Skip to comments.Oh my: Senate votes to end ethanol subsidies, 73/27
Posted on 06/16/2011 6:46:47 PM PDT by SeekAndFind
Yesterday’s vote failed for procedural reasons but they cleaned it up today and nailed down a remarkably bipartisan consensus. Eyeball the roll: 38 Democrats, 33 Republicans, and both independents voted yes, with no votes coming mainly from plains-states senators eager to keep the campaign cash flowing. When you’ve got both senators from California and both senators from Oklahoma on the same side of an issue, you’re working magic, my friends.
The vote also could have ramifications on future votes to reduce the deficit. Much of the GOP conference supported Feinstein’s bill even though it does not include another tax break to offset the elimination of the ethanol tax credit.
As such, the vote could also represent a setback for influential conservative Grover Norquist, head of Americans for Tax Reform (ATR), who said a vote for the plan would violate the anti-tax pledge most Republicans have signed unless paired with a separate tax-cutting amendment…
Feinstein’s amendment to an economic development bill would quickly end the credit of 45 cents for each gallon of ethanol that fuel blenders mix into gasoline. The credit led to $5.4 billion in foregone revenue last year, according to the Government Accountability Office.
The amendment also ends the 54-cent per gallon import tariff that protects the domestic ethanol industry.
It was a vote about ethanol but it wasn’t really a vote about ethanol. For instance, although this bill would strip away federal subsidies, it does nothing about the federal mandate specifying U.S. consumption of 36 billion gallons in “renewable fuels” each year until 2022, which means there’s plenty of business still to come for ethanol special interests. What the vote is really about, at least to the Norquistians among us, is whether this might signal a new willingness by GOP leaders to strike a grand bargain with Democrats on deficit reduction that would include tax hikes. Tom Coburn, the anti-Norquist, insists that there’s no signaling here for the simple reason that lifting a subsidy isn’t the same as raising taxes, even if both have the effect of raising revenue. The rebuttal is that Coburn actually did vote for tax hikes when he supported the Bowles/Simpson Deficit Commission plan that ended up failing last winter. Ethanol is the flashpoint, but the wider war is over whether there’s room for compromise on taxes in the name of finally solving America’s debt problem — which explains why the sniping between Team Coburn and Team Norquist has turned remarkably nasty at times. This dispute isn’t going away — on the contrary, it’ll get hotter — so watch Coburn’s floor speech today and then spend five minutes with this excellent backgrounder from Andrew Stiles on the deepening conservative wedge. It’ll serve you well down the road if/when a deficit package finally hits the floor.
Hey Obamski: Sustain that.
If this goes through, does it not take off an an issue for the Iowa caucases???
Thank God. Now the price of corn will come down. Just a matter of time.
Iowans will probably make it so.
Now they need to eliminate the requirement that it be put in gasoline!
It doesn’t remove the mandate to put ethanol in our gasoline. But one step at a time, eh?
And even if this proves to be a show vote that doesn’t actually pass into law, it goes to show that ethanol is increasingly unpopular, so that a huge number of Senators want to be seen voting against it.
Time to sell a futures contract? Will be interesting to see how corn futures about a year out or so will fair tomorrow...
I'm all for free trade,but as long as there is an OPEC Cartel, I'm in favor of a drill baby drill policy coupled with a $50/barrel tariff on imported oil.
Probably more time than we’d like. The House is not expected to take this up, thus it will die, and Obama would probably veto it in any case. It’s either a safe way for some Senators to grandstand or a sign that maybe things are moving in the right direction. Damned if I know which.
Does anyone at FR have an understanding of how the ethanol business would operate (if at all) without subsidies?
I hate ethanol. I firmly believe it somehow damages the engine. Grrrr
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Quite surprised and disappointed at Thune’s “Yea” vote.
It’s bound to. You reduce the supply of liquid fuels by 10%, how could the price not go up?
I don’t see how this does anything but raise the price at the pump.
It does, however, allow more efficient methods of producing ethanol that does not require corn farming lands be used - such as cellulosic ethanol, which is basically produced from a weed-like plant that’s useless for anything else and can basically be grown in otherwise useless swamp.
Other methods could not compete with corn ethanol as long as corn had a subsidy.
I figure the grandstanding.
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