Why Campaign Spending Will Continue to Rise

Because the government has put itself in the job of redistributor-in-chief, and there is just too high of a financial return from influencing who are to be the beneficiaries, and who are to be the sacrificial lambs.  This is particularly the case when Congress can aim dollars at a small group who will give back generously in return, and where the costs are dispersed across large numbers of people, generally consumers or taxpayers or both:

Dan Morgan has another excellent Washington Post report
on our tangled web of farm subsidies, tariffs, government purchases,
and so on. This time he examines the sugar industry's political
contributions"“"more than 900 separate contributions totaling nearly
$1.5 million to candidates, parties and political funds" in 2007 alone.
Most of the money went to Democrats, apparently, which might explain
why Democrats opposed more strongly than Republicans an amendment
to strike the sugar subsidy provisions from the bill. Morgan delights
in pointing out members of Congress such as Rep. Carolyn Maloney of
Queens and Manhattan and Rep. Steven Rothman of bucolic Hackensack and
Fort Lee, New Jersey, who received funds from the sugar magnates and
voted to protect their subsidies despite the fact that they would seem
to have more sugar consumers than sugar growers in their districts....

So $1.5 million is a lot of money, and it seems to have done the trick.
But . . . is it really so much money? According to Morgan, the sugar
provisions in the farm bill are worth $1 billion over 10 years. That's
a huge return on investment. In what other way could a business invest
$1.5 million to reap $1 billion?

The real campaign finance reform that is needed is to get the government out of the business of naming winners and losers.

Update:  More on the sugar fiasco here.

Under the current system, the government guarantees a price floor for
sugar and limits the sugar supply "” placing quotas on domestic
production and quotas and tariffs to limit imports. According to the
Organization for Economic Cooperation and Development, sugar supports
cost American consumers "” who pay double the average world price "” more
than $1.5 billion a year. The system also bars farmers in some of the
poorest countries of the world from selling their sugar here.

The North American Free Trade Agreement is about to topple this
cozy arrangement. Next year, Mexican sugar will be allowed to enter the
United States free of any quotas or duties, threatening a flood of
imports. Rather than taking the opportunity to untangle the sugar
program in this year's farm bill, Congress has decided to bolster the
old system.

Both the House bill, which was passed in July, and the Senate
version, which could be voted on as early as this week, guarantee that
the government will buy from American farmers an amount of sugar
equivalent to 85 percent of domestic consumption "” regardless of how
much comes in from abroad. To add insult to injury, both also increase
the longstanding price guarantee for sugar.

The bills encourage the government to operate the program at no cost
to the budget, by selling the surplus sugar to the ethanol industry.
That's not likely. Ethanol makers will never accept paying anywhere
near sugar's guaranteed price. According to rough estimates from the
Congressional Budget Office, supports for sugar in the House bill could
cost taxpayers from $750 million to $850 million over the next five
years.

  • Larry Sheldon

    The very worst of the sugar thing is that I have to import Dr. Pepper from Texas, and search the Mexican grocery stores for Coca Cola in order to get soft drinks that are made with sugar instead of (MUST be poisonous) HFCS.

    Terrible stuff.

    There are a few other bottlers (some of Jones Soda, e. g.) that sell soft drinks that are fit to drink.

  • http://goodmorningeconomics.wordpress.com jsalvati

    This might explain why campaign spending is high, but I don't think it suggests that campaign spending will increase (unless you just mean that it will increase with economic growth).

  • Anonymous

    Cosco in Oregon has recently started carrying Coca Cola made in Mexico (sweetened with real cane sugar) in packages of 24 12 ounce bottles for about $18 with $1.20 deposit. I have to say I enjoy them a lot more than the other colas made with sugar.

  • http://www.humanadvancement.net/blog Kyle Bennett

    "Ethanol makers will never accept paying anywhere near sugar’s guaranteed price."

    Sure they will... or else.

    The bill requiring it will be touted as correcting a market failure, and as a way to reduce our dependence on foreign oil - and it will come with a subsidy to the ethanol makers. Voila, the sugar subsidy is, in and of itself, revenue neutral.

    "This might explain why campaign spending is high, but I don't think it suggests that campaign spending will increase "

    If 1.5 million every four years invested gets you a hundred million a year, would you draw the line there? Or would it still be a bargain at 2.0 million? Or three million? Or twenty? Even discounting the obvious risks to the anticipated returns, how high would it have to be to get the buyers to say "no thanks"?