Posts tagged ‘Farm Subsidies’

01/27/2012

Republican Debate: Florida (1-23-12)

FOREIGN POLICY: Paul said Gingrich would have to change his foreign policy to gain his support. He believes it is not the role of the federal government to be the policeman of the world.

AFGHAN: Romney thinks the War in Afghanistan can be ended, not by talking to the Taliban, but by beating them.

CUBA: Paul opposes a military overthrow of Cuba. We propped up Castro for 40 years, Paul said, by imposing sanctions, which gave him the ability to blame everything on the U.S. He reminded everyone he was drafted in 1962 at the height of the Cold War, but it’s not 1962 anymore and the Cold War is over. We now talk to Russia, China, and Vietnam and have trade with them, so why not Cuba? Romney thinks it is dangerous to open travel with Cuba now, but if Castro died, he would work with a new Cuban leader to move them in an open direction. Gingrich favors aggressively overthrowing the Cuban regime. He accused Obama of being infatuated with the Arab Spring, but ignoring a Cuban Spring. Santorum tried to distinguish Cuba from China, by saying the Cuban island is only 90 miles away. He would continue sanctions against Cuba. He would wait until the Castro brothers died. He believes jihadists and Iranians are excited to establish a platform 90 miles off our coast in Cuba, Venezuela, or Nicaragua.

IRAN: Paul does not think Iran will close the Straits of Hormuz, because they need them open as much as we do. He said it is our blockade that would make Iran close the Straits. A blockade is the act of war, he said, and closing the Straits would be retaliation. Americans certainly do not want a hot war in Iran right now. He asked, what would we do if someone blockaded the Gulf of Mexico? Romney said we need opens seas and if Iran shut down the Straits of Hormuz, it would be an act of war. Gingrich said America has no appetite for war, but we didn’t have one when Pearl Harbor was bombed or the World Trade Center was destroyed either. He accused Obama of cancelling a military exercise with Israel, so as not to be provocative. Santorum said Obama does not see the threat Iran poses, not just to Israel, but the entire world. He argued they held hostages, attacked our ships and embassies, and made improvised explosive devices (IEDs) to harm our troops.

MILITARY: Romney believes we are shrinking our Navy. He again repeated the ridiculous assertion that it is now smaller than at any time since 1917. He wants to increase shipbuilding from 9 ships a year to 15. He wants a carrier in the Gulf. We need to be so strong, he said, so they could never defeat us.

SPACE: Romney thinks space exploration should be a priority for science and military development. Gingrich wants a series of space stations built. He wants to offer prizes for going into orbit.

ENGLISH LANGUAGE: Gingrich was asked: Why is it alright to court votes using Spanish TV ads, but not ok for government to serve people using it? Gingrich said there are 86 languages in Miami-Dade County, and 200 in Chicago. We need a central language to unify the country. Romney said Mass allowed teachers to teach in their native languages, and students ended up not speaking English very well. He pushed English language emersion. People must learn English, he said, to be successful in the U.S. Paul said for national business, we need one language, but states should be allowed to accommodate local needs.

IMMIGRATION: Gingrich favors allowing aliens to earn citizenship through military service. Romney favors self-deportation, which is what he thinks they will do if they do not have proper employment documents. Santorum said people are returning home now, because there are no jobs. He speculates they steal Social Security numbers to get work. Someone who came here illegally, he said, is continually breaking our laws. If you want to come to America, respect our laws, Santorum said.

JOBS: Romney again claimed to help create thousands of jobs at Staples, Bright Horizons, the Sports Authority, and Steel Dynamics. Gingrich was asked why the Bush tax cuts have not created jobs. He speculated things would have been worse.

OLYMPICS: Someone please tell Romney to stop mentioning his work on the Olympics, as if it was some great achievement. Who cares if he was in charge of the Olympics? It’s not important.

VULTURE CAPITALISM: Santorum said there is constructive capitalism and destructive capitalism.

FINANCE: Santorum asked Romney and Gingrich why they supported the Wall Street bailout if they believe in capitalism. Why not let destructive capitalism work, he asked? He said financial institutions should have been allowed to go bankrupt. Why prop them up through government? Romney said the derivatives market was not being regulated. Gingrich said Dodd-Frank allowed the biggest banks to get even bigger. He said regulators are walking into banks and telling them not to lend money.

FED: To placate Ron Paul, Gingrich discussed the formation of a commission to bring back the gold standard.

AGRICULTURAL SUBSIDIES: Gingrich was asked if he would do away with subsidies for the sugar industry, and get rid of import quotas that protect them. He said the industry was real good at protecting themselves. Romney would eliminate subsidies and let the markets work properly.

ENERGY: Santorum was asked if off-shore oil drilling was worth it. He believes it is essential to build the Keystone Pipeline and gain oil from domestic sources. Pipelines are safer than off-shore.

ENVIRONMENT: Paul would continue federal financing to protect the Everglades. Santorum said Romney believed in global warming enough to sign a cap on CO2 emissions in Mass.

