The New Republic, June 11, 2001:23

Jeffords, Dairy Socialist
Spilled Milk

Jonathan Chait

     When Jim Jeffords crossed President Bush in April by voting to reduce the size of the tax cut, angry Republicans threatened that they would “get” him – perhaps by dismantling the Northeast Interstate Dairy Compact, a subsidy dear to Vermont dairy farmers.  Now that Jeffords has left the Republican Party, partly due to such bullying, some conservatives are determined to make good on their threat, “I was walking through the Capitol that day [that Jeffords defected],” recalls GOP activist Grover Norquist, “and staffers were saying, ‘Dairy Compact—dead.’”
     It would seem the kind of political dispute in which you can determine the proper position merely by contrasting the parties involved.  On one side, you have vengeful White House operatives employing Mafioso tactics; on the other, a lone, plainspoken New England moderate standing up for beleaguered family farmers.  But that superficial impression is misleading.  Jeffords’s Dairy Compact is, in fact, an indefensible boondoggle.  In this case, the Bushies’ penchant for revenge neatly coincides with the public interest.
     America’s dairy industry operates under a system that can best be described as socialism.  Rather than allow supply and demand to set prices, milk processors have prices set by the federal government.  These prices, moreover, vary radically from region to region:  Dairy farmers from those parts of the country most suited to dairy farming receive the lowest payments for their milk, and those from the least-efficient regions receive the highest.  The system, by design, punishes efficient farmers and rewards inefficient ones.
     The purpose of this perverse system is to ensure that each region of the country locally produces its own milk.  This requirement made some sense when the regulations were written in the 1930s:  People needed fresh, local milk unspoiled by cross-country trekking.  Since then, however, improvements in refrigeration and trucking have made it possible to transport milk great distances without spoilage, rendering the regulations nonsensical.
     Nonetheless, local dairy farmers have successfully defended this outdated system against attempts to reform it, and in 1996 – at the behest of Pat Leahy, Vermont’s other senator – Congress allowed states in the Northeast to jack up their milk prices even higher than the federal milk formula allowed.  The resulting arrangement, the Northeast Interstate Dairy Compact, has since become politically sacrosanct among Northeastern representatives of both parties.  Witness the speed with which Hillary Clinton, upon moving to New York to run for Senate, swore her fealty to it.
     From the behavior of Northeastern politicians such as Jeffords and Clinton, one might infer that the Dairy Compact benefits their constituents as a whole.  But, in fact, it hurts the vast majority.  The compact drives up the cost of milk in the Northeast by an extra five cents or so per gallon.  It is, in effect, a tax on food, and – since the poor devote the highest percentage of their income to food – extremely regressive.
     So what do Northeasterners get in return for this tax?  According to its website, the Dairy Compact seeks “to assure the continued viability of dairy farming in the [N]ortheast, and to assure consumers of an adequate, local supply of pure and wholesome milk.”  Of course, without the compact, Northeasterner’s could have pure and wholesome milk anyway.  The only difference is that they would pay less, and more of it would come from Wisconsin.  Should the latter fact bother Northeasterners?  It’s hard to see why.  Floridians produce a disproportionate number of oranges, and Detroiters build a disproportionate number of cars.  Suppose Detroiters decided to restrict themselves to locally grown oranges, and Floridians to locally built cars.  The only reason the current dairy system doesn’t come across as equally ridiculous is that it’s been in place for several decades.
     The Dairy Compact survives because its benefits accrue to a well-organized minority, while its costs are borne by a diffuse and largely ignorant public.  Indeed, preventing open discussion of the plan is essential to the Dairy Compact’s survival.  Jeffords practically admitted as much in April.  “Hopefully … everybody will be concentrating on something else other than the compact,” he told the Associated Press, “and thus, we can sneak it in through the stealth of the night, get it through when people aren’t looking.”  Somehow this quote has not made it into any Jeffords-as-Jimmy-Stewart hagiography that proliferated during the last week.
     To be sure, ending dairy socialism would put inefficient farmers out of business – a prospect that brings on a fuzzy-minded sentimentalism in some liberals.  A Boston Globe editorial on the need to preserve small family farms, published last year, typifies this logic.  “The children of such farmers are reluctant to endure 13-hour days for incomes that are, at best, modest,” the editorial noted.  “It is a grueling undertaking, particularly in competition with larger farms … which have greater mechanization and hundreds of animals.”  But rather than conclude that these farmers’ children should move into other lines of work, the Globe argues that the compact should be maintained so they can toil in futility for generations.  The percentage of the population involved in agriculture has been declining for centuries.  This is the basis for economic and social progress.  It makes no more sense now to keep people on the farm than it did 100 years ago.
     Alas, agrarian mythology has embedded itself so deeply in the political culture that it is nearly impossible to uproot.  If no politician is willing to push reform on its own merit, the only available recourse may be some enlightened thuggery by Bush advisor Karl Rove and his minions.  Nice Dairy Compact you’ve got there, Senator Jeffords.  Shame if anything should happen to it.