Taxpayers writing checks to the IRS today can take solace in one thing: at least one federal policy is under budget and hasn’t cost them a dime.

The story gets even better when you find out that this policy—America’s sugar policy—helps maintain 146,000 America jobs while pumping $10 billion into local economies.

As it has since 2002, sugar policy operated at no cost to taxpayers in 2009 and is projected to do the same in 2010.  In fact, the USDA has projected that sugar policy will carry a $0 price tag through 2020—a far cry from government projections in 2007, which showed a $1.3 billion cost for sugar policy over 10 years.

This no-cost policy is largely made possible because sugar farmers don’t receive government subsidy checks.  However, members of Congress were under pressure a few years ago to embrace taxpayer-funded sugar subsidies—and it wasn’t the U.S. sugar industry lobbying them.

During the last Farm Bill debate, large food manufacturers asked lawmakers to start sending checks to sugar growers in an effort to artificially depress U.S. sugar prices.

Analysis at the time by McKeany-Flavell, a respected food and commodities research firm in California, projected that this policy change would cost $13 billion over 10 years.

Sugar producers fought the subsidy proposal, questioning the wisdom of a costly, unproven new program when federal funds were so scarce.   Beet and cane farmers noted that they preferred to generate their income from the market instead of a government check.

They also argued in an August 2006 issue brief that food manufacturers were promoting the proposal to boost their own profits, even though “their revenues aren’t exactly slumping.”

Food manufacturers lost the debate, but the news wasn’t all bad for them.  Even though sugar policy remained cost-free and sugar prices didn’t plummet below the cost of production, candy companies did manage to boost their profits.  And, they did so despite the economic downturn.

A 2008 report from the National Confectioners Association boasted of 35% profit margins in the industry, and analysts have called confectioners “recession-proof,” noting their strong sales.

“Throughout the recession, consumers have continued to get in touch with family values during the holidays, forgoing the desire for wants with items that meet specific needs,” George Van Horn with market research firm IBISWorld recently said. “Since 2006, traditional category expenditures, like Easter food and candy, have increased their share of total sales.”

Will food manufacturers use these riches to try to shove subsidies down sugar farmers’ throats again in the 2012 Farm Bill?  Only time will tell, but rest assured the fight would be even bloodier this time around given huge budget deficits and accumulated public debt.

Luckily, sugar farmers have some pretty powerful allies in their corner from Capitol Hill and within the agricultural community.

Just weeks ago, the National Farmers Union passed a policy resolution that stated:

“BE IT…RESOLVED that special emphasis should be placed on preserving agricultural programs such as crop insurance, permanent disaster relief, dairy and commodity supports, the Feedstock Flexibility Program for Bioenergy Producers, the no-cost sugar program and other federal initiatives to strengthen agricultural and rural economies; and BE IT FURTHER RESOLVED that National Farmers Union will defend these policies, which are of vital importance to family farmers and ranchers, that were included in the 2008 Farm Bill.”