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Right Turn
Posted at 08:30 AM ET, 03/30/2011

Should conservatives be defending ethanol subsidies?

The Hill reports:

Sen. Tom Coburn (R-Okla.) ripped conservative activist Grover Norquist on Tuesday for defending tax breaks that benefit special interest groups.

In a letter to Norquist, the president of Americans for Tax Reform, Coburn said a tax break for ethanol producers ultimately raised the tax burden for average taxpayers and should be done away with.

Americans for Tax Reform quickly shot back with a letter to Coburn that accused the senator of misinterpreting its views of the ethanol tax credit, which it said it opposed. The group said it opposed Coburn’s amendment because he did not offset elimination of the tax break with a corresponding tax cut.

The unusual fight between two conservative heavyweights in the Republican party reflects tension over Coburn’s role in a group of lawmakers working on a possible deal to cut entitlement spending and reform the tax code. . . .

“By opposing my amendment, you are defending wasteful spending and a de facto tax increase on every American,” Coburn, one of the Senate’s staunchest fiscal conservatives, wrote of the amendment he offered to small-business legislation pending on the Senate floor.

Coburn said Norquist’s defense of ethanol tax breaks demands “that Senate conservatives violate their consciences and support distortions in the tax code.”

This fight within the conservative ranks over tax reform and spending reductions points to an underlying philosophical divide:In the absence of a pristine, low marginal-rate tax code, how far should we go to eliminate the tax breaks that currently exist? Coburn in this case takes the purist view: We shouldn't use the tax code to pick favorite industries. Americans for Tax Reform takes the practical view: Starve the government of funds, which in turn will bring down spending and the size of government. Coburn’s staff made its point succinctly:

“Grover hears what he wants to hear. Dr. Coburn has been arguing for many years, in word and deed, that the problem is overspending, not under-taxation. That said, he strongly disagrees with ATR’s belief that every distortion and corporate welfare subsidy in the tax code, such as that for ethanol, is a ‘tax cut’ that needs to be preserved,” said John Hart, Coburn’s communications director.

“Trusting Washington to pick winners and losers in the tax code should be anathema to conservatives,” Hart added. “ATR’s odd definition of tax purity is an argument for tax deferment, tax complexity, more spending and unsustainable borrowing.”

A I pointed out previously, the same battle can be seen in the debate over tax reparation.

This is an interesting philosophical debate, but it also has practical, political ramifications. It has been a quadrennial dilemma for conservative politicians who want to run in the Iowa caucuses: Back ethanol subsidies, or stick to the Coburn line — no market-distorting credits and subsidies?

There are good reasons for GOP presidential candidates to skip Iowa. If you’re not a rock star for social conservatives (e.g. Mitt Romney, Jon Huntsman, Mitch Daniels) you may lose. If you lack a well-run organization you may not have the ground game to do well. But there is a better argument than that. The conservative base is intensely anti-government, anti-corporate-welfare and anti-crony-capitalism. In other words, is it worth it for candidates to annoy those voters in order to do well in a single state contest? Perhaps not. In any event, those candidates who skip Iowa may be saved from the chore of defending themselves against the onslaught of those in the party who these days tend to side with Coburn’s side of the tax/subsidy argument.

By  |  08:30 AM ET, 03/30/2011

Categories:  2012 campaign, Taxes

 
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