With the whole industry enthused about the Farm Bill due to its allocation for produce programs, it is worthwhile to note that the President may veto the bill as a budget-buster. It also seems to be filled with a lot of questionable items that are just starting to come to light.
The Pundit has long held the editors of The Wall Street Journal editorial page in high esteem, an esteem only enhanced by their decision to publish the Pundit’s recent article on Editorial Independence.
And the WSJ editorial page editors recently ferreted out this tidbit from the Farm Bill:
DAVIS-BACON ON THE FARM
The overstuffed farm bill now waddling through Congress — toward a possible veto by President Bush — has attracted so much waste that everyone with a genuine interest in agriculture is feeling disheartened. Yet the bill has earned unlikely support from the labor union lobby.
Hmmm. Could this be at all related to a new and unprecedented Davis-Bacon requirement for ethanol construction? Davis-Bacon is the Depression-era holdover that forces federal construction contracts to pay a “prevailing union wage” — determined by the Department of Labor — rather than a market wage. This anachronism was attached to the bill last week by House Democrats; a staffer tells us he’s never before seen Davis-Bacon in a farm bill.
The bill is flush with subsidies to produce ethanol, the corn-based alternative fuel that still can’t compete on a free-market basis. More ethanol requires more biorefineries. Democrats plan to mandate Davis-Bacon wages for workers building those refineries. With nonunion builders unable to compete on price, each new refinery could cost as much as 35% more. In many rural areas with little or no union activity, this artificially high labor cost could even make the prospect of building an ethanol plant a net loss.
Because ethanol production would be significantly more expensive under Davis-Bacon — and because the government requires ethanol in gasoline — ordinary Americans would foot the bill for this union handout in the form of higher prices at the gas pump. That veto is looking more attractive by the moment.
Corn based ethanol itself seems to be a loser. Why we should subsidize it is unclear. But if we are going to subsidize it, why should we give a sop to the labor unions designed, specifically, to increase the cost of ethanol?
One wonders if it will be effectual to ask produce executives to urge their representatives to pass a Farm Bill that contains this kind of stuff?