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Public Statements

Flood Insurance and Modernization Act

Floor Speech

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Date:
Location: Washington, DC

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Mr. TOOMEY. Mr. President, I rise to discuss a particular amendment--perhaps a couple of amendments--on the farm bill, specifically the amendments to the sugar portion. There are a number of titles, it is a big, complicated bill, and there is a great deal of discussion about the many reforms that are contained in this bill.

There is one very glaring exception. There is one huge program that has no reforms whatsoever in the underlying bill, and it just so happens to be in, in my view, one of the most egregiously flawed programs in the entire agricultural sector, maybe in government as a whole, and it is the Sugar Program. This is a program which systematically forces American consumers to pay much more than the global price for sugar. It is a huge transfer of wealth from consumers, including the poorest American consumers, to a handful of wealthy sugar producers. It is completely wrong, it is ill-conceived in the first place, it is perpetuated in this bill, and I think that is just unconscionable.

Some of the specific ways in which the existing program has the government completely manipulating the market for sugar include explicit limits on how much sugar can be produced domestically. There is a de facto government-imposed price floor on sugar rather than allowing the price to reflect whatever supply and demand would lead to. It puts strict limits on how much sugar can be imported without forcing Americans to pay taxes on those imports in the form of duties. It mandates that the government purchase excess sugar and then sell it at a loss to ethanol producers. All of these are features of the existing sugar policy, and all of them are left completely unchanged by this bill. So it is screaming for some amendments to provide some commonsense reforms to this very badly flawed program.

Let me be very clear. At the end of the day, the net effect of all of these machinations in which the government manipulates the market for sugar is that U.S. consumers end up paying much more, often about double the going rate that everyone else in the world who doesn't manipulate their markets pays for sugar.

By the way, that should be reason enough to end this program entirely, but there are other reasons. For instance, the existing sugar policy--as I said, unchanged in this bill--is absolutely costing us jobs in the United States. That is not even disputable. It is, on balance, a job killer. It is costing us jobs today specifically in manufacturing--the manufacturing of products that include sugar, of which there are many.

Here is a simple observation from the CEO of a candy manufacturer in Pennsylvania who uses sugar as an import. He points out: These sugar subsidies artificially inflate the price of one of the staples of the candy industry and force us, and any other companies, to choose between absorbing the higher costs, passing the costs on to consumers, or producing elsewhere.

The fact is that some people inevitably choose to produce elsewhere.

The next chart illustrates a point that has been made by the U.S. Department of Commerce. We are not just making these things up. Many U.S.--essentially sugar-consuming producers--manufacturers have already closed or relocated to Canada, where sugar prices are less than half of the United States. Why? Because Canada chooses not to have a ridiculous sugar program. So we lose jobs as manufacturers go to Canada, use market-priced sugar at much lower costs to produce candies, and then import them into the United States.

The next chart quantifies this. It is very simple. For every job that is protected somewhere where they are growing beets or cane sugar, three manufacturing jobs are lost. Again, these are statistics from the Department of Commerce. This is very clear. This is not really refutable.

The final chart illustrates this in another way. The Canadian Government has figured this out, and they advertise the fact that they have a huge competitive advantage because they choose not to create an artificially high price for sugar, and as a result they are constantly trying to persuade manufacturers to move up to Canada where they can have lower costs. By the way, for many of these companies, the cost of sugar in the United States is the single biggest cost they pay.

The other point that we should stress and that I would like to underline is that not only do we lose jobs systematically because of this program, it also hurts consumers. Think about it. Everybody consumes sugar. There is sugar in so many products that it is impossible to avoid this inflated cost. It should be seen as equivalent to a tax. It is as though the Federal Government is imposing a tax on sugar. It doesn't work literally that way, but it has that economic effect. It is completely equivalent. Who gets hit the hardest? It is the lowest income Americans. It is as regressive a tax as we can have. Think about that. Wealthy people devote a small percentage of their income to food. They have plenty of money to spend on other things. If you are a low-income American, then you necessarily are devoting a large part of your income to food, and so much of it is artificially inflated in cost by our own Federal Government. This is what is so egregious about it.

The GAO said in 2000 that the existing sugar policy forced Americans to pay $2 billion in additional food costs. And if we use their same methodology and we move it ahead to today, AEI projects that those costs are now $3.5 billion. This is a simple straightforward transfer of wealth from low- and middle-income and ordinary American consumers to a handful of wealthy producers. It is as simple as that.

There is one other feature. There is also an ongoing risk to taxpayers. Because of that feature I alluded to earlier in which the Federal Government buys what is deemed to be excess sugar and then sells it at a loss to ethanol makers, CBO projects this will lose $193 million for taxpayers over the next decade.

We have an amendment that would address this, the Shaheen amendment. I think Senator Shaheen has actually offered more than one amendment on this topic, one would repeal the entire program. I salute her. I agree with her. I support that. My understanding is that we will soon be voting on a motion to table that amendment. I think it is quite unfortunate that Senator Reid would choose to take this amendment off the table, so to speak, to put it aside. A vote to table the amendment is, of course, a vote to kill it. I think we ought to be passing this amendment and end the practice of forcing American consumers to transfer this wealth in this fashion.

But I wish to also stress that I am concerned about the process that has gotten us here. I am concerned that Senator Reid has intentionally chosen an amendment that is going to be very difficult to pass. As strong as its merits are, from my point of view, I know it is difficult to get a majority in this body to support the full repeal of this program. I hope we can succeed in that, but I don't know that we can. If we cannot, Senator Shaheen has another amendment that I have joined her on which would push back some of the excesses of this program--push us back to where we were back in 2008, prior to the most recent farm bill. The amendment makes some modest changes and just scales back some of these excesses. I certainly hope we get a chance to vote on that. If we can't pass full repeal, we have every right--and I would argue every responsibility in this body--to try to at least improve on what is such an egregiously flawed program.

Again, I would underscore the fact that the current bill is silent; in other words, it perpetuates, it continues this spectacularly flawed program that is so unfair to American consumers. We will have an opportunity to vote later today on a motion to table. I hope we defeat the motion to table so we can take up this amendment and do away with this program. But failing that, it is very important that we have an opportunity to at least amend the program.

With that, I yield the floor.

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