Lawrence Bullock
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Re: The Social Security Solution. Really
"Osama Bin Kerry" <obk@osama.net> wrote in message
news:3PKxd.18556$kq2.14606@twister.nyc.rr.com...
> tmurph2@peoplepc.com wrote:
> > That's not bad but I have another possible solution. Why not keep the
> > cap on SS taxes at + - $87K as I think it is now but re-instate the tax
> > on any income over let's say $250K. We have a lot of people making
> > that much money and more who can afford it. This would give relief to
> > middle class folks without being a burden on the economy.
>
> While we are at it, let's cut out the tax credits and exemptions for the
> welfare class. Let the welfare class carry their own weight.
> >
And if you need an example of corporate welfare, here it is , courtesy of
the Cato Institute...
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
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Executive Summary
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
One of the most politically charged debates in Washington revolves around
business subsidies known as "corporate welfare." A number of policy
organizations have published studies examining the corporate welfare
phenomenon: what qualifies as corporate welfare, how much it costs
taxpayers, and how much it damages the economy. This study examines the
dynamics of corporate welfare somewhat differently by investigating ADM as a
classic case study of how those subsidies are obtained, how the welfare
state encourages such "rent seeking," and how such practices fundamentally
corrupt the political life of a nation. Congress's expressed desire to
foster a free marketplace cannot be taken seriously until ADM's corporate
hand is removed from the federal till.
Introduction
ADM is certainly the nation's most arrogant welfare recipient. And it is one
of the few welfare recipients that spend millions of dollars each year
advertising on Sunday morning television shows populated and watched by
politicians. Chairman Dwayne Andreas's and ADM's success in farming
Washington represents the rational result of contemporary government
policies that turn elections into "an advanced auction of stolen goods," as
H. L. Mencken quipped. Thanks to its multi-million-dollar hustling in
Washington, a company that lives and dies on the generosity of the American
taxpayer has managed to get itself revered as a great public servant.
Although ADM is not the only corporation with its hand out in Washington, it
is easily one of the most successful beggars on the block.[1]
Andreas recently told a reporter for Mother Jones, "There isn't one grain of
anything in the world that is sold in a free market. Not one! The only place
you see a free market is in the speeches of politicians. People who are not
in the Midwest do not understand that this is a socialist country."[2]
Andreas's comment about "no free markets" is like the old joke about the son
who murdered his parents and then asked for the court's mercy because he was
an orphan. ADM champions political control over markets and then invokes
that control as an excuse for its continued political manipulation. Andreas
has exerted his influence in Washington to ensure that the U.S. form of
"socialism" resembles 1930s' Italian corporate statism: the government
plunders the citizenry for the benefit of politically connected
corporations. And, though Andreas does not like to admit it, there are many
markets in the world for agricultural products that are not controlled by
politicians.
This past May ADM ran in major newspapers a full-page, full-color ad showing
a corn cob decorated with the American flag with a picture of President John
F. Kennedy along with Kennedy's most famous slogan, "Ask not what your
country can do for you--ask what you can do for your country." The
advertisement is the ultimate Orwellian agit-prop exercise, the true message
being, "Ask not what your country can do for you, ask what you can do for
ADM." Such misleading "public service" ad campaigns are the staple of ADM's
public relations operation, providing the thin cover necessary to plunder
the public till.
Although much has been written lately on ADM and its harvest of taxpayer
dollars, the full scope of its parasitic relationship with the U.S. taxpayer
has rarely been closely examined. This study provides that detailed
examination as well as an insight into the political dynamics that encourage
corporate leaders to profit, not by pleasing consumers, but by pleasing
politicians. The study also examines the three main arenas for ADM's
corporate rent seeking: the ethanol program, the sugar program, and
subsidized grain exports.
Tithing at the Church of Subsidy
Andreas has long talked and behaved as if he had a divine mission to give as
much money as possible to as many politicians as possible. The Washington
Post noted in 1985 that "Andreas said he was raised in a religious tradition
that called for 'tithing' 10 percent of personal income to the church. And,
he adds, 'I consider politics to be just like the church.'"[3] Andreas
likewise declared in 1990, "I was raised to believe you're supposed to
support your mayor and your congressman and your politicians. . . . If a
fellow is willing to devote his life to public service, and a fellow like me
has more money than I ever dreamed existed in the whole world, wouldn't I be
an ass if I didn't respond to requests?"[4] One should not be surprise that
the "public services" that Andreas rewards are services that subsidize ADM.
