Tuesday, July 31, 2007

How to pass a farm bill...

In order to get Dems to sign off on the farm bill, Speaker Pelosi and her allies threw in quite a handful of goodies - one of which may come back to haunt the farmers who like the current subsidy scheme.

Democratic leaders did it by playing Santa Claus. To representatives from California and other states that don't grow the types of crops that traditionally get federal handouts, they doled out $1.6 billion for specialty crops such as vegetables and nuts. To the Congressional Black Caucus, they handed at least $100 million to help settle discrimination lawsuits by minority farmers. To urban liberals, they gave a needed expansion of the food stamp program. And to Democrats in farm states, they presented a bill that keeps in place all of the trade-distorting subsidies that made the 2002 farm bill a shameful violation of international agreements. [More]
But the real eyebrow-raiser was this bone for labor unions:
The bill is flush with subsidies to produce ethanol, the corn-based alternative fuel that still can't compete on a free-market basis. More ethanol requires more biorefineries. Democrats plan to mandate Davis-Bacon wages for workers building those refineries. With nonunion builders unable to compete on price, each new refinery could cost as much as 35% more. In many rural areas with little or no union activity, this artificially high labor cost could even make the prospect of building an ethanol plant a net loss. [More]
This is no problem if your ethanol plant is already up and running, but bad news for expansion plans.

We seem to be risking a lot for a $25 DCP.

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