Subsidies: Beneficial or Detrimental?

Since 1979, the topic of corn subsidies has been a controversial one. According to the following chart, the United States government has given more money to corn subsidies than to any other program in the US since 1995. By 2009, US corn subsidies had totaled to a staggering $73,775,277,671, beating out any other program by at least double. Based on one article that I read, "America's corn farmers have been benefitting from annual federal subsidies of around $6 billion in recent years, all in the name of ethanol used as an additive for the nation's vehicles." To put it simply, our nation's corn farmers are paid annual subsidies to produce mass amounts of corn crop, and are guaranteed to make a profit, even if they produce too much corn, or the market price of the corn is too low to make a profit on its own.

But what is a subsidy?

 A subsidy is "a benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction." (Investopedia.com) Subsidies were first introduced to corn farmers following the ending World War II had ended. During the war, farmers in the US produced mass amounts of food for the entire Allied force. However, once the war ended, there was a surplus of food, causing prices of many crops, including corn, to go down. This hurt the farmers tremendously, so Congress and the President decided to subsidize several crops, including corn, which was subsidized the heaviest. Because of all the farm subsidies, farmers were forced to raise only a single crop, corn for instance. With only one crop to worry about, farmers mass produced, causing corn prices to decline even more, which the prompted the government to subsidize even more, thus creating an endless cycle, which has caused a lot of controversy in the US.

 Just recently, however, the US government ended a three-decade old policy on corn subsidies. The policy was originally put into place during Jimmy Carter's presidency in an effort to increase the use of natural fuels such as corn ethanol and decrease the dependence on the Middle East for oil. However, it has been recently established that corn ethanol is not as environmentally friendly as we think it is. According to Michal Rosenoer, corn ethanol " leads to more climate pollution than conventional gasoline, and it causes deforestation as well as agricultural runoff that pollutes our water." This information pushed Congress to change the policy on corn subsides to be more moderate towards farmers.

 Is it a good idea for the government to decrease corn subsidies? How will this effect the price of corn? Will it help or hurt the economy?