This is the Cato Daily Podcast for Friday, July 27th, 2007.

I'm Caleb Brown.

As Congress considers this year's Farm Bill Depression-era subsidies for milk producers chug along unabated.

As recently as 2002, Congress created new milk producer subsidies.

Chris Edwards, the Cato Institute's Director of tax policy studies, says the Byzantine system

of hiking milk prices needs to go.

Says the system imposes a huge tax on milk products that hit poor consumers particularly hard.

What are the components of the U.S. milk support programs?

Well the United States intervenes in five main ways into the dairy products markets.

The first thing they do is ever since the 1930s the federal government has imposed so-called

marketing orders. The government has imposed so-called marketing orders.

The government has carved up the country into ten different regions and every month the U.S.

Department of Agriculture sets the price for milk and other products in those 10 regions of the country and that tends to create a cartel and push up the price of milk and other dairy products.

Secondly, the government runs the so-called price support

program. If the price of milk and other dairy products falls below minimum

target prices, the government will buy up any extra or surplus product.

Third, the federal government runs an income support program.

If the price of milk and other dairy products falls below certain target levels,

the federal government provides cash payments

to farmers.

Fourth, the federal government supports all these price support programs by putting pretty

strict import barriers for dairy and other milk product.

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