Will Obama Save Ethanol Boondoggle? Jonathan S. Tobin 06.17.2011 - 11:23 AM
The ethanol lobby isn’t finished, but it is reeling after a 73-27 Senate vote ended the 45-cent-a-gallon subsidy the government gives refiners and the 54-cent-per-gallon tariff on imported ethanol. Earlier in the week, a Republican-led attempt to cut ethanol subsidies was beaten back. Yesterday’s more bipartisan vote ended differently.
The vote was a historic defeat for the powerful biofuels lobby. It signals what might be the beginning of the end of its ability to maintain massive subsidies that enrich corn farmers and refiners while raising the price of food and doing little to boost America’s energy independence.
But while the outlook looks bleak for ethanol (a fact reflected in the collapse of the price of corn on futures markets), opponents of this boondoggle can’t be certain they have won even in this legislative session. Shortly after the vote, the White House issued a statement saying it opposed the end of the $6 billion per year subsidy and leaving open the possibility of a veto of the amendment that just passed. And only 15 minutes after this vote, another effort to end federal aid for ethanol blender pumps and storage facilities that had already passed the House of Representatives failed in the Senate. This leaves the issue open to future negotiations between the two bodies that might well save all the ethanol subsidies. There is also the chance it may get tangled up in fights over the issue of whether oil companies should be singled out for higher taxes as the Democrats seem to want.
Nevertheless, the one victory for ethanol critics was a first and one they should savor. With the government caught in a terrible budget crunch, it is becoming increasingly clear sooner or later the ethanol subsidies will end. If President Obama winds up saving the massive waste of money on ethanol it may help him with some voters in corn-producing states, but may provide Republicans with yet another issue with which to hammer him. That is, if Republican candidates don’t succumb to the temptation to pander to Iowa’s corn farmers themselves.
