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Tilting at Windmills

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December 1, 2010

STRANGE BEDFELLOWS AND ETHANOL SUBSIDIES.... This may not seem like the sexiest issue on the policy landscape, but the fight over ethanol subsidies keeps getting increasingly interesting.

To briefly recap, 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 pretty quickly to save them -- if they're to be saved.

The question is what conservative Republicans are prepared to do about it. 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.

In a new twist, we're seeing some unusual alliances coming together.

What could bring together the liberal MoveOn.Org, the Tea Party-aligned FreedomWorks, California Democratic Sen. Dianne Feinstein and Oklahoma Republican Sen. Tom Coburn?

Ethanol subsidies -- they're all against them.... In a letter Monday to congressional leaders, MoveOn.org Political Action, FreedomWorks, and more than four dozen groups called on Congress to let the ethanol tax credit expire at the end of the year.

"At a time of spiraling deficits, we do not believe Congress should continue subsidizing gasoline refiners for something that they are already required to do" under federal law, according to the letter, which was also signed by the Sierra Club, the American Conservative Union, and the Grocery Manufacturers Association.

Feinstein and Coburn are working together on this, and have 15 senators from both parties on their side.

Their efforts, in turn, have prompted a separate, bipartisan group of 15 senators to do the exact opposite, urging Senate leaders to extend the subsidies. "Allowing the provisions to expire or remain expired would threaten jobs, harm the environment, weaken our renewable fuels industries and increase our dependence on foreign oil," the group, led by Sens. Kent Conrad (D-N.D.) and Chuck Grassley (R-Iowa), wrote in their letter.

I honestly can't think of the last time this many liberals and conservatives teamed up on both sides of an issue.

Also note, it seems Republicans are in the tougher spot here. High-profile GOP senators like Grassley and Orrin Hatch (R-Utah) want to prove their fiscal conservatism, but they've been strong supporters of subsidies like these for years, and their constituents expect them to deliver.

If Dems wanted to use this as a wedge, driving divisions between the party's activists and the party's corporate benefactors, there's still an opportunity to do that.

As for what happens next, it's hard to say, even if Republicans drop their hostage strategy. One possibility would see a brief extension of the status quo, leaving the next Congress deal with the issue.

My preference would be to see all of the subsidies 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 3:40 PM Permalink | Trackbacks | Comments (11)

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Comments

Vote to fund the government the rest of this fiscal year and then adjorn. Let the tax cuts and subsidies all expire. Then take them up one at a time. Remember nothing gets through the Senate without Democratic approval.

Posted by: Ron Byers on December 1, 2010 at 3:59 PM | PERMALINK

Sen. Durbin as congressman represented Decatur and some of the biggest ethanol companies in the US. I don't think he is going to allow the subsidies to expire.

Posted by: Objective Dem on December 1, 2010 at 3:59 PM | PERMALINK

It's also an opportunity for conservatives to drive a wedge between regional factions of Democrats. Liberals on the coasts hate the ethanol subsidies and protection. Here, in the Midwest, we are more susceptible to the argument that corn ethanol is an important transition fuel even if other forms that haven't yet been perfected for commercial production are inherently superior.

Posted by: urban legend on December 1, 2010 at 4:03 PM | PERMALINK

I live in one of the states that would lose out from the subsidies. It's a little scary to think what that will do to the economy. I've got a master's degree and I'm still unemployed with a mountain of school debt. The job market is picking up but if the ethanol subsidies are cut I'm fucked.

But it's still the right thing to do. Christ it's scary though.

Posted by: Raptor on December 1, 2010 at 4:05 PM | PERMALINK

My guess, based on projecting forward previous patterns, is that, since I'm against them, they will be extended, but only in the most frustrating way possible, after some ridiculous Democratic bumbling that undermines the party's position both in the media and in terms of power politics.

Posted by: biggerbox on December 1, 2010 at 4:05 PM | PERMALINK

Grassley is wedge-proof. He was just re-elected and if he runs again at all it wont be until 2016. And frankly, he is unbeatable at this point no matter what he does so long as it doesn't involve sex with a minor (or a goat, and even that might not be enough).

Posted by: zeitgeist on December 1, 2010 at 4:14 PM | PERMALINK

Tangential to the topic - the hostage strategy is not going last more than a week or two. All Harry Reid needs to do is threaten to adjourn without reaching a compromise and the GOP will fold like a cheap tent. They NEED to cut the tax rates and extend ethanol subsidies more than we need anything this term. The Dems have the leverage, and the GOP knows the hollowness of their bluff.

The GOP can't pass anything through the Senate next year, even with newly-gained control of the House. Stalemate's a bitch for both parties.

Posted by: danimal on December 1, 2010 at 4:18 PM | PERMALINK

Of course the ethanol subsidies will be extended. The corn/ethanol industrial complex is for worse here to stay. Congress created a Frankenstein that they will continue to keep well fed with our tax dollars and forced usage. You ready for 15% blends?

Posted by: lou on December 1, 2010 at 4:33 PM | PERMALINK

danimal, you are right. As I suggested above Reid's stategy ought to be: "The Republicans are trying to hold the senate hostage. Americans don't surrender to hostage takers. The Republicans have already vistited hell on 2 million unemployed Americans. They are refusing to do much more this year. We will take up funding the government through FY 2011, by CR if necessary. We will deal with New START since that doesn't come under normal Senate rules. Then, since they wont let us deal with anything else, we will adjourn for the rest of the year. We can take up the tax and subsity issues next year."

Posted by: Ron Byers on December 1, 2010 at 5:14 PM | PERMALINK

Will the ethanol subsidies be extended? Is Iowa still the first Presidential primary contest?

That said, like Raptor, I'm from a state that might see some benefit from the ethanol subsidies, so my feelings on the matter are fraught, with worry for my state being balanced against worry for the environment and the best use of federal dollars.

(I'm from Michigan - although everybody thinks of it as "automobile" country, most of the area outside of Detroit and south of Traverse City is agricultural. Corn production is big in the little farm town I came from, and where my mom still lives - and rents out the fields that my dad farmed until a few years ago. He passed away over the summer, and the field rental fees are one of the few sources of income my mom has, now.)

Although it's my understanding that the expiring subsidies don't go directly to ethanol producers, but rather to oil/gass refiners, to help pay for the blending process, so the "hit" to corn-producing states is somewhat less direct. Still. Fraught.

Posted by: KarenJG on December 1, 2010 at 6:05 PM | PERMALINK

"...Sens. Kent Conrad (D-N.D.)..."

I will be so grateful when this hypocrite leaves government. Using his position to funnel money to his wife (and so, to himself) has been so successful that I hope the greedy bastard never gets the chance to spend it. Just another con in sheep's clothing who has stood in the way of so much good legislation that when I apply the saying, "This too will pass" I can only hope sooner rather than later. CON-rad the phony...yuck.

Posted by: bjobotts on December 1, 2010 at 6:37 PM | PERMALINK
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