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Craig Pirrong with a textbook example of the disgusting government we have in Washington.
… The persistence of price supports, in milk, and in sugar, and in other ag commodities, is in fact a testament to the disproportionate power of the ag lobbies. These programs transfer billions of dollars from urban and suburban America to farmers. Much of the impact is felt by poor Americans. But don’t worry! We’ll offset that by food stamps-pardon me, SNAP-a program that has metastasized, almost doubling in size in terms of participation, and more than doubling in dollars since Obama took office.
These price supports are an abomination. They are textbook examples of redistributive government policy creating deadweight losses.
For Vilsack to get all weepy about the political weakness of rural America just adds insult to injury.
I knew Ross Perot was an economic idiot when during the 1992 campaign he expressed bewilderment at how the political power of the agriculture interests increased as the farm population declined. Basic political economy provides the answer to that: small, concentrated interests exert disproportionate power The benefits are concentrated, the costs are diffuse. The beneficiaries have a strong incentive to pay pols to advance their program because each individual gets a relatively large amount of money in the bargain, and those who pay the costs don’t have the incentive to organize an opposition because no individual pays a big cost (even though the collective costs are huge). An individual farmer might make several thousand additional dollars. An individual consumer pays a few dollars more. No individual consumer has an incentive to spend to oppose the bill, but individual farmers do. As the farm population has shrunk, it has become more concentrated and homogenous, and much more powerful as a result.
This is not the biggest policy disaster we face now, but it does demonstrate the dysfunction of our politics. And no, it’s not the dysfunction that the Vilsacks and the other DC denizens routinely bewail: the inability to get things done. In fact, getting things done is exactly the problem .
And what gets done is us. Who gets milked to pay for the milk program? You do, sucker. …
WSJ Editors have more.
In praising Congress’s huge new tax increase, President Obama said Tuesday that “millionaires and billionaires” will finally “pay their fair share.” That is, unless you are a Nascar track owner, a wind-energy company or the owners of StarKist Tuna, among many others who managed to get their taxes reduced in Congress’s New Year celebration.
There’s plenty to lament about the capital and income tax hikes, but the bill’s seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout, so allow us to shine a light on the merriment. …
… Thus Michigan Democrat Debbie Stabenow was able to retain an accelerated tax write-off for owners of Nascar tracks (cost: $78 million) to benefit the paupers who control the Michigan International Speedway. New Mexico’s Jeff Bingaman saved a tax credit for companies operating in American Samoa ($62 million), including a StarKist factory.
Distillers are able to drink to a $222 million rum tax rebate. Perhaps this will help to finance more of those fabulous Bacardi TV ads with all those beautiful rich people. Businesses located on Indian reservations will receive $222 million in accelerated depreciation. And there are breaks for railroads, “New York Liberty Zone” bonds and so much more.
But a special award goes to Chris Dodd, the former Senator who now roams Gucci Gulch lobbying for Hollywood’s movie studios. The Senate summary of his tax victory is worth quoting in full: “The bill extends for two years, through 2013, the provision that allows film and television producers to expense the first $15 million of production costs incurred in the United States ($20 million if the costs are incurred in economically depressed areas in the United States).”
You gotta love that “depressed areas” bit. The impoverished impresarios of Brentwood get an extra writeoff if they take their film crews into, say, deepest Flatbush. Is that because they have to pay extra to the caterers from Dean & DeLuca to make the trip? It sure can’t be because they hire the jobless locals for the production crew. Those are union jobs, mate, and don’t you forget it. …
… The great joke here is that Washington pretends to want to pass “comprehensive tax reform,” even as each year it adds more tax giveaways that distort the tax code and keep tax rates higher than they have to be. Even as he praised the bill full of this stuff, Mr. Obama called Tuesday night for “further reforms to our tax code so that the wealthiest corporations and individuals can’t take advantage of loopholes and deductions that aren’t available to most Americans.”
One of Mr. Obama’s political gifts is that he can sound so plausible describing the opposite of his real intentions.
The costs of all this are far greater than the estimates conjured by the Joint Tax Committee. They include slower economic growth from misallocated capital, lower revenues for the Treasury and thus more pressure to raise rates on everyone, and greater public cynicism that government mainly serves the powerful.
Republicans who are looking for a new populist message have one waiting here, and they could start by repudiating the corporate welfare in this New Year disgrace.
Even David Brooks sees the problem. Of course, since he has obamalove, he can’t see the empty suits who cause the problem. Brooks wants to blame the public.
Ultimately, we should blame the American voters. The average Medicare couple pays $109,000 into the program and gets $343,000 in benefits out, according to the Urban Institute. This is $234,000 in free money. Many voters have decided they like spending a lot on themselves and pushing costs onto their children and grandchildren. They have decided they like borrowing up to $1 trillion a year for tax credits, disability payments, defense contracts and the rest. They have found that the original Keynesian rationale for these deficits provides a perfect cover for permanent deficit-living. They have made it clear that they will destroy any politician who tries to stop them from cost-shifting in this way.
Most members of Congress are responding efficiently to the popular will. A large number of reactionary Democrats reject any measure to touch Medicare or other entitlement programs. A large number of impotent Republicans talk about reducing the debt, but are incapable of forging a deal that balances tax increases with spending cuts.
The events of the past few weeks demonstrate that these political pressures overwhelm the few realists looking for a more ambitious bargain. The country either doesn’t know or doesn’t care about the burdens we are placing on our children. No coalition of leaders has successfully confronted the voters, and made them heedful of the ruin they are bringing upon the nation.
A Michael Walsh Corner post gets the nod because of this ‘graf.
… Naturally, Louis Michael Seidman is a graduate of Harvard Law, whence now seems to originate all our misery. (For a preview of the kind of misery heading our way, just look at these photos.) William F. Buckley, Jr., once famously said that he would rather be governed by the first few hundred names in the Boston phone book than by the faculty of Harvard, but in fact we are being governed by Harvard, from the Supreme Court on down; only at Harvard could Chief Justice John Roberts have learned the spineless sophistry that permitted him to rule in favor of Obamacare — a ruling that will live in infamy, assuming the U.S. survives Obamaism in any recognizable way. …