Editore"s Note
Tilting at Windmills

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November 22, 2010

'WE NEED TO LET THE ETHANOL SUBSIDIES EXPIRE'.... Following up on an item from two weeks ago, there are two existing ethanol subsidies that 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.

The question is what conservative Republicans are prepared to do about it. Greg Sargent reported today that there may be "a new intra-GOP war brewing" over this issue -- by some measures, more intense than the earmark fight -- and he talked to a couple of leading far-right senators who'll likely lead the way.

Senators Jim DeMint and Tom Coburn, two leading conservative Senators who have pushed the GOP to be serious about its anti-spending rhetoric, told me they are calling on fellow Republicans to urge Congress to allow ethanol subsidies to expire -- something that could put other leading GOP Senators in an awkward spot, and could put them in the cross-hairs of the Tea Party. [...]

With billions in ethanol subsidies set to expire this year, including a 45-cent-a-gallon tax credit for ethanol blenders that heaped nearly $5 billion on to the deficit last year, it appears senators DeMint and Coburn are dead serious about pressing the point.

Neither conservative left much in the way of wiggle room. DeMint said supporters of the subsidies are "just protecting a parochial interest ahead of the national interest." Coburn added a continuation of the subsidies would be the opposite of what the Tea Party base wants from the GOP.

I continue to think this will be fun to watch. On the one hand, congressional Republicans inclined to do what corporate lobbyists tell them to do, and the lobbyists naturally want the industry subsidies to continue. The American Future Fund is a shadowy right-wing group that raised all kinds of secret money to help Republicans win midterm elections, and it just so happens to have been created in large part by a wealthy executive of an ethanol producer. It's a safe bet he'll expect his GOP friends to repay his assistance.

On the other, the subsides are expensive, unnecessary, and ultimately counter-productive, and a prime target for anyone who cares even a little about spending cuts.

Also watch to see the extent to which this divides the GOP caucus. With earmarks, the vast majority of Republicans weren't willing to stick their necks out and reject the base's demands. But high-profile senators like Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa) are in a much tougher spot -- they want to prove their fiscal conservatism, but they've been strong supporters of subsidies like these for years. Iowans, in particular, expect Grassley to deliver.

I continue to think this could be a carefully-applied wedge, driving divisions between the party's activists and the party's corporate benefactors. That is, if Dems play it right.

As for the Democratic strategy on this, as far as I can tell, their attention is elsewhere and there is no game plan in place. One possibility is of Dems to 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. I'd look forward to seeing how the far-right GOP House majority deals with an issue like this one.

Steve Benen 3:45 PM Permalink | Trackbacks | Comments (21)

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Comments

I'm for letting them expire.

And hoping it causes a big rift in the GOP.

Posted by: fourlegsgood on November 22, 2010 at 3:49 PM | PERMALINK

While we're at it, can we do away with corn subsidies and sugar subsidies?

Posted by: fourlegsgood on November 22, 2010 at 3:53 PM | PERMALINK

Finally something that DeMint, Coburn and I can agree on. Suck on it ADM!

Posted by: AshtonCinder on November 22, 2010 at 3:55 PM | PERMALINK

"That is, if Dems play it right."

There's the rub.

Posted by: The Guilty Carnivore on November 22, 2010 at 4:13 PM | PERMALINK

I continue to think this could be a carefully-applied wedge

Spoken like someone who doesn't have a television. It's not a wedge unless Matt Lauer and Wolf Blitzer call it one. More likely it will be called "Democrat infighting".

Posted by: Danp on November 22, 2010 at 4:23 PM | PERMALINK

Doesn't Obama favor the ethanol subsities?

Posted by: Ron Byers on November 22, 2010 at 4:29 PM | PERMALINK

If we are going to eliminate ethanol subsities, can we eliminate the oil company subsities at the same time. You know free markets and all that?

Posted by: Ron Byers on November 22, 2010 at 4:32 PM | PERMALINK

For once, I agree with DeMint and Coburn. Popcorn, anyone?

Posted by: Marko on November 22, 2010 at 4:34 PM | PERMALINK

Yes, please end the stupid and destructive ethanol subsidies. Also the coal and oil subsidies, and sugar, too. Oh, and corn! Might as well get 'em all.
And limit farm subsidies to small, independently owned and operated family farms with a cap around $2mm gross revenues.

Posted by: sue on November 22, 2010 at 4:37 PM | PERMALINK

You know, the purpose of policy is to advance the interests of the American people, not to fuck up the other party.

If the ethanol subsidies are a bad idea, and some Republicans agree with that (even if it's for different reasons than ours) then how about we just work with those Republicans to get rid of the damn subsidies and let people draw their own conclusions about how the rest of the GOP behaves rather than try to "play" something in a way that makes it hard for even those Republicans who agree with us to cooperate with us?

