Could The Fiscal Cliff Milk Tax Payers For $8 A Gallon Milk?


If an agreement on the fiscal cliff is not met, reports are that we could see an increase in the cost of milk anywhere between $6 and $8 per gallon.

So why is this? Apparently a subsidy that is nearly 63 years old will kick in and the Agriculture Department will be required to buy milk at inflated prices.

The Washington Post reports on the "Milk Cliff,"

Come Dec. 31, Washington’s inaction could push the country’s milk prices to as much as $6 to $8 per gallon unless Congress passes a farm bill renewing federal support for agriculture programs.

Here’s how that would happen: Without legislative action in the next five days, the government will have to revert to a 1949 dairy price subsidy that requires the Agriculture Department to buy milk at inflated prices. Much like the current fiscal cliff, the law was left on the books “as a poison pill to get Congress to pass a farm bill by scaring lawmakers with the prospect of higher support prices for milk and other agriculture products,” as Vincent Smith, a Montana State University professor, told the New York Times.

The Farm Bill isn’t technically part of the fiscal cliff. Speaker John A. Boehner (R-Ohio.) has resisted the call by Agriculture Secretary Tom Vilsack (D) to incorporate it into the budget negotiations — to avoid complicating the budget talks and losing GOP votes, a Boehner aide told Politico last week. Legislators from rural districts are also worried that crop subsidies could be a tempting target in the fiscal cliff negotiations, so they’ve been trying to push Congress toward a separate resolution, to little avail. Although producers would temporarily benefit from the hike in milk prices, it would hurt processors and consumers, and the dairy industry would prefer a long-term resolution as well.

The Post's editorial section carried these comments:

The conventional wisdom is that this pending mess is yet another symptom of congressional gridlock — for which dairy policy itself is blameless. The Democratic-controlled Senate has passed a farm bill, and the Republican-controlled House Agriculture Committee has passed one, too, though it has not yet come to the floor. Both versions would replace existing milk subsidies with a new subsidized insurance program to ensure producer profits even when prices are low. The impasse over the farm bill relates to other provisions and to cost — currently $969 billion over 10 years in the Senate version, which is $12 billion more than what is in the House version, which many Republicans want to cut even more.

Supporters of the Senate bill argue that it would reform the most egregious direct-payment subsidies for crop farmers, thus saving at least $23 billion over what would have been spent absent the changes. This is a compelling argument, if you accept the warped logic of subsidized agriculture. The supposed savings would come from replacing direct payments with a lush “crop insurance” program that some economists believe could end up costing as much or more as the old system under certain circumstances.

In other words, the true cause of the “milk cliff” is Congress’s endless attempts to manipulate markets in favor of the various farm lobbies. Like other commodity programs, dairy supports are so complex that even many farmers can’t comprehend them without accountants and lawyers. But their objective is simple enough: to protect dairy farmers from the market vicissitudes with which every other business in America must contend, all in the name of a “secure” supply of milk.

Our family simply goes to the farmer directly for fresh raw milk. I understand the government has been incredibly intrusive in other states, even staking out the Amish "milk terrorists" for a year. I don't know if we will see an increase or not, but we pay just $4 a gallon currently and it lasts longer than the FDA approved milk and is better for you.

I do have to constantly wonder why it is that the federal government wants to subsidize business and industry and then tax the owners out the wazoo when they die.

Charles Krauthammer echoed my sentiments on the issue. He said, "I do think if we went over the milk cliff it would actually be a good idea. [If] people actually saw the milk price double, it would be less abstract than watching a debt clock. They would finally understand that we have the insane laws, that acquire barnacles over the decades. And the farm laws are the worst. They are all kind of pressure, special interest favors, pay offs which make no economic sense. I'd like to wipe them out and start all over again, and it would be good if the law expired. People would actually be awakened to how insane our system is and how much we really need tax reform. It wouldn't be an abstraction, it would be real."

The bottom line here is that the federal government is using public funds to protect producers of a particular commodity. Like anything else we are dealing with, including the fiscal cliff, consumers are the ones that will pay the price for this. However, if it woke enough people up to demand that Congress get its hands out of things like this, it would be worth it. My guess is they would simply ignore the public outcry, much like they do today.

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  • christine

    I guess that means milk in Hawaii will be $15 a gallon. It's already $7 there now.

  • http://www.newsandopinions.net/ Bill Stanley

    Repeal the milk price-support laws. Get farming off welfare. newsandopinions dot net

  • J J

    It isn't the 'cliff' that will cause this - it is the idiots in Washington who sit up there 24/7 doing nothing until they absolutely have to. It is caused by Washington not approaching and dealing with out of date laws and policies. It is caused by Washington interfering where it doesn't belong basically to justify its existence. If milk goes to $8 a gallon, many other food items will follow. We will all lose weight because we won't be able to afford to eat. Oh, but, Washington will have exempted themselves from this issue like they do so many other issues so they will be the only healthy people in the country. Or a bailout will soon be on the way; food stamps for all!!!

