To regain solvency and true economic recovery, issues must be judged on their merits, not on parochial political sacred cows.
The US Senate took up the issue of ethanol tax credits on Tuesday and once again politics has trumped reason.
Senator Tom Coburn (R-OK) offered an amendment to S.782 (Economic Development Revitalization Act of 2011) to repeal the Volumetric Ethanol Excise Tax Credit.
The ethanol tax credit is part of a package of business tax breaks that Congress must renew each year. The current credit is scheduled to expire at the end of the year. Coburn’s amendment would have repealed it immediately.
Coburn argued that the tax credits are wasteful subsidies for an industry that no longer needs them.
“The days of placing spending programs in the tax code and giving them holy status are over,” Coburn said. “Ethanol is bad economic policy, bad energy policy and bad environmental policy.”
Ethanol is a renewable, liquid fuel additive made from fermenting plant sugars, typically from corn. The tax credit provides 45 cents a gallon to oil refiners who mix ethanol with gasoline. Corn growers support the tax credit because it helps increase demand for their crops thereby increasing their prices and profits while also increasing the price of corn used for food, food additives and livestock feed.
The Wall Street Journal on Tuesday highlighted a new study by 10 international organizations that blames biofuel subsidies as among the leading causes of agricultural price shocks.
Unfortunately, some senators prefer to serve the interests likely to get themselves re-elected rather than pursuing sound economic policy and make the tough decisions to stand for fiscal conservatism.
The ethanol industry must stand on its own merits without the taxpayer subsidies or not at all.