Crap. Between that casually tossed off line and the apparent political polarization of resistance to TSA gate rape, I'm becoming rather disappointed with the left today.

Posted by: John on November 22, 2010 at 4:37 PM | PERMALINK

On the other, the subsides are expensive, unnecessary, and ultimately counter-productive, and a prime target for anyone who cares even a little about spending cuts.

That description would apply to probably more than half the Pentagon budget, but that's not going to get cut either.

The key phrase here is "anyone who cares even a little about spending cuts." There is no one like that in the Republican leadership. Sure, they would love to defund NPR or other symbolic nickels and dimes. But cut corporate welfare programs? There is no F in weigh.

Posted by: James E. Powell on November 22, 2010 at 4:44 PM | PERMALINK

"Doesn't Obama favor the ethanol subsities?"
When he was a senator, he was from Illinois.

Figure it out for yourself.

Now, who knows?

Posted by: catclub on November 22, 2010 at 4:45 PM | PERMALINK

You mean congressional inaction kills both farm subsidies AND the Bush tax deferral plan?? Bring on the gridlock!

Posted by: danimal on November 22, 2010 at 5:23 PM | PERMALINK

There are enough Democratic members of Congress that are fully owned subsidiaries of the ethanol lobby that there will probably be bipartisan support for extending the subsidies. But DeMint and Coburn could easily gum up the works in the Senate.

Remember those shrieks of protest from the Right about Congress doing ANYTHING during the lame duck session? It seems that there are lots of things expiring on 12/31 that need to be taken care of.

Posted by: meander on November 22, 2010 at 5:25 PM | PERMALINK

What strategy is needed? Dems are going to be stressed getting the Defense approps. with DADT, the START treaty, etc. through.

Downside of playing games here is that IA, MN, and WI people will be pissed. But who is up for re-election in 2012? And if they just sit on their hands, who cares?

And, I will be impressed when Coburn rides his high horse, and supports elimination of the intagible drilling cost expensing deduction for the oil cos., and the domestic production activities deduction, or the Tarriff act of 1943 that still allows deductions for lost values of oil fields, well beyond what has actually been paid, or the ability for American producers in foreign countries to deduct royalities paid to those countries; or allowing offshore ships and rigs to be registered with "flags of convienence" allowing them to escape USCG safety regs ....

I could go on, Sen. Coburn. I await your eagerness to get rid of the direct and indirect subsidies we provide the oil and gas industry...

Posted by: bigtuna on November 22, 2010 at 5:37 PM | PERMALINK

Senators Jim DeMint and Tom Coburn, two leading conservative Senators who have pushed the GOP to be serious about its anti-spending rhetoric, told me they are calling on fellow Republicans to urge Congress to allow ethanol subsidies to expire

Are they calling on Palin, Romney, Pawlenty and Gingrich to speak out? It's fourteen months from the Iowa caucuses, and Corn Is King.

Come on, Sister Sarah, the tea people need your tweet on this. Just say ethanol will keep the mosques away.

Posted by: Dwight on November 22, 2010 at 5:57 PM | PERMALINK

Actually, what we should be eliminating are the subsidies for oil, timber, and mining. Then alternative energy will have a better chance to be competitive.

Posted by: Joe Friday on November 22, 2010 at 6:41 PM | PERMALINK

I have always thought ethanol was a mistake. It takes too much carbon inputs for the little output and ethanol competes with human food for land to be grown on.

Posted by: Chief on November 22, 2010 at 10:24 PM | PERMALINK

Wrong on both counts. Those are propaganda points spread by Big Oil.


Posted by: Joe Friday on November 22, 2010 at 11:42 PM | PERMALINK

It would be bad enough if these monies subsidized ethanol for the domestic market, but they are increasingly used to subsidize the export market:

“There is increasing trade from the US to Europe which is using domestically produced ethanol and blends this ethanol with gasoline, thus being eligible for the [US] tax credit and also being eligible for lower import duties in the European Union. This of course makes quite a profitable operation,” FT

Posted by: jhm on November 23, 2010 at 6:11 AM | PERMALINK

From the article:
"Senators Jim DeMint and Tom Coburn, two leading conservative Senators who have pushed the GOP to be serious about its anti-spending rhetoric, told me they are calling on fellow Republicans to urge Congress to allow ethanol subsidies to expire -- something that could put other leading GOP Senators in an awkward spot, and could put them in the cross-hairs of the Tea Party. [...]"

My only observation is anything that might cause Republican Senators to attack one another verbally or physically should be encouraged.

Posted by: max on November 23, 2010 at 8:32 AM | PERMALINK
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