Who’s Actually Repaying Federal Loans?

Here’s one example.

Under the 2008 Farm Bill, the United States Department of Agriculture is required to buy sugars like refined beet sugar and sell it to ethanol producers if the sugar producers are, in the opinion of the USDA, likely to default on certain Federal loans (this requirement is unchanged by the current Farm Bill modifications wending their way through Congress).

You read that right: the Feds loan sugar producers money, then the Feds buy the producers’ output so the producers can repay the loans.  Federal money—which is to say, our money sent to the Feds as taxes—is loaned to sugar producers in support of an ethanol program that no one wants.  Then, when repaying those loans becomes inconvenient, or even impossible, more of our (tax) money is used to buy the borrowers’ output, providing them with the funds with which to pay up.  The borrowers, courtesy of…Uncle Sugar…use (our) purchase money to pay us back.  We’re screwed two times in one deal.

But wait—there’s more.  In one illustrative case,

[t]he USDA paid about $3.6 million for the sugar, which it purchased from Western Sugar Cooperative, a sugar-beet processor based in Denver, according to a notice posted on the agency’s website Friday.  Front Range Energy LLC, a Windsor, CO-based ethanol maker, paid $900,000 for the sugar, according to the USDA notice.

We’re screwed a third time.

And that’s the purpose:

By buying the sugar, the USDA aims to boost prices to a level where sugar processors will be able to repay $298 million in outstanding federal loans that come due at the end of August and September.

It really is just this barefaced.

Leave a Reply

Your email address will not be published. Required fields are marked *