Cotton Subsidies – How To Save An Easy $4 Billion

| November 22, 2010 | 0 Comments

Commodity prices are trading near all time highs… and some are setting records not seen in decades.  Take cotton for example.  Unless you’ve been hiding in a cave with Osama Bin Laden, you know cotton prices are near 40 year highs.

I’ll show you a chart in a moment… but first, let me ask you a question about cotton.

Did you know that the US government is spending $150 million a year… to help cotton farmers in Brazil compete against US grown cotton?

$150 million a year.

Money that could go to help the homeless.  Money that could improve schools and education.  Money that could pay down the deficit, or fund safety services like police and fire departments.

Can you believe our government just wastes money like this?

I can, and it makes me sick!  Right now the politicians in Washington DC are arguing about the budget, deficits, and excessive spending.  They’re too busy to look down and see the $150 million sitting on the floor.  (And $4 billion more sitting right next to it!)

How stupid is our government?

That’s a rhetorical question… let’s get back to the $150 million being wasted.  First, I wish I could claim responsibility for uncovering this blatant waste of money… but I didn’t.  I heard about it on National Public Radio (NPR).  Yet again, this organization is able to uncover a tragedy of monumental proportions caused by our government.

For the full story, go to NPR.com and search for “Why U.S. Taxpayers Are Paying Brazilian Cotton Growers.”  What you’ll read is shocking… and if you’re like me, it will make you incredibly mad.

In a nutshell, The US government is providing upwards of $4 billion a year to US cotton farmers in the form of subsidies.  Brazilian cotton farmers are upset and say the subsidies influence competition.  (Seems obvious to me.)  The World Trade Organization (WTO) ruled in favor of the Brazilian farmers… so Brazil threatened to start taxing US imports.

To avoid the import taxes, the US government offered a BRIBE!  They now pay $147 million every year to Brazilian cotton farmers… all because the US is ALREADY PAYING $4 BILLION a year in subsidies to US cotton farmers!

This situation is so crazy, at first I couldn’t believe it!  If I wrote a book about this, no one would believe me!

I have two very serious questions…

First, who in the US government approved this $147 million a year BRIBE… and why haven’t they been fired yet!?!

And second… have you seen cotton prices?

   Cotton prices are up almost 200% in the last two years.  My question is why is the hell is the US government giving $4 billion in subsidies to cotton farmers.  What are we getting for our $4 billion?  Why are we still sending money to farmers if we can buy the same product cheaper elsewhere?

Does Congress not understand the basics of economics?

Do they not understand supply and demand?

With prices like this, if your cotton farm isn’t profitable… then maybe you should look for another line of work.  Seriously.  Why do we need to subsidize this industry… it hasn’t helped stabilize prices.  And it sure hasn’t helped international relations.

Can our leaders in Congress pull their heads out of their backsides and for once do the right thing.

First, let’s stop sending $150 million to Brazil.  That’s hard earned taxpayer dollars being sent as a BRIBE to a foreign country.  What are they thinking?

Second, would somebody in Congress please look at other payments the US government is making?  I’ll bet dollars to donuts this isn’t the only BRIBE the government is paying.  I consider this fraud.  It’s a misuse of government funds, pure and simple.

Finally, can we take an honest look at government subsidies of all types. Not just those to the cotton farmer… but every subsidy Congress is making.  I understand some things need to be kept in house despite being uneconomical… like our military.  But seriously, let’s take an honest look at the economics of a situation… and make decisions based on logic, not what lobbyists are best.

We have a new class of Congressmen entering Washington right now… let’s pray they do the right things.

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Category: Commodities

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The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

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