Written by Ron Rabatsky   

Subsidies are a major part of our tax problem.

Agri-business subsidies. We do not want to eliminate the Farm Credit System. However, between 1996 and 2002 farm subsidies were $121 billion and they have grown substantially since then. Congress increased the subsidies by 74% in 2008, overriding a rare veto from Mr. Bush. This extensive federal welfare system for agri-businesses is costly and distorts the economy. Subsidies induce farmers to overproduce, which pushes down prices and creates political demands for further subsidies. Subsidies inflate land prices in rural America. And the flow of subsidies from Washington hinders farmers from innovating, cutting costs, diversifying their land use, and taking the actions needed to prosper in a competitive global economy. These subsidies are also rife with fraud. The largest 10 recipients of agri-subsidies receive 72% of these monies. We are not supporting small farmers as Congresspeople like to tell us. It is landowners not tenant farmers or farm workers that receive these subsidies. Some of this land is not even used for farming any longer, yet the subsidies are paid nonetheless. I cannot even find a reliable estimate of how much is paid out every year in agri-subsidies. But we can safely say that these total more than $250 billion/year. Subsidies encourage the use of food products such as sugar and corn to be used for ethanol - we are using our food supply to power our cars!

Oil Company subsidies. President Obama has proposed eliminating a mere $4 billion/year in oil company subsidies and tax breaks. In February of this year, Republicans voted to keep $53 billion in subsidies to the largest oil companies. Without digging any deeper, here is $53 billion of deficit reduction including interest and opportunity costs. The Senate just defeated a bill to end subsidies to the top 5 oil companies, showing that their interests lie with their constituents - oil companies - rather than with the voters of their districts. Oil and gas companies have reportedly donated nearly $18 million to the 48 Senators who voted to protect oil subsidies. The Associate Press quoted John Cornyn, R-TX as saying about the defeat of the bill: "This is not an energy strategy, this is a public relations strategy, this is a 'how do I get re-elected' strategy". It does not solve the problem or the pain that Americans are feeling at the pump."

How could anyone vote against a bill that would have saved $21 billion from the cash-rich oil companies in the midst of the debate over debt ceilings and deficit spending? Oil and gas companies have reportedly spent $39.5 million lobbying congress in just the first quarter of this year, and have donated nearly $18 million to the 48 Senators who voted to protect oil subsidies - five times more than to Senators who supported ending them.

Other governmental subsidies need to be identified and reviewed with an eye toward their elimination when they are clearly not furthering government policies.