ADM's Largess Preserved Ethanol Break, Study Says
By Ben White
Congress recently extended the subsidy through 2007 as part of the new highway bill signed into law Tuesday, overriding efforts by House Ways and Means Committee Chairman Bill Archer (R-Tex.) and other critics of "corporate pork" to kill the tax break.
Champions of the subsidy say it is important for bolstering the farm economy and reducing the nation's dependence on foreign oil. Ethanol is a corn-based extract that is blended with gasoline to produce gasohol a gasoline alternative. The tax break makes ethanol cheaper for gasohol producers to buy.
But the Common Cause report contended that the tax break a perennial target of budget hawks and "pork busters" escaped its latest brush with death largely on the bountiful political giving by ADM, the nation's largest ethanol producer.
Of the more than $3 million of soft money accounted for in the study, $2 million went to Republicans and $1.1 million to Democrats.
ADM also gave direct political action committee contributions to congressional candidates: $700,170 to Democrats and $529,276 to Republicans from Jan. 1, 1987, to Dec, 31, 1997, according to the report.
The top recipient in the Senate was Richard J. Durbin (D-Ill.), who got $34,500. The Senate Republican who received the most was Charles E. Grassley (R-Iowa), with $17,000. In the House, the top recipient was Minority Leader Richard A. Gephardt (D-Mo.), at $16,000, while the top Republican was Thomas W. Ewing (R-Ill.), $14,750.
The tax break costs the Treasury $600 million a year, according to the General Accounting Office.
"ADM has methodically, over the years, used big money to ingratiate themselves and protect the ethanol subsidy," said Common Cause president Ann McBride.
Dwayne O. Andreas, ADM's prominent former chairman, was known for currying favor with both political parties.
ADM declined to respond directly to the Common Cause study. Eric Vaughn, president of the Renewable Fuels Association, a Washington lobby representing ADM and 70 other ethanol producers, said the decision to renew the subsidy was less the product of ADM's political contributions than the result of grass-roots lobbying by corn-farming cooperatives that have an increasing stake in ethanol, as well as pressure from the governors of corn-producing states.
The tax subsidy was initiated in the 1970s oil crisis to help maintain a viable market for the alternative fuel.
Archer, armed with a 1997 GAO report describing the failure of ethanol to improve the environment or reduce U.S. reliance on foreign oil, successfully led an effort in the House to phase out the subsidy in the highway bill, only to be overruled in a House-Senate conference stacked by House Speaker Newt Gingrich (R-Ga.) with pro-ethanol members.
An angry Archer said Gingrich had given in to pressure from farm-state members worried about their reelection campaigns.
Midwestern defenders of the ethanol subsidy complained that Archer was trying to kill it as a favor to competing oil and gas industries in Texas.
"The oil industry has enjoyed subsidies for a hundred years," said John McClelland of the Corn Growers Association.
McClelland said that maintaining the subsidy would allow more time for research to make the production of ethanol less expensive, a point made in May by Agriculture Secretary Dan Glickman.
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