The Wall Street Journal declared on July 11 that "for more than two decades,
Mr. Andreas has reigned as the prince of political influence."[5] 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.[6] 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."[7] The Wall
Street Journal likewise recently reported, "In the Senate, Mr. Dole has been
the chief promoter of the ethanol subsidy."[8] 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."[9] 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).[10] 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.
Since 1979 Andreas, family members, and ADM have contributed more than $4
million to congressional and presidential candidates, as well as to the
national Democratic and Republican parties.[11]
In the two years before the 1992 election, ADM gave $772,000 to Republicans
but only $136,500 to Democrats.[12] But the likelihood of Clinton's victory
did wonders for Andreas's bipartisan spirit. According to the Wall Street
Journal, "Andreas, whose personal contributions heavily favored Republican
candidates in 1992, weighed in a mere six days before the presidential
election with a $50,000 contribution to the Democrats' congressional
campaign committee."[13]
Frank Greven of Knight-Ridder News Service noted earlier this year that, in
the 1992 presidential race, "Andreas and his family and his companies gave a
combined total of nearly $1.4 million to Democratic and Republican party
efforts on behalf of Clinton and Bush. Among Democratic party givers,
Andreas and company ranked third, according to a tabulation by the Center
for Responsive Politics. Among Republican party givers, they ranked first.
Andreas-related contributions to individual candidates were also split in
November's mid-term elections: $461,500 to Democrats, $325,268 to
Republicans. Hundreds of thousands of dollars more, like the Red Cross
contribution, have flowed from the Andreas Foundation or the ADM Foundation
to charitable causes championed by key lawmakers like Dole."[14] Andreas is
even a dedicated caretaker of the image of dead politicians: he donated $1
million--the largest donation received so far--to the Richard Nixon Center
for Peace and Freedom.
As the Charlotte Observer's Frank Greven notes, Andreas has also been
generous to House Speaker Newt Gingrich. "Andreas' large and pre-victory
contribution to Gingrich was a reported $70,000 to GOPAC, the nonprofit
organization used by Gingrich since 1987 to pay for airline travel, mail
videotapes and speeches and generally build national visibility for
Republican candidates."[15] Gingrich, responding to widespread criticism,
distanced himself from GOPAC in May.
Andreas donated $100,000 to a single Democratic fundraising dinner in
1994.[16] In the first 18 months of the Clinton administration, as Peter
Stone of the National Journal reported, Andreas and ADM donated over
$300,000 "in soft money to Democratic groups--roughly six times what they
contributed to Republicans."[17]
Andreas has also reached into his pocket to help politicians in their
personal struggles. When Sen. Tom Harkin (D-Iowa) was sued for libel in 1986
because of a campaign statement, Andreas gave $10,000 to a legal defense
fund for Harkin and two aides.[18] When former president Jimmy Carter
decided to get out of the peanut business, Andreas was there with a check
for $1.2 million to help Carter promote Habitat for Humanity.[19]
Dwayne Andreas: Donor with a Cause
Perhaps not surprisingly, Andreas's penchant for funding politicians has
repeatedly run him afoul of the law. Mother Jones, for example, has
reported, "In a recently released deposition, Richard Nixon's secretary,
Rose Mary Woods, recalled a 1972 personal visit from Andreas in which he
delivered an unmarked envelope containing $100,000 in $100 bills. The cash
spent a year or so in a White House safe before Nixon, with the Watergate
investigation closing in around him, decided to give it back."[20] The Los
Angeles Times noted last year that "a $25,000 [Andreas] campaign
contribution in 1972 to Nixon fundraiser Kenneth Dahlberg turned him into
what he once described to the Washington Post as an 'innocent bystander' in
the Watergate scandal. That money ended up in the bank account of Watergate
burglar Bernard Barker, giving investigators the first link between the
Watergate break-in and the Nixon campaign committee."[21] Of course, most
"innocent bystanders" do not offer $25,000 in cash to people who can do them
big favors.
Senator and Vice President Hubert Humphrey was one of Andreas's first major
sweethearts in Washington. The Washington Post reported that "Andreas
introduced Humphrey to business leaders, paid for the military school
education of one of his children, and managed Humphrey's blind financial
trust."[22] Andreas was indicted by Watergate special prosecutor Archibald
Cox for making an illegal contribution of $100,000 to Humphrey's 1968
presidential campaign. He was acquitted of that charge by a Minnesota jury.