HOUSING: Paul said interest rates were kept too low for too long. He said he introduced legislation 10 years before the bubble burst to end the line of credit to Freddie and Fannie. The Community Reinvestment Act forced banks to make even more risky loans. Our policy has been to try to keep home prices up, but they should be allowed to fall. We have to liquidate the debt, Paul said. They should have gone bankrupt, and the bad debt would have been wiped off the books. As long as we keep the debt on the books, we are not going to grow. Gingrich told Republicans in July 2008 to deny Freddie Mac any money, because they needed reform. Romney accused Gingrich of failing to speak out against what Freddie Mac was doing. Santorum was asked about the 40% of homeowners in Florida whose homes are underwater and the 53% whose homes are worth less today than before the crisis. He was asked if it was too easy to own a home. He said the Democrats fought a reform of Freddie Mac and Fannie Mae. He said we have to let capitalism work and allow banks to realize their losses. He would allow homeowners a tax deduction for their losses. Romney thinks Dodd-Frank makes it harder for banks to renegotiate mortgages and is killing the residential home market.

LOBBYING: Romney said Gingrich was paid 1.6 million by the chief lobbyist of Freddie Mac to influence Congress. He received $25,000 per month, or $300,000 a year, for services for Freddie Mac. Gingrich said he was paid for consulting, not lobbying. Romney reminded Gingrich he first said he was paid to be a historian. Gingrich said his share for three offices was $35,000. Romney said Gingrich spent 15 years on K Street influence peddling. Romney reminded viewers 84 ethics charges were filed against Gingrich and 88% of the Republicans in the House voted to reprimand him, causing him to resign in disgrace in 1998.

HEALTH CARE: Gingrich said he always favored a stronger Medicare program and favored Medicare Part D. The government would not pay for insulin, but they would cover kidney dialysis. They would not pay for Lipitor, but would cover open heart surgery. It was a terrible way to run Medicare, he said. Santorum said Romney’s health care plan in Mass was the basis for Obamacare, and Gingrich supported the individual mandate for 20 years. Romney said his health care plan, chosen by the people in Mass, is the one the Constitution allows us to have. He then said he opposes a federal mandate.

BUDGET: Gingrich thinks he balanced four federal budgets in the 1990s. He apparently forgot that they came about because Bill Clinton was President, and a democratically controlled Senate voted, without any Republican support, to make it happen.

TAXES: Romney said he paid a lot of taxes and not a penny more than required. He wants to eliminate taxes on interest, dividends and capital gains for those earning less than $200,000. He wants the highest corporate income tax lowered to 25%.  Gingrich called his 15% flat tax proposal a “Romney Tax.” He wants everyone to pay the level paid by Romney. In an inconsistent way, he said he would lower capital gains taxes to zero. Romney responded saying his tax liability would have been zero in that case. Romney refused to follow his father’s example of releasing 12 years of tax returns.

LIFE SUPPORT/DEATH: Santorum was asked if government should get involved in disputes like the 2005 case between the spouse of Terri Shaivo and her parents over removing feeding tubes. Non-lawyer Santorum admitted he asked a “federal” judge to get involved, when such situations are almost always ruled upon in state courts. Non-lawyer Gingrich also argued in favor of federal court intervention, where it clearly does not belong.  Paul correctly said the decision should be made at the state level.

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06/02/2011

Farm Subsidies: Created For A Reason

With current budget deficits and a growing national debt, some have asked whether we should eliminate U.S. farm subsidies, but a better question is: Why were they created in the first place?

The agricultural free market collapsed in the Great Depression, and could not recover on its own, because the farm economy stubbornly defied normal supply and demand curves. Agriculture was not like other economic sectors, because everyone needed to eat, and food demand remained constant. Since food demand never changed, the only variable that affected price was supply.

The supply problem, which continues today, is the production of more food than farmers can sell. U.S. farming is so efficient it creates an oversupply, which in turn pushes prices down, often below the cost of production. Although U.S. farmers were making enough food in the 1930s to feed the world, in the free market, they were unable to earn a living wage. They responded to low prices, by redoubling their efforts, and producing even more, with a hope of selling more, but this additional supply caused prices to drop even further, and took the entire farm sector to the brink.

The issue in 1934 was how to ensure a sustainable price for food, given the reality that supply routinely exceeded demand. Liberals argued for controls on agricultural supply, and subsidized minimum prices, to guarantee economic stability. The New Deal Democrats proceeded to make radical changes, as they replaced the capitalist free market system with a controlled economy. It was like creating a farm minimum wage. Once the government set the price for food, surpluses in supply became irrelevant.

The question now is whether the U.S. should once again adopt the capitalist agricultural free market that failed so miserably in the Great Depression. If there is one thing we sometimes learn from history, is that we don’t learn from history. If agriculture goes back to the unregulated free market that ushered in the Great Depression, it is reasonable to predict the system will fail again.

Terminating subsidies will return agriculture, a valuable necessity, to the chaos of free market forces. Excessive supply in relation to demand will cause prices to bottom out again. This will in turn trigger bankruptcies, and the ultimate loss of the farm sector.

While consumers may gain in the short run, once the domestic farm sector is out-of-business, the U.S. will become dependent on foreign producers, imported food supplies from abroad, and prices set in a global market place, well beyond our control.

A controlled economy using supply management and subsidized price controls is not an evil. We should think twice before we end the supply and price controls that have met our needs since 1934.