The hidden cost of tax revenues

The News Virginian / News Virginian
Published: February 27, 2008

Like Valley foliage in the fall, the capacity of government to exacerbate predicaments of its own devising by exercising precisely the same malformed logic that produced the problem in the first place is always remarkable. Shaken down once more by frivolous feds, taxpayers are the ones who change colors, from healthy hues to a battered black and blue.

One of many cases in point is farm aid. Sixth District U.S. Rep. Bob Goodlatte, R-Roanoke, proudly announced Monday that dairy farmers will get federal money to help cover the cost of shipping milk to the South, where the supply of white stuff is short. The cash infusion is needed, he explained, because local farmers have been hit hard by soaring gas and feed prices.

Grain costs are rising because more corn, at the behest of President Bush and the rest of the Beltway's comical cadre of policymakers, is being used for ethanol production. That trend ostensibly will result in the United States being less dependent on foreign oil.

Before hastening to consider the validity of the concept, let's consider its impact so far. In addition to driving up the cost of feeding farm animals, the ethanol push is costing the rest of us more to feed ourselves. Food prices jumped 1.7 percent last month, the largest monthly increase in three years.

As for the concept, there are a few niggling questions.

Foremost among them is the one about whether enough corn can be grown to make ethanol a viable alternative to oil. To produce enough ethanol to make it a significant source of motor fuel, growers would have to clear 50 million acres of land, according to one study. For a little perspective, that would be roughly equivalent to the state of Nebraska, which, of course, is itself a vast cornfield already. Maybe growers can find the extra land on eBay.

Duly brightened by the concept's potential and needing only an extra state or two on which to plant our next alternative fuel crop, the feds have taken to pouring $3 billion annually into ethanol. Strapped farmers get their share to cover their higher costs, and tax rebate checks are in the mail for Americans, whose bills also are increasing.

Eliminating ethanol mandates and superfluous spending on a concept built on shifting sand, along with lightening farmers' regulatory burden, would allow farmers and taxpayers alike to save money. Instead, government chows down on tax revenues the way a couch potato does junk food. Lawmakers seem to spend based on the motto of the popular 1990s ads for nacho chips: "Crunch all you want, we'll make more."

Too bad it's not quite so simple for the rest of us.