Between 1975 and 1977 Andreas gave $72,000 in ADM stock to the children of
David Gartner, then-senator Humphrey's chief of staff. After President
Carter named Gartner to the Commodity Futures Trading Commission in 1977,
news of the ADM windfall leaked out. Because ADM, like other major
agricultural and grain corporations, is heavily involved in commodity
futures trading, the handouts raised red flags throughout Washington. Vice
President Walter Mondale took the lead in pressuring Gartner to resign "on
the grounds that the ethical appearances surrounding that matter were such
that he could not operate without public questioning of his integrity and
the independence of his judgment."[23] Gartner, however, refused to
budge.[24]
More recently, Andreas and his wife, Dorothy, paid an $8,000 fine to the
Federal Election Commission in 1993 for exceeding legal limits of $25,000 a
year in contributions to political candidates.[25]
One amusing aspect of Andreas's bipartisan bankrolling is that both parties
realize he has no specific loyalty to them, but as long as he and his
cohorts are willing to write checks for millions, members of Congress and
presidents are happy to perpetuate billions in handouts for ADM. Regardless
of how much such a deal costs American taxpayers and consumers, it is still
profitable for politicians. ADM's success highlights the absurdity of the
interventionist state in which imaginative and highly skilled political
businessmen can get hundredfold returns on their handouts to politicians.
Although Andreas has pulled all the strings to ensure that ADM's own gravy
train continues, he is at least patriotic enough to believe that Congress
and the president must act to end the federal deficit. On January 26, 1993,
six days after Bill Clinton had taken the oath of office, Andreas bravely
called for shock therapy and $150 billion in new taxes. "I think it's time
for Americans to face up to the fact that we have to accept the taxes that
will keep our country solid and preserve our democracy."[26] Fiscal
sacrifices, apparently, must be made by the taxpayers but not by the
recipients of taxpayer largesse.
The basic problem here is, not that businessmen occasionally give large sums
of money to politicians, but that what they are trying to "buy" ought not to
be for sale in the first place. Mencken's "advanced auction of stolen goods"
has two guilty parties, the auctioneers and the bidders. And it is the
auction--not the existence of wealthy bidders--that cries out for attention.
Ethanol: The Great Agricultural "White Hope"
Nothing symbolizes ADM's political exploitation of Americans better than
ethanol. Ethanol has become a magic obeisance button for politicians. Simply
mention the word and politicians grovel like trained dogs, competing to heap
the most praise on ethanol and its well-connected producers. Regardless of
how uncompetitive the product may be, politicians have for years talked
about ethanol as if it were the agricultural equivalent of holy water.
Ethanol producers have received a de facto subsidy of nearly $10 billion
since 1980--yet they continue demanding more, more, more.
Andreas has long sought to frame the ethanol issue in histrionic terms.
Burning tax dollars to artificially jam ears of corn into gas tanks seems to
have near-cosmic significance. In 1988 Andreas hailed ADM's ethanol
operations as "a service to corn growers" and "a service to humanity."[27]
Andreas declared in 1992, "This is the Midwest vs. the Middle East. It's
corn farmers vs. the oil companies."[28] Ethanol producers view themselves,
not as self- serving corporations at the federal trough, but as veritable
Mother Theresas striving to save the world with clean air and renewable
resources.
Ethanol is produced by distilling corn into alcohol. Ethanol is simply grain
alcohol--"white lightning"--the same substance used to fortify MD 20/20 or
gin. Ethanol can be mixed--one part ethanol to nine parts gasoline--to make
gasohol. Tom Donlan, editorial page editor of Barron's, observed last year
that the ethanol controversy is simply one more episode in the dispute over
corn whiskey that has been going on since the birth of the American
Republic: "200 proof corn liquor is still the same stuff for which western
Pennsylvania farmers fought the Whiskey Rebellion of 1792. In this more
complicated age, a new Whiskey Rebellion must be fought by aggrieved
taxpayers" against wasteful ethanol subsidies.[29]
Although proponents of ethanol argue that such fuel is better for the
environment and helps reduce America's reliance on foreign oil (while not at
all incidentally providing a new market for corn farmers), the fuel itself
is inferior to straight gasoline and the collateral benefits promised by
supporters are fewer than meet the eye.
Ethanol 101
Ethanol producers receive an array of subsidies from federal and state
governments. The largest subsidy is the exemption from federal fuel taxes.
Gasoline companies receive a tax break of 5.4 cents for each gallon of
gasohol they sell. Because gasohol is usually sold in a mixture of nine
parts gasoline to one part ethanol, each gallon of ethanol receives the
equivalent of a 54 cent break from the federal tax code. While it is often
misleading to speak of tax deductions and credits as the equivalent of a
direct federal subsidy, it is certainly the case that, without the massive
distortion of the tax code, there would be no ethanol industry, given the
large cost differential in the production of ethanol and traditional
gasoline.
