The Influence Industry: Ethanol lobby running low on fuel in Washington

June 15, 2011

For years, Washington’s influential ethanol lobby seemed untouchable, successfully defending subsidies that this year alone are worth an estimated $6 billion.

But now ethanol producers find themselves under siege as GOP presidential candidates and lawmakers from both parties look for new ways to save money.

Deputy Editor, National Politics View Archive

Ethanol subsidies were the target of a Senate vote Tuesday that attracted support from nearly three dozen Republicans. The attempt to cut the subsidies fell short amid procedural objections from Democrats but could be revived with better odds in coming weeks.

Tax breaks for ethanol also have attracted vocal criticism from some Republican presidential candidates, which is particularly notable given the importance of corn ethanol in Iowa, home to the first-in-the-nation GOP caucuses.

“What you have here are political decisions disguised as policy decisions,” said Matt Hartwig, spokesman for the Renewable Fuels Association. ”We’re not the big guys like the oil industry, so it’s easy to rail against ethanol.”

GOP presidential hopefuls Tim Pawlenty and Rick Santorum have advocated phasing out ethanol subsidies, while former Utah governor Jon Huntsman Jr. has blasted tax breaks for ethanol and other agricultural products. Candidate Newt Gingrich, meanwhile, is one of the industry’s strongest public boosters, earning $312,500 in consulting fees from an ethanol industry group in 2009.

Two main policies are in dispute. One is a 45-cents-per-gallon tax credit available to ethanol blenders, and another is a 54-cents-per-gallon tariff on imported ethanol. An estimated 40 percent of the U.S. corn crop is now dedicated to ethanol.

Despite its history of political success, the ethanol industry spends relatively little on lobbying compared with traditional energy and agricultural interests, records show. The industry’s main trade groups — the Renewable Fuels Association, Growth Energy and the American Coalition for Ethanol — spent about $3 million on lobbying in 2010; the American Petroleum Institute, by comparison, spent more than twice that much.

Ethanol subsidies have attracted an odd assortment of powerful critics, including oil companies, livestock interests, fiscal hawks and environmental groups. Sen. Tom Coburn (R-Okla.), who co-sponsored this week’s anti-ethanol bill, called the subsidies “bad economic policy, bad energy policy and bad environmental policy.”

Ethanol boosters say they support doing away with the current system but favor a compromise proposed by Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) that would award reduced credits based on oil prices and funnel more money into infrastructure projects.

“Ethanol has become this weird litmus test for the willingness of all politicians to make budget cuts,” Hartwig said. “We’re an easy target.”

No action against Buchanan

The Federal Election Commission has dismissed complaints against Rep. Vern Buchanan (R-Fla.) alleging he orchestrated illegal contributions to his campaign, according to letters released this week.

Buchanan, who holds a leadership position at the National Republican Congressional Committee, has come under attack from Democrats in recent weeks over his ownership ties to car dealerships accused of illegally reimbursing employees and acquaintances for donations to Buchanan’s campaign.

Buchanan aides responded this week by releasing two letters from the FEC, sent in February and March, that until now were protected under confidentiality rules. The FEC told Buchanan that the agency had decided to “take no further action” against him.

“The congressman has been completely exonerated, as we knew he would be,” said Buchanan spokeswoman Sally Tibbetts. “These phony accusations have been exposed as dishonest and partisan attacks.”

In one case, the FEC is seeking a $68,000 penalty from a now-defunct Florida dealership, Hyundai of North Jacksonville, accused of making illicit conduit contributions to Buchanan’s campaign from 2005 to 2007. Buchanan was part-owner of the business until 2008.

In another, a former finance manager for Buchanan’s Venice Nissan Dodge has alleged that she and other employees were illegally reimbursed for $1,000 donations to Buchanan’s first congressional campaign.

Tibbetts said Democrats now “have egg on their face and should be embarrassed by their cynical attacks.”

Super PACs pile up

Roll Call reported this week that “Super PAC” mania continues, with three dozen of the new political committees forming so far this year.

Super PACs emerged last year after the Supreme Court ruled that corporations could spend unlimited amounts of money on elections. The FEC allows Super PACs to raise and spend unlimited funds as long as they don’t coordinate with campaigns.

One of the newest of the breed is a Super PAC formed last week by Citizens United, the same group that brought the aforementioned Supreme Court case.

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