting sales of 15 percent ethanol in the summer, the Sierra Club denounced him for “once again ignoring Americans’ health and safety. Despite claims, corn ethanol is not a safe and environmentally-friendly fuel source — it is hugely detrimental to the environment and public health.”
Keeping Ethanol Flowing
Despite these drawbacks, the largesse for ethanol continues.
Forbes reported in 2016, “[f]rom the 2008 through 2014 election cycles, the [biofuels] industry showered federal lawmakers with $10.9 million in campaign contributions.
This pales in comparison to the money they spent lobbying the federal government. From 2008 to 2014, the industry spent $188 million on an array of special interest perks. According to a USDA-financed report from the Food Marketing Policy Center of the University of Connecticut, “For every dollar invested in contributions to political action committees, farm groups obtained on average approximately $2,132 in policy transfers,”—policy transfers being a euphemism for subsidies.
Unfortunately, the vast majority of farm policy corruption is legal – thanks to laws written by politicians. Buying votes is the only farm policy most members of Congress understand. When politicians and political appointees have free rein to set prices and rig markets, only a damn fool would not expect shady payoffs. Subsidized corporations favor politicians controlling the game, since they are confident they will control politicians.
Since the 1930s, federal farm policy has been “socialism for one industry,” with endless interventions to profit the most politically connected groups of growers.
‘Defined Down Robbery’
Almost a century and a half ago, the Supreme Court clearly recognized the perfidy of such schemes ruling: “To lay with one hand the power of the government on the property of the citizen and with the other to bestow it upon favored individuals to aid private enterprises and build up private fortunes is nonetheless a robbery because it is done under the forms of law and is called taxation.”
Lamentably, politicians have “defined down” robbery. The only way to fix federal farm subsidies is to abolish them.
James Bovard (Jim@jimbovard.com) is the author of ten books and has written for the New York Times, Wall Street Journal, Washington Post, and many other publications.
A longer version of this article was originally published by the American Institute for Economic Research, which has been edited and republished with the permission of its author.