Ethanol subsidies reduce federal revenues by $770 million a year,[30] losses
that the Congressional Research Service estimates could rise to $1 billion
by the year 2000.[31] Many state governments also heavily subsidize the
production or use of ethanol.[32]
Federal policy is not designed to simply "level the playing field," or even
to tilt the playing field in ethanol's favor. Instead, the program amounts
to nothing less than buying the entire playing field and giving the title
directly to ethanol producers. Ethanol, as far as it is used for gasoline,
is a political concoction--a product that exists and is used solely because
of the interference of politicians with the workings of the marketplace.
Ethanol producers must heavily bankroll politicians because their product
would otherwise vanish overnight from the nation's gas pumps.
As early as 1979 the Washington Post reported, "The gasohol lobby says the
$18.80 a barrel in available subsidies--compared with the $16 a barrel cost
for foreign oil-- is not enough."[33] The tax exemption or credit for
ethanol production has consistently exceeded the entire value of the
gasoline that ethanol displaces. The 54-cent-per-gallon tax deduction or
credit is the equivalent of a subsidy of $23 per barrel of oil displaced at
a time when oil costs only about $18 a barrel.[34]
In 1986 the U.S. Department of Agriculture estimated the average cost of
producing ethanol at $l.60 a gallon, more than double the then wholesale
gasoline price of 60 cents a gallon (the current wholesale price is roughly
55 cents).
The ethanol debate is unlike the typical economic argument for an infant
industry to which the government provides small subsidies or trade
protection for a short period to help the new industry get on its feet.
Instead, a perpetual, massive subsidy has been maintained in order to keep
an existing industry from sinking under the weight of its own helpless
uncompetitiveness. Rather than an infant industry, ethanol is an industry
that, in economic terms, was born senile and has since gotten fat.
Ethanol has done poorly on its own largely because it is a relatively lousy
fuel. An Agriculture Department report observed,
Each gallon of ethanol contains about two-thirds as much energy as does
gasoline, resulting in reduced fuel economy. One would expect vehicles using
gasohol to show about a 3.3 percent reduction in miles per gallon since
ethanol constitutes 10 percent of the ethanol-gasoline blend. In a recent
report on the performance of alcohol-gasoine blends, the DOE concluded that
gasohol-fueled vehicles averaged 4.7 percent fewer miles per gallon than
gasoline-fueled vehicles in automobile fleets.[35]
The comparatively feeble fuel value of ethanol is a large part of the reason
why the fuel is so discounted from its cost of production. The USDA report
further noted,
Fuel ethanol sold for about $0.90 per gallon in July 1986. This price does
not reflect its free market value because gasoline blenders qualify for
Federal and State ethanol subsidies. After deducting the value of the
subsidies ($0.60 per gallon for the Federal subsidy and some $0.30- $0.40
average for State subsidies) the net cost of ethanol to blenders is about
zero. This indicates that ethanol producers could not survive without the
subsidies, and suggests that most will need even larger subsidies to stay in
business unless petroleum prices increase sharply. Net of applicable
subsidies, ethanol is selling for about $0.30 per gallon less than the
wholesale price of gasoline.[36]
Yet, while ethanol was selling (net of subsidies) for half the price of
gasoline, it cost more than twice as much to produce as gasoline. Obviously,
government intervention is necessary.
The Politics of Ethanol
Ethanol has long been the "great white hope" of the farm lobby. Since the
era of the Civil War, farm lobbyists have called for government subsidies to
convert crop surpluses into fuels and thereby make the surpluses disappear
and drive up crop prices forever. However, the ploy has not worked out very
well. The Congressional Research Service, in an analysis of federal
subsidies and tax incentives for ethanol, concluded in an October 1994
report,
For four reasons, the alcohol fuels tax incentives are economically less
efficient than alternative energy tax policies:
(1) They provide subsidies to alcohol fuel producers when economic
principles suggest that no subsidy, and maybe even a tax, should be imposed;
(2) They fail to fully tax users of alcohol fuels in transportation on a
par with users of gasoline and commensurate with the benefits received from
the system of national highways;
(3) The tax component that corrects for the negative environmental
externalities from the combustion and evaporation of alcohol of vehicles is
the same as gasoline when theory and evidence suggests that it be less than
for gasoline;
(4) As a policy to stimulate alternative fuels, targeting alcohol
subsidizes more expensive fuel when economic theory suggests that the market
will determine the least expensive fuels to use.[37]
The rationale for ethanol subsidies has continually changed to meet shifting
political winds. In the late 1970s ethanol was championed as a way to
achieve energy independence. In the early 1980s ethanol was portrayed as
salvation for struggling corn farmers. From the mid and late 1980s onward,
ethanol has been justified as saving the environment. However, none of those
claims can withstand serious examination.
