Editore"s Note
Tilting at Windmills

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November 12, 2010

AN AWKWARD TEST OF FISCAL CONSERVATISM.... Conservative writer Tim Carney raised an interesting point the other day that seems likely to put some Republican senators in a very awkward position.

Republicans talk about ending wasteful government intervention. Congressional Democrats say they want to protect the environment. And Barack Obama claims he's looking for bipartisan cooperation and reform. All of these goals would be served by rolling back ethanol subsidies.

"A Republican takeover of the House of Representatives," Bloomberg News speculated this week, "may mean that U.S. subsidies aiding ethanol producers will be cut after the party pledged to reduce government spending."

We'll find out within months if that's putting too much stake in GOP rhetoric.

It may not even take that long. Two existing ethanol subsidies are due to expire at the end of the calendar year, which means Congress may have to act during the lame-duck session to save them -- if they're to be saved.

So, what exactly are conservative Republicans planning to do about this? On the one hand, they're inclined to do what corporate lobbyists tell them to do, and the lobbyists naturally want the industry subsidies to continue. On the other, the subsides are expensive, unnecessary, and ultimately counter-productive. If there was an intellectual consistency to the Tea Partiers' ideology -- a big "if" -- this seems like exactly the kind of budget cut the free-market-loving activists could get behind.

And so, as Carney put it, "ethanol becomes a good test for the supposedly reborn Republican Party." It does, indeed.

What will be especially interesting is if Dems decide the kick the can down the road a bit -- extending the subsidies for, say, six months -- and letting the next Congress deal with the issue. Or better yet, Dems can simply allow the subsidies to expire this year, and let the next Congress decide whether to resuscitate them.

Would a GOP-led House, and an expanded GOP Senate caucus, rally behind ethanol subsidies costing $6 billion?

The larger political pressures here are also worth keeing an eye on. The American Future Fund, for example, is a shadowy right-wing group that raised all kinds of secret money to help Republicans win midterm elections. The Fund was created in large part by a wealthy executive of an ethanol producer -- and it stands to reason he'll expect his GOP friends to repay his assistance with these subsidies.

This could get especially awkward for some key conservative lawmakers who've supported the ethanol policy in the past, including Sen. Orrin Hatch (R-Utah), but who are anxious to prove their fiscal conservatism.

If Dems play this right, the subsidies could be a carefully-applied wedge, driving divisions between the party's activists and the party's corporate benefactors. It's definitely an issue to look out for in the coming months.

Steve Benen 3:35 PM Permalink | Trackbacks | Comments (29)

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If Dems play this right...

Well, I'll be holding my breath for that!

Posted by: short fuse on November 12, 2010 at 3:43 PM | PERMALINK

Wow, didn't even get a chance to type it before "short fuse" had posted my comment! Sigh...

Posted by: seriously on November 12, 2010 at 3:56 PM | PERMALINK

Make that three of us. Dems won't play this right. Or left. You know it. I know it. My cats know it. The Reps will play both sides and get away with it like they always have.

Posted by: adolphus on November 12, 2010 at 3:59 PM | PERMALINK

The only slim chance is that Nancy Pelosi is smart enough to play it right. If those other clowns will just stay out of her way...

Damn, yeah, it's hopeless.

Posted by: Steve LaBonne on November 12, 2010 at 4:03 PM | PERMALINK

Y'all are showing definite signs of PTSD. . .

Posted by: DAY on November 12, 2010 at 4:11 PM | PERMALINK

Crap! Make it four... I'm not sure they're capable of getting it right any more.

Posted by: kanopsis on November 12, 2010 at 4:11 PM | PERMALINK

And if Democrats play the tax cut expiration issue right, it would be framed as Republicans insisting on raising taxes for the middle class. How is that working out so far?

Posted by: Shalimar on November 12, 2010 at 4:15 PM | PERMALINK

This is an excellent post and an excellent question. The tea party people will be hostile to the subsidies of both ethanol and sugar. Both commodities (corn and sugar) are spiking in price as crops are down this year and demand is very high world wide.

