• Everything You Need to Know About the Milk Cliff

    Ugh, why are we talking about dairy products instead of the "fiscal cliff?"

    Because the fiscal cliff is bullshit. The panic surrounding it has been concocted by media outlets that like countdown clocks a lot more than they like explaining policy. If Congress fails to extend the current tax rates and spending levels before midnight tonight, they can always amend the tax code in January, which means your taxes will go up for two weeks. We will all find a way to get by. Meanwhile, there's a chance you won't be able to afford a milkshake in January, so let's talk about what matters.

    OK, so what happens if Congress doesn't resolve this milk crisis?

    Milk now sells for an average $3.53 per gallon nationwide. According to Agriculture Secretary Tom Vilsack, prices will rise to $7 a gallon if Congress fails to extend the current milk subsidy program.

    Does this mean the "real" market price of milk is $7 a gallon?

    Haha, no. Prices will skyrocket because the expiration of the current farm bill will automatically activate a farm subsidy drawn up in 1949. Under that plan, the government will be forced to buy up milk at exorbitant prices, driving it off grocery store shelves. Congress left the 1949 law on the books in order to force itself to keep passing farm bills that will supersede the silly '49 law.

    That sounds a lot like the fiscal cliff scenario.

    Exactly! Congress hoped that the threat of harsh and indiscriminate spending cuts would force itself to come to a "grand bargain" on debt reduction. Similarly, Congress hoped that the poison pill of the 1949 farm bill would lead to more sensible subsidy bills being passed. Congress tries these pre-commitment devices all the time. They almost never work, because members of Congress are rarely personally affected by these commitments.

    Imagine you want to stop cursing. But instead of promising to deposit a dollar in a swear jar every time you say a bad word, you instead promise to steal a dollar from your grandma's purse, hoping that the degeneracy of stealing from grandma will keep you from swearing. This is how Congress makes policy.

    So what are the chances of passing a farm bill to avert the milk cliff?

    Luckily, there's been much more progress on this than the fiscal cliff. There are three bills being talked about. Plan A would extend the expired 2008 farm bill  for one year. Plan B would provide for a farm-bill extension through January and a Plan C would just extend dairy programs through January.There's no Plan (Vitamin) D because this issue has already inspired enough puns.

    Right now, it's likely that the one-year extension will clear the House of Representatives today and be signed by President Obama before the end of the week.

    Why can't Congress just repeal the 1949 law and leave milk un-subsidized?

    Dude, this is Congress we're talking about.

    Photo by Justin Sullivan/Getty Images News/Getty Images


    Tags: Agriculture, Fiscal Cliff, Food, Tom Vilsack

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