Using ethanol for vehicle fuel is hardly a new practice. In fact, ethanol
has been used for fuel for more than 100 years. A USDA report noted, "The
use of alcohol as an automobile fuel dates back to the first modern internal
combustion engine, the Otto Cycle (1876), which used alcohol as well as
gasoline. Henry Ford designed the Model T (1908) to use alcohol, gasoline,
or any mixture of them."[38] State and federal governments have long striven
to rig the economic playing field to benefit ethanol producers.
By the early 1970s the use of ethanol for fuel had almost completely
disappeared in the United States. But, after President Nixon took the United
States off the gold standard and slashed the value of the dollar, the
Organization of Petroleum Exporting Countries was formed and launched its
brief embargo of oil sales to the United States. Ethanol then found a new
lease on life, as midwestern states rushed to create tax incentives and loan
programs for ethanol production. In 1977 Congress passed an act directing
the secretary of agriculture to invest $60 million in guaranteed loans for
ethanol distilleries.
When OPEC restricted oil production again in 1978--and the Carter
administration tightened oil and gasoline rationing, creating artificial
panic--Andreas arrived at the White House with a salvation scheme. Why not
increase subsidies for ethanol? According to Frank Greven, who is working on
a book on Andreas and ADM, "During the 1978 Persian Gulf oil crisis, he
convinced Carter that using ADM's ethanol as a lead-free octane booster in
gasoline would promote energy independence and cleaner air."[39] As part of
its grandiose solution to the energy crisis--which the president proclaimed
to be the moral equivalent of war--the Carter administration drove through
Congress a plan to exempt gasoline with 10 percent ethanol from the
4-cents-a-gallon federal fuel excise tax.
Even with the extremely generous federal tax credits for ethanol use, the
alternative fuel still did not take off. Politicians decided that massively
subsidizing ethanol's use was not sufficient; they must also massively
subsidize its production.
Not all were fooled by the near-religious tone of the pro-ethanol campaign
in the late 1970s. Syndicated columnist Jane Bryant Quinn observed at the
time, "The recipe for successful politics shows similar proportions: nine
parts of regional pandering, overlaid with one part national purpose. The
explosive mixture of excess corn in an election year ignited the gasohol
program and will keep it running." Quinn related widespread and accurate
perceptions of the defects of gasohol. "Vapor lock (boiling in the fuel
pump) is more prevalent with gasohol. It's more explosive than gasoline. The
first time you put it in your tank it might loosen some rust and clog some
lines. The EPA says that you'll get about 3 percent fewer miles per gallon
with gasohol. If you don't correct for the lower mileage by driving a more
fuel-efficient car (or driving less), you'll fritter away the oil savings by
tanking up more often."[40]
On the eve of the 1980 election, the Carter administration announced a
deluge of loans to companies to build processing plants to make ethanol. On
October 9, 1980, Secretary of Agriculture Bob Bergland announced $341
million in new loans to finance construction of gasohol plants.[41] On
January 27, 1981, the new Reagan administration rescinded all the loans
after its inspector general discovered that the Carter administration had
violated official procedures and federal law in awarding many of the grants.
Testimony by private investigators at a congressional hearing in February
1981 revealed that some of the loans were "reviewed in a matter of days,
some in a matter of hours." Bruce Yellen of the Chicago-based Better
Government Association told Congress, "Two loan guarantees were approved for
individuals who had contributed to the Democratic National Committee or the
Carter campaign. And 10 of the 15 guarantees went to states that were, at
the time, considered critical to the president's re-election bid. These
elements suggested that this last-minute rush was politically inspired, and
our interviews with agency officials substantiated that point." He said that
one official said that an October 10 announcement of the guarantees was
timed as "a public relations ploy for political gain."[42]
Although the Reagan administration initially blocked the loans, the farm
lobby prevailed and the new administration added its seal of approval to
ethanol. Nevertheless, 9 of the 12 recipients of the loans the Farmers Home
Administration made for ethanol plants went bankrupt.
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."[43] 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.
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."[44] 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."[45] One company, New Energy Corporation, received almost $5 million
worth of free corn and then went bankrupt a few months later.
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