  • http://www.facebook.com/ben.marty.7 Ben Marty

    Has a child of a dairy farmer, you all will hate me. The price of milk that you buy at the store has gone up 200% over the last 30-40 years. The amount that the farmer is paid has only gone up some 40-50% over the same time frame. If the government got their fingers out of the pie and free market set the price, milk would still be the same cost but farmers would not need the subsides the government gives them. Also, while, yes pasteurization did help the health of people, I want to be able to CHOOSE for myself whether or not I want to drink unpasteurized milk. Nothing better then getting it straight from the tank before it goes to get pasteurized. It isn't really about health anymore, its about control. I want that choice.

  • Kingscairn

    Hate to mention it, knowing all the parents will, if not already, be up in arms big time.
    But, we shouldn't be subsidizing farmers for ethanol, grains or milk - especially now.
    Not to worry tho because I fear no one will get anything pretty soon !

  • spin43

    This whole thing is going to collapse in the Welfare States of America. Will the military side with tyranny? What say you?

  • notosharia

    This is because of corn being used for ethanol --be ready to use GMO's inserted into corn,soy etc. to mess up your system -Europe bans GMOs but not our country -controlled by the selfish -arrogant undermining Congress led by an illegal-dictator.

  • http://www.facebook.com/gene.r.swank Gene R Swank

    It will last untill the American Patriots remove the current administration and form a new one using our constitution but with term limits for all government employees and cutting all salaries in half down to 50k a year. That will fix our country and our government!!!!!!

  • HistoricalRecord

    I'm sorry, but you raw milk people are a public health threat. Did Louis Pasteur boil milk to make corporations rich? No, they pasteurized milk because it contains pathogens, and most importantly tuberculosis. Raw milk was the main vector for TB back in the day, back when that disease was the number 1 killer. I'm so glad we have ignorant people who disregard history when its convenient, and forget REAL public health risks because they are so paranoid they believe someone is poisoning their food.

    When you nut jobs start spreading resistant strains of TB throughout society, and hundreds of thousands die every year again, the finger can only be put back on you. This whole raw food fad is a big lie, you are angry about an imaginary food threat, yet you can't see your actions against this paranoid delusion are putting real people at far greater, real risks.

    • notosharia

      The GMO factor is far worse than raw milk. The floride factor is also far worse---
      The illegals who bring in diseases (bio-terrorism ) brought over the borders that are unguarded is also far worse than raw milk. Yes CA is kept ignorant because of elected officials who reap the rewards . There is far more TB brought over by illegals than any from raw milk. The GMOs factor on salmon and other fish we eat are far more dangerous . Why didn't you go into this area?
      We have a brain-dead Governor who is continuing to ruin the State of CA -The effects of his bad-ideas will continue to destroy the state. ( He did it once already)
      He was the whore who bought into the COMMON CORE in Ed. for this state which will give kids a nazi-format in history and other rewritten studies-as well as giving the islam0s another "nose under the tent" as they abridge our constitution and laws. LIBERALISM IS A MENTAL DISORDER ---DEFEAT JIHAD LIBERALISM!

      t

  • Wolf-Talker-1

    Are all Staples to become luxury items?

  • oldcoyote

    It's going to be cheaper to eat money then food.

  • Gman

    Funny how a mere mention of some kind of financial or government crisis then the price of everything goes up or there will be a shortage. If milk prices go to $8 a gallon, I would think people would not buy it. That goes on for a couple of days or so, I bet those prices come down real quick. But that would be too much for the American people to do. The same would happen for gasoline.

    • Plaintruth

      What you missed is that it matters not if people actually buy the milk. The government would be paying farmers anyway. And since the government gets its money from YOU, that means you pay for the milk regardless if you drink it or not. Same for other things such as peanuts. And Chevy's. We all lose when the government picks winers and losers. Every time in the long run.

  • BlueViolets

    Not just milk folks but you best get that bushel basket to carry the money you'll need for a loaf of bread. It's all going along smoothly just as our president and his handlers planned.

  • Seymour Kleerley

    I thought Righties loved the "free market". Why do they want Gov. intervention now?

    • HIstoricalrecord

      The government intervention IS the problem. The price increase is a result of the government programs buying up milk at the higher prices, which sets the universal market price. If the government did not set the price floor, there wouldn't be this problem in the first place. The government in this case is only changing up the price floor with a subsidy. So, this entire problem is government intervention.

    • Seymour Kleerley

      I always thought that somehow the Government assured that milk would never be too expensive. Every child needs it. I'll have to learn more about . Thanks.

    • Wholetruth

      Hey Seymour. Typical reply from a "Lefty". We don't want any government intrusion, That is the point. Let the current rules expire. And abolish the old rules which set the arbitrary pricing. You should actually READ and understand the entire article completely before you comment on it. Don't just pick out a small part for your "Leftist" commentary. Makes you look silly when you ignore parts of the text such as "I’d like to wipe them out and start all over again..."

    • Seymour Kleerley

      You're right on.

  • fliteking

    So much for liberals claim of being concerned about childrens health.

    • jregsr9304

      the only thing they care about is getting that extra green to line their pockets with not kids or the health of our kids.

  • deseartu1

    Moo or Boo to Obozo! What else is knew! I don't drink milk I am more concerned about my ice cream, butter, cheese, yogurts, philli cream cheese, sour cream, cottage cheese, it is all from milk so what will this be priced at? Next let's get to baked goods, they all need milk? Mashed potatoes need milk, coffee cream? You voted for the COW so now live with his huge CASH COW PRICES! Mooooo!