It will be a good test and the tea party people are very suspicious of old boy Republicans. Another big tea party issue is whether Fred Upton gets the Chair of the energy and Commerce committee. He is Mr Light Bulb for having backed the idiotic ban on incandescent bulbs.

Posted by: Mike K on November 12, 2010 at 4:30 PM | PERMALINK

I wish you people would stop being such chronically negative sourpusses. The fact that you are right is no excuse.

Posted by: Ken D. on November 12, 2010 at 4:40 PM | PERMALINK

There are enough Democrats that are captured by the ethanol lobby -- especially in the Senate, where they have a bit more farm state representation -- that I doubt that the Democrats could pull together enough votes to stop extension of the giveaways if it came up on the floor of either house. In addition, like climate change, ethanol is somewhat more of a regional issue than a party issue, so strict party counts don't apply very well.

Posted by: meander on November 12, 2010 at 4:42 PM | PERMALINK

You are expecting the Dems to play something right?

Yea, and the Easter Bunny will be driving Santa's sleigh.

Posted by: Darsan54 on November 12, 2010 at 4:47 PM | PERMALINK

I can't believe you are all so cynical.

Except I dashed in here to pen the same thing.

If there's a way to take the blame and give the repubs credit, I'm sure our Dem leadership will figure it out. It sucks to feel this way about the party.

Posted by: jhill on November 12, 2010 at 4:51 PM | PERMALINK

has Rush told them what to do yet?

Posted by: andyvillager on November 12, 2010 at 4:59 PM | PERMALINK

If Dems play this right,[...] -- Steve Benen

...and if grandma had wheels, she'd have been a bicycle (as we used to say back in Poland). Consider the subsidies extended sine diem.

Posted by: exlibra on November 12, 2010 at 5:00 PM | PERMALINK

"If Dems play this right"

That is just adorable.

Posted by: Bill on November 12, 2010 at 5:04 PM | PERMALINK

I'm not sure, but I think I sense an enthusiasm gap.

Posted by: Steve LaBonne on November 12, 2010 at 5:24 PM | PERMALINK

They're such hypocrites and the rabble are pointedly immunized against pointy-headed logic, but just to rub in in: let's design an ethanol-fueled version of the F-22 and see what they do with that ...

Posted by: neil b on November 12, 2010 at 5:54 PM | PERMALINK

As a senatorial candidate from a corn-growing state, Obama fully supported the ethanol subsidy. Sadly, I see no reason to believe that he has gotten any better on this issue.

Posted by: bob on November 12, 2010 at 6:11 PM | PERMALINK

Even if the Dems played it right (unlikely) how exactly would the corporate media let this become an issue that people would know about?

Posted by: rusty chainsaw on November 12, 2010 at 6:26 PM | PERMALINK

"I can't believe you are all so cynical.

Except I dashed in here to pen the same thing."

Me too. Or me ten, or me however many it's up to by now.

The Dems need a politics coach. Yes, a party full of politicians needs someone to teach them the basics of playing politics.

Posted by: low-tech cyclist on November 12, 2010 at 7:06 PM | PERMALINK

The first couple of posts were amusing, sort of. After that it got old, really fast.
From what many of you post, at least, you're the guys the politicians should be listening to; so, what are the marching orders? How are the Democrats in Congress supposed to handle this?
Remember, Democrats can't expect ANY cooperation from the MSM or Beltway pundits, this has to be done entirely in the halls of Congress. You know, deals made, "quiet aggreements"; that sort of thing.
So, who's going to be first?

Posted by: Doug on November 12, 2010 at 7:29 PM | PERMALINK

Doug @ 7:29-Some of us busted our asses in 2008 to get the President & Congress elected. What should Congress do? The f*cking job we elected them to do! Not crawl up the asses of the same people who f*cked this country up to the extent they have. How anyone can be anything other than cynical & jaded at this point is beyond me.

Posted by: PeteCO on November 12, 2010 at 8:08 PM | PERMALINK

the subsides [sic] are expensive, unnecessary, and ultimately counter-productive

And . . . drum roll please . . . socialism.

