Why is Congress subsidizing foreign rum producers?

Exclusive Vacation Rentals Starting at $600/night, Book Now!

Earlier this week, the federal government reached the legal limits of its spending authority.

Congressman Paul Ryan and the House Republicans are stressing the point to the Obama administration that government spending must be cut. One of countless programs that can be cut is a wasteful corporate welfare program that will cost U.S. taxpayers close to $20 billion over the next ten years.

Under the rum cover-over program, the federal government imposes a $13.50 excise tax on each gallon of rum produced in a U.S. territory and sold in the U.S. The federal government returns more than 98% of the revenue it collects from this excise tax to rum-producing territories (like the U.S. Virgin Islands) as economic aid — and there are virtually no strings attached to how that money is spent. Recently, this program has become an even more outrageous corporate welfare scheme designed to line the pockets of foreign companies at the expense of U.S. taxpayers.

Earlier this year, the Obama administration confirmed a new loophole in the program that not only increases the program’s cost from $700 million a year to nearly $2 billion a year but also puts in jeopardy the jobs and competitiveness of corn growers and distilleries throughout the Midwest.