A letter to the editor in today’s Washington Post (scroll down to the second letter on this page) infuriated me beyond words. People have a right to offer their opinion, however ill-informed, in a democracy. Nobody, however, has a right to basically lie outright. Yet James L. Henry, chairman of USA Maritime managed to get a letter to the editor published that did just that.
Henry was responding to the column “5 Myths About Foreign Aid” in which the author, John Norris, the executive director of the sustainable security program at the Center for American Progress quite rightly noted:
Congress mandates that 75 percent of all U.S. international food aid be shipped aboard U.S. flagged vessels — ships registered in the United States. A study by several researchers at Cornell University concluded that this subsidy of elite U.S. shipping companies cost American taxpayers $140 million in unnecessary transportation costs during 2006 alone.
The Government Accountability Office noted that between 2006 and 2008, U.S. food aid funding increased by nearly 53 percent, but the amount of food delivered actually decreased by 5 percent. Why? Because our food aid policies are swayed by an agribusiness lobby that stresses buying American, not buying cheaply.
Both of these points are well-documented. But Henry, chair of the interest group that protects the US shipping industry from competition in the delivery of food aid, really doesn’t want you to know this. Instead, he argues:
The reality is that cargo preference adds no additional cost to foreign aid programs and should be credited with sustaining an essential national defense sealift capability.
Cargo preference does not divert one dollar away from food aid programs. To the extent that cargo preference increases costs, the difference has been reimbursed by the Transportation Department. For example, reimbursements resulted in a $128 million net increase in available food aid funding in 2006. The Transportation Department reimburses these costs because a reliable U.S.-flag commercial fleet provides essential sealift capacity in times of war or national emergencies.
The language here is very careful – technically, he is not lying. But by no means is his explanation meant to help the reader understand what is going on. In arguing that “cargo preference does not divert one dollar away from food aid programs,” he fails to point out that the cost of cargo preference is built into existing budgets . . . it is part of existing food aid programs, and therefore technically does not divert money from them. But this, of course, is not what Norris meant in his “5 myths” piece, nor is it what most people care about. The simple fact of the matter is that more of the food aid budget could go to procuring food if the cargo preference requirement was dropped. Period.
Second, if we read these two paragraphs carefully, we find that Henry is engaged in one of the more carefully phrased but entertainingly contradictory bits of writing I have ever seen. Pay attention, now: in the first paragraph, he argues that “cargo preference adds no additional cost to foreign aid programs.” In the second, he notes “To the extent that cargo preference increases costs, the difference has been reimbursed by the Transportation Department.” OK, first, let’s note that he just admitted that cargo preference does increase costs. Second, he is technically correct – the burden of those costs is shifted outside foreign aid programs . . . to the Transportation Department. Which is funded by the same tax dollars as foreign aid. Basically, he is arguing that their taxpayer-funded subsidy/reimbursement should not be seen as having any impact on taxpayer-funded foreign relief operations. Even though these are the same tax dollars, in the end.
Technically all true. Clearly intended to deceive. So, WaPo, how do you feel about publishing letters from poverty/disaster profiteers?
Lets keep following the logic.
I think you agreed the food aid costs are converted by reimbursement from the transportation department.
You should then also agree that cargo preference does not cost the food aid program anything extra.
Your real objection seems to be that the reimbursement is still coming from taxpayer dollars.
But now we come full circle to Mr, Henry’s comment that very large amounts of US Tax dollars are saved through the use of the US Flag merchant service as opposed to having money spent to have the Navy / Military provide the same service.
The end result is a huge saving to the US taxpayers through the use and support of a commercial privately owned US Flag merchant service.
And so while US tax money is the source of the US Flag reimbursement program, it is a lot less money than would have to be drawn down if there was no US Flag merchant service and the military was to left on their own.
Mr. Henry gets my vote, by a nautical mile.
An ex merchant mariner
If the US military was the only way to deliver aid, you would have a point. However, when Mr. Henry sets up his comparison between the US flagged merchant marine and the military, he is creating the false impression that the military is the only other option for aid delivery, and it is not – there are plenty of commercial shippers out there. And while I have absolutely nothing against the merchant marine in principle, there is no reason why, in an emergency situation, we should not be using non-US flagged vessels. The flag of convenience system is a mess, and needs reform – but holding aid hostage to address what amounts to a shipping and trade issue is unconscionable.
