CBS News reports Congress is debating whether or not to keep subsidies for producers of ethanol to be used as a fuel for automobiles in the United States. Even as corn prices have increased due to ethanol as a fuel additive, farmers worry about taking away the government's funding for ethanol manufacturing plants. A subsidy is a means of helping control prices within certain sectors that are advantageous to the public, according to a definition in Merriam-Webster's dictionary.
Subsidies exist for such sectors as the oil industry, agriculture, security, safety, tourism and health. The number of government subsidy programs has risen steadily since 1990, according to a report by the Cato Institute. Only 1,176 federal programs existed in 1990 versus 1,696 in 2006, an increase of 44 percent. The energy industry alone rose from nine subsidies in 1990 to 26 in 2006.
What's wrong with the ethanol subsidy? The ethanol industry didn't do anything to the American people in terms of burgeoning debt to the taxpayers. If any industry deserves to have its financial strings cut off from Uncle Sam it would be the home lending market or the gasoline industry for creating economic bubbles that have harmed the bottom lines of American families for three years running.
If Congress is going to do away with one subsidy to help tighten its spending, it should do away with all government funding of private industry and let the free market completely take over.
Subsidies are available for large and small companies in the United States. They cover expenses and start up costs for all kinds of things a company needs. Subsidies are designed to make smaller companies have a profit quicker and faster as they struggle to compete against larger conglomerates.
A subsidy is like a handicap in golf or bowling. It helps smaller players be competitive against large companies who are already better and established in the field. Removing a subsidy won't hurt large producers, but it reduces the playing field by eliminating smaller start-ups who otherwise wouldn't be able to compete.
If smaller businesses are the backbone of the American economy, removing any subsidy will eliminate the competition. Start ups and small companies will suffer the most as larger and more established companies already have larger profit margins and more cash flow that can be spent on research and development.
Competition helps keep prices low in a free market. Removing competition by eliminating subsidies will hurt various sectors, force some companies to close and some employees will likely have to be cut. Singling out one sector of the economy for removing their subsidies is unfair. If everyone across the American landscape must sacrifice to pay down our burgeoning debts, Congress should do the right thing and get rid of every subsidy made to the private sector.
A free market economy is what America has, after all, even when predatory home lenders took advantage of the American dream in 2008 and destroyed the economy.
William Browning is a research librarian specializing in U.S. politics. Born in St. Louis, Browning is active in local politics and served as a campaign volunteer for President Barack Obama and Missouri Sen. Claire McCaskill.