No need for ‘compromise’ in trimming ethanol subsidies
LAST MONTH, the Senate voted 73 to 27 for an amendment that would have immediately cut two indefensible federal ethanol subsidies. But the bill lawmakers attached it to failed. Now supporters of the policy are trying to pass it some other way, affixed to another bill or as part of the deal the White House and Republicans will eventually strike (we trust) on raising the federal debt limit.
Either way, the supports must go. Congress has protected ethanol three ways: with a $6 billion-a-year tax subsidy to those who blend it into gasoline, a tariff on competing imports and a mandate that billions of gallons enter Americans’ fuel tanks every year, which come on top of three decades of federal patronage of the industry. The Senate voted to get rid of the first two, which would still leave a federal mandate guaranteeing ethanol a market — a comfort that other businesses would be giddy to have.
And for what? Ethanol, which comes almost entirely from corn, doesn’t help the environment much, even as its government-sponsored use puts upward pressure on the price of corn and rural land. The Congressional Budget Office found that, using corn ethanol, it costs taxpayers an astonishing $750 to cut one metric ton of carbon dioxide, whereas estimates of the value of avoiding that same ton range in the tens of dollars. The Environmental Working Group’s Sheila Karpf argues, further, that higher production of corn contributes to the depletion of soils and the dirtying of water.
Despite all this, ethanol still seems to have hope in Washington. Somehow, some conservatives are wary of repealing the fuel’s tax subsidies because they could be construed as tax increases. And the White House says it would like to see “new approaches” to promoting biofuels. Sen. Dianne Feinstein (D-Calif.), one of the sponsors of last month’s anti-ethanol amendment, now feels it necessary to negotiate a deal with Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), both ethanol backers. Those two farm-state senators want to take some of the money saved from ending support for blenders and use it to . . . support blenders, financing such things as ethanol pumps. But the Senate has registered strong support for repealing all of the blenders’ subsidy, which is scheduled to expire later this year anyway. It’s hardly time to “compromise” with yet another support for ethanol.
Ms. Feinstein shouldn’t have to negotiate at all. Saving money by slashing ethanol supports should be among the most obvious items in any debt deal. President Obama and the House of Representatives should join the Senate in good sense.