As I said in the post, the claim that cargo preference does not cost the food aid programs anything extra is technically true, but beside the point – if we could realize the more than $100 million in transportation savings, we would be able to deliver either more food aid, or more programs promoting food security that, in the long run, would reduce the need for food aid. And there does not seem to be any doubt that cargo preference does cost extra – there are plenty of studies out there (including academic and the Government Accountability Office) that demonstrate that limiting our shipping of aid to US flag costs more than just using the open shipping market. Actually, that point does not seem to be in doubt, as Mr. Henry effectively admits this to be the case in his letter. So, I stand by my post – Henry’s argument is technically true, but not to the point.
Ed, you are stunningly confused about the role of cargo preference. There is no argument by Mr. Henry or otherwise that military vessels should deliver food. The point is that (a) using U.S.-flag vessels costs the food aid programs nothing and, indeed, more often results in MORE funding being available to feed the hungry due to the DOT/MARAD reimbursement and (b) the use of these taxpayer funds provides sealift capability using the public-private partnershp with the US Merchant Marine, saving over $1 billion annually in operational costs and $52 billion in infrastructure costs that the Department of Defense would have to expend to replicate these sealift assets.
The Cornell study referenced is completely wrong. He confuses the role of the maritime security program, the policy behind the Merchant Marine Act, ignores the role of the Voluntary Intermodal Sealift Agreement, and relies upon completely erroneous data that has been refuted by U.S. Maritime Administration data.
I submit that, going forward, you would do better to rely more on facts and less upon a baseless distrust of the informed.
Thanks for the comment. I’m not sure how you can say that Mr. Henry is not arguing that military vessels are the alternative to cargo preference – it is the only cost comparison he puts up. Indeed, you seem to be making the same argument. I don’t doubt that using the military for this sort of sealift would be costly, but nobody is arguing for that. I understand the purpose of the partnership, but if the main benefit of these taxpayer funds is to save money for DoD, then let the subsidy come out of DoD’s budget. I’d also like to hear what you think of the report on the ineffectiveness of this program cited in the comment below.
Second, I take issue with your characterization of my comments as baseless and driven by a distrust of the informed. I happen to work at USAID/DCHA, the Bureau that houses Food for Peace – the food aid program that uses this sealift capability. Indeed, it seems you live in a glass house, given your clear lack of understanding of how federal budgets are really built. OMB reviews all submitted budgets, and cross rectifies requests . . . so if the DoT is listing several hundreds of millions of dollars in subsidy to support cargo preference for a Food for Peace program, OMB will most certainly look for ways to recover that cost from Food for Peace or related aspects of the Foreign Aid budget. Second, if reimbursements are partial (delayed doesn’t matter, as those can be shaken out over several budgets) there clearly is a cost to food aid programs. The idea that this program costs food aid programs nothing is simply incorrect and misinformed.
In sum, I submit that I actually know a lot more about this than you think I do, and that while you clearly understand things from the marine transport side of the equation I am a lot better positioned to comment on its impacts on food aid delivery than you are.
It’s worse than this. Actually, the transportation department only reimburses part of the additional costs due to cargo preference requirements and often years later. So the costs are to taxpayer, but also, indeed, to the food aid program itself.
The cargo preference requirement requires food aid to be spent on decrepit and uncompetitive ships, since foreign-flagged shippers can’t/don’t bid.
And the cargo preference requirement does a miserable and ineffective job maintaining \critical sea-lift capacity\. 70 % of the ships maintained this way are not militarily useful – as is documented very effectively in the cornell paper.
The cornell paper can be found here: http://dyson.cornell.edu/faculty_sites/cbb2/Papers/Cargo Preference 29 June 2010.pdf
Even if it did a good job, it’s definitionall a very ineffecient way to achieve that objective, costing taxpayers a lot more than doing the job directly.
We’ve got to tackle this stupid special interest subsidy soon.
Gwain says it’s time “to tackle this stupid special interest subsidy soon.” Very true. But what really needs to be re-examined fundamentally is the entire construct of “Food Aid” as defined in the Farm Bill and established in a very different era of the 1950s and 1960s, through perhaps as late as the 1980s, when we had major food surpluses and a lot more structural poverty and food deficits. Yes, food aid has saved many lives, during the Ethiopian famine of the 1980s, for example. And emergency food aid probably still makes sense in bona fide humanitarian crises (even though many are man-induced). But the very idea of food aid makes little economic sense, especially anymore, when there are few or no grain surpluses available in the US, food prices are skyrocketing, and local and regional procurement of food supplies is increasingly possible. Why should we continue to hugely expensive supply pipelines? Certainly there are many vested interests along that supply chain, only one of them the U.S. flagged merchant marine.
Then there is the entire perverse impact of food aid in creating dependency, undermining self-help incentives, and distoring private supplies and markets by completely subsidized commodities. I recommend the still very relevant book Food Aid After Fifty Years by Chris Barrett and Dan Maxwell.