It would be interesting if this same writer could update his study, and see just who in the Bush administration is still on ADM's 'payola roll'.
A CASE STUDY IN CORPORATE WELFARE
by James Bovard
James Bovard is an associate policy analyst with the Cato Institute. His most recent book is Shakedown: How the Government Screws You from A to Z (Viking, 1995).
QUOTE
The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history. ADM and its chairman Dwayne Andreas have lavishly fertilized both political parties with millions of dollars in handouts and in return have reaped billion-dollar windfalls from taxpayers and consumers. Thanks to federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports, and various other programs, ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30.
QUOTE
The Wall Street Journal declared on July 11 that "for more than two decades, Mr. Andreas has reigned as the prince of political influence." The Washington Post described Andreas as "one of the great financial 'switch hitters' of American politics," meaning that ADM will bankroll any politician who supports ethanol or sugar subsidies regardless of political creed or ideological convictions. Andreas has done a masterful job of diversifying his investments by carefully cultivating both Senate Majority Leader Bob Dole and Senate Minority Leader Tom Daschle. The New York Times in 1990 called Dole "ADM's staunchest ally on Capitol Hill." The Wall Street Journal likewise recently reported, "In the Senate, Mr. Dole has been the chief promoter of the ethanol subsidy." The Times also noted that "ADM's private plane has flown Dole to Midwest speaking engagements, and for a time ADM sponsored Dole's commentaries over the Mutual Radio Network. The Senator and his wife, Elizabeth Dole, then Secretary of Labor, purchased an apartment from Andreas in 1982 at the Sea View, a Bal Harbour, Florida, hotel in which residents hold shares. They paid $150,000 -- less than the apartment's market value." Since 1993 Dole has accepted 29 flights on ADM's private planes (Dole reimburses the company for the price of a first-class ticket -- far less than the cost of chartering a private plane). After Elizabeth Dole became the head of the Red Cross, Andreas's nonprofit foundation gave $1 million to the Red Cross. Andreas also donated $100,000 to Bob Dole's now defunct Better America Foundation.
QUOTE
The Energy Department also got into the ethanol game and has lost more than $100 million on recipients' defaults on ethanol loans. Andreas was less than pleased at the prospect of more tax-subsidized competition. On August 20, 1981, he wrote to James Stearns, then director of the Office of Alcohol Fuels at the Department of Energy, to urge the government not to go through with loan guarantees it had announced for 11 small ethanol producers. He noted, "It is very clear to me that your program to finance totally inexperienced individuals in their investments mostly as tax shelters is counterproductive in that it has discouraged the flow of private capital into new facilities." Andreas went on to complain about Brazilian ethanol imports in the same letter. At the time, ADM controlled over 70 percent of ethanol production facilities in the United States.
QUOTE
Andreas's single largest rip-off of taxpayers occurred in 1986. The price of corn had risen and the price of gasoline had fallen. Clearly, ethanol had become a greater economic absurdity than ever. Andreas and ethanol supporters had an easy solution: make ethanol pseudocompetitive again through USDA gifts of free corn. Andreas and his top lobbyist met with USDA secretary Richard Lyng for a breakfast at the Madison Hotel in Washington. Two days later Lyng announced a new program under which ADM would receive $29 million in free corn and other ethanol producers would receive multi-million-dollar corn windfalls. The USDA's Office of Energy proposed targeting the free corn to only those ethanol producers that were in severe financial distress. But Secretary Lyng personally vetoed the "means test" idea as unfair. Lyng declared that imposing a means test "didn't make sense to me at all. . . . I think the government should treat people equally. . . . The Constitution calls for that." But, because only a handful of ethanol producers were eligible for the multi-million-dollar giveaway, Lyng's profession of concern about "equal treatment" was ludicrous, even by Washington standards. Jack Blum, a lawyer for the Independent Gasoline Markets Council, denounced the giveaway as "corporate food stamps for ADM." One company, New Energy Corporation, received almost $5 million worth of free corn and then went bankrupt a few months later.
QUOTE
As a result, the net energy efficiency of ethanol is in question. One gallon of ethanol contains the energy equivalent of 76,000 British Thermal Units (BTUs). In 1991, the Department of Energy estimated that to make a gallon of ethanol required 85,000 to 91,000 BTUs.
QUOTE
The EPA waiver for ethanol's use in gasoline was the equivalent of allowing city trash trucks to drop as much trash on the streets as they pick up from the curbsides -- and to double bill their customers. The federal government had gone from ignoring pollution to benefit big business to mandating pollution to benefit one specific fat-cat corporation.