Posted by: Squeaky McCrinkle on November 13, 2010 at 12:50 AM | PERMALINK

Conservative writer Tim Carney raised an interesting point the other day that seems likely to put some Republican senators in a very awkward position.

Please. The situation won't cause even a nanosecond's worth of awkwardness among Republicans. What part of "We support heartland values and American energy independence; Obama wants to increase the amount of money we send to his Muslim friends in the Middle East!" don't you understand?

Posted by: Jasper on November 13, 2010 at 1:43 AM | PERMALINK

The ethanol lobby has given the dems and republicans all the cover they need to continue supporting the ethanol subsidy: they will claim that tax revenues resulting from corn ethanol are greater than the cost of subsidies.

This may very well be a case of voodoo economics. But there is no doubt that utilizing a third of the nation's corn crop for ethanol production has contributed mightily to the rapid rise in corn and other commodity crop prices. Corn is approaching $7.00 per bushel. Farm income is up substantially. And prices and profits for farm inputs and their producers have increased significantly. The consortium of the big GMO seed companies, ADM and Conagra, John Deere and Co., the farm lobbies including the Farm Bureau and the farm state politicians will not have to labor too hard to maintain the subsidies.

The corn industrial complex would like us to believe they can produce even more with rising yields. But we should be asking the major policy question: Does this all out production actually render the system less sustainable in the long run?

Pursuing this course of fueling an unsustainable infrastructure built on cheap oil is a fool's errand.

Posted by: lou on November 13, 2010 at 8:35 AM | PERMALINK

Senator Grassley is going to be pushing these subsidies hard. http://blogs.desmoinesregister.com/dmr/index.php/2010/11/11/grassley-sees-hope-for-tax-cut-extension/

I wouldn't be surprised to see the American Future Fund start running issue ads, focusing on energy independence or alternative fuels, for example, and/or noting the change in
EPA rules to allow higher amounts of ethanol in fuel. As 501(c)(4), they're going to have to start spending money on issue ads and lobbying, or else their large expenditures for candidates in the election will leave them open to an IRS challenge that their primary purpose is to influence elections. Of course, Rastetter (the ethanal producer)gave them a large amount of money to start up operations, but reportedly hasn't given them anything since. But since 501(c)(4) donors stay anonymous, we don't really know how much influence his money may be buying.

Posted by: jsj on November 13, 2010 at 1:55 PM | PERMALINK

"The f%cking job we elected them to do." PeteCO @ 8:08 PM.

I don't know about you, but I voted for the Democrats so we would have a party in control that actually cared about governing the country and not just getting re-elected. On that basis, they've done a fairly decent job.
I don't know what went on during the maneuverings over HC reform, FinReg and the stimulus. I DO know what self-serving "leaks" were put out. I also know that what WAS accomplished was done by the Democrats alone, whose majority was, and still is, reliant on a caucus whose members could easily pass as Republicans.
Certainly I'm disappointed by the short-sightedness of many members of that caucus because of what DIDN'T get passed; their short-sightedness cost the country a lot and it will be even harder to make up those losses in the future. Of course, because of their own short-sightedness, many members of that causcus' won't even have a chance to make amends in the new House, but that was of their own choosing.
My faith in the abilities of Speaker Pelosi, Majority Leader Reid and President Obama remains, but then I never expected miracles...

Posted by: Doug on November 13, 2010 at 6:53 PM | PERMALINK

I read somewhere that corn subsidies are so generous that other American crops, wheat in particular, are being crowded out, which is the reason why bread prices have gone up so disproportionately over recent years.

Posted by: Nancy Irving on November 14, 2010 at 5:18 AM | PERMALINK

"If Dems play this right, the subsidies could be a carefully-applied wedge, driving divisions between the party's activists and the party's corporate benefactors."

It's just as likely to drive divisions between the Democratic party's environmental activists and the party's farm state Senators and Representatives.

If the Democratic Party is less split on this issue (and I'm not willing to concede that it is), it's only because the Democratic Party is *more* monolithically in favor of ethanol subsidies.

Posted by: John Thacker on November 23, 2010 at 5:25 AM | PERMALINK



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