Oh my: Senate votes to end ethanol subsidies, 73/27

posted at 5:33 pm on June 16, 2011 by Allahpundit

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.

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Sorry – but Michelle Obama doesn’t approve of theater pop corn.

HondaV65 on June 16, 2011 at 7:52 PM

I have to go to a health food store to buy my coconut oil and I’m sure I pay too much for it but some things are just worth the price. Oh, and real butter too. Don’t waste your money on coconut oil if you’re just going to slather grease on your popcorn.

SKYFOX on June 17, 2011 at 6:17 AM

Great, but…

Still destroying my outboard
Still destroying Brazilian rainforest

And, does it now allow ethanol from sugar cane????

tomg51 on June 17, 2011 at 6:54 AM

I was just looking at some commodity prices. Ethanol is at $2.63…gas is at $2.92. Ethanol is still mandated to be in the gas…so won’t this increase the price of gas at the pump? Even if they got rid of the requirement to put ethanol in the gas, it would lead to higher prices because of an increased demand for gas. I suppose they could do away with the tariffs and buy it from a foreign country for less. But that means more dependence on foreign producers.

These tax credits are not just there to make money for farmers or Monsanto…they are also there to offset the price of gas to consumers. I am not saying we should not phase them out, but there might be a price to the rest of us too.

Terrye on June 17, 2011 at 7:07 AM

These tax credits are not just there to make money for farmers or Monsanto…they are also there to offset the price of gas to consumers. I am not saying we should not phase them out, but there might be a price to the rest of us too.

HUH??? Offset the price of gas to consumers? Are you kidding? The government takes dollars from your paycheck in order give to their crony capitalists du jour, and you’re ok with that because you get to feed at the government trough everytime you put gasoline (& ethanol) in your car? Did I parse that correctly?

JSGreg3 on June 17, 2011 at 9:23 AM

Since ethanol has an energy of 76,330 BTU/gallon and gasoline has an energy of 116,090 BTU/gal, I think it would be much, much easier to meet the new CAFE standards if ethanol was just used for drinking. Then almost everybody wins.

The losers, auto mechanics and cornhuskers.

Old Country Boy on June 17, 2011 at 9:24 AM

We the consumer will still get it in the shorts. Repubs still haven’t learned not to compromise with the lib/dems. They want to grab all the money they can and not look at the end results.

Kissmygrits on June 17, 2011 at 9:24 AM

What it’s also going to mean is an instantaneous 50c rise in gas per gallon, in states where the Tim Pawlentys of the world have outlawed pure gasoline.

MNHawk on June 17, 2011 at 9:57 AM

I thought the they were largely exempted from the estate tax.

Count to 10 on June 16, 2011 at 7:31 PM

This is untrue.
There is a basic exemption of I think one million in total assets & cash.
But our place is worth more than that & I can tell you we are dirt poor.
Every small business is affected by the Death Tax.
The only reason it seems to hit farms & ranches so badly is bcs when you have to sell off land, equipment animals etc to pay it, then you are losing the assets that provide the income & so bankruptcy often ensues.
So you have to hire lawyers & accountants to set things up to get around the tax, which you can do.
But it shouldn’t have to be done.
NO ONE should be taxed bcs they die.
It’s BS.

Badger40 on June 17, 2011 at 10:47 AM

And I see my cowardly ND Senators voted no.
I know why. Bcs there are a LOT of farmers here in on the ethanol game.
And ending the subsidy will cause them financial harm.
I agree with another poster here.
Slowly phase out subsidies.
But not too slowly.

Badger40 on June 17, 2011 at 10:48 AM

It’s hell on boaters.

Pure-gas.org shows you stations where you can get pure gasoline.

slickwillie2001 on June 16, 2011 at 8:53 PM

And other small engines.
Ethanol, even just %10 blends, has been proven to ruin small engines.

Badger40 on June 17, 2011 at 10:52 AM

These tax credits are not just there to make money for farmers or Monsanto…they are also there to offset the price of gas to consumers. I am not saying we should not phase them out, but there might be a price to the rest of us too.

Terrye on June 17, 2011 at 7:07 AM

Farmers get direct payments of money from the farm program, federal govt., to plant crops.
Depending upon your base acres on your land, coupled with the crop you want to plant, depends upon the price per acre you receive as a subsidy.
IDK how this new ACRE program works, but it is a little different, but probably more of the same game.
If you are a big enough farmer (that’s why farms are getting bigger & bigger) then you WILL make $$$ off of the govt.
Subsidy payments, coupled with the tax laws, they all make a profit if done right.
Farmers are not farmers anymore.
They are federal goverment scammers.
And some of our best friends are farmers.

Badger40 on June 17, 2011 at 10:59 AM

I will say this is good news for ranchers.
Corn prices typically pound us.
Bcs the feeders’ already tight profit margins get smaller & so then they pay less for our calves.
But that hasn’t been happening lately.
All these analysts still don’t know why beef prices are so high now.
Probably due to record low numbers.
I don’t really know.

Badger40 on June 17, 2011 at 11:09 AM

Since ethanol has an energy of 76,330 BTU/gallon and gasoline has an energy of 116,090 BTU/gal, I think it would be much, much easier to meet the new CAFE standards if ethanol was just used for drinking. Then almost everybody wins.

The losers, auto mechanics and cornhuskers.

Old Country Boy on June 17, 2011 at 