As CEI’s Brian McGraw points out, ethanol subsidies are opposed by just about everyone: researchers,environmental activists, free market wonks, and newspaper editorial writers across the ideologicalspectrum. Even Al Gore has come out against them.
I say "just about" everyone because of course the ethanol lobby and the farmers it serves still favor keeping the subsidies in place.
Naturally, the current plan is to extend them for another year.
IF YOU'RE wondering which of America's leaders are serious about cutting wasteful government spending, you might start by examining who's behind the effort to extend tax breaks to America's corn ethanol industry, which expire at the end of the year.
WASHINGTON -- After being elected with a strong mandate to cut spending, all Republicans don't agree on how best to rein in the deficit -- and some have become unlikely allies with green groups in the fight to gut federal subsidies of ethanol.
Iowa Republican Chuck Grassley was irked when his colleagues, Sens. Jim DeMint (R-S.C.) and Tom Coburn (R-Okla.) voiced their support for letting ethanol subsidies expire, claiming that Demint and Coburn should be willing to give up their oil-gas subsidies.
Coburn appears to be ready to accept the challenge -- and green groups, for their part, couldn't be happier about it.
John Krieger, a staff attorney with US PIRG, said that if the GOP is serious about reining in government spending, more lawmakers will have to join Coburn in calling for an end to ethanol subsidies.
"They're going to have to find common ground or they're going to be completely paralyzed," he said. "And I think any member now understands the punishment that comes with paralysis and not taking action especially on an issue that so many Americans voted on in the last election.
Congress established an overlapping and expensive system of subsidies, requiring that billions of gallons of ethanol be blended into the nation's gasoline, slapping tariffs on foreign ethanol and handing those who blend the fuel into gasoline a tax credit of 45 cents a gallon.
In other words, the government pays the industry for the privilege of selling to a captive market, spending $6 billion in 2009 on the tax credits alone. Without the tax credits, the amount of corn ethanol produced would still increase over the next 10 years, the Agricultural Policy Research Institute at the University of Missouri calculates. Yet the Congressional Budget Office (CBO) estimates that taxpayers still pay $1.78 to replace a gallon of gasoline with its energy equivalent of corn ethanol. The numbers are far worse when put in terms of greenhouse gases. The CBO reports that it costs a staggering $750 to reduce annual greenhouse gas emissions one ton by burning corn ethanol - and the CBO makes some generous assumptions to get even that figure.
Yet because the policy directs cash to farm states that are rich in political influence, lawmakers are rallying to save this payoff from expiration. Sen. Kent Conrad (D-N.D.), who insisted Sunday that President Obama's fiscal commission didn't go far enough in its deficit reduction plan, has paired with Sen. Charles E. Grassley (R-Iowa) to press for renewal of the gratuitous corn ethanol tax credit and the ethanol tariff through 2015. Typically, the farm lobby has won out on such issues. But this year it's meeting stronger than usual opposition from a bloc of fiscal conservatives and environmentalists, backed by such strange bedfellows as Tea Party organizer FreedomWorks and ultra-liberal pressure group MoveOn.org - even Sen. Jim DeMint (R-S.C.) and Al Gore.
An extension of the corn ethanol provisions shouldn't be part of the deal that's emerging on the Bush tax cuts, and if it is, senators should remove it from the resulting legislation. While they're at it, lawmakers should reconsider their blending mandate, too. There are far better ways to address oil dependence and greenhouse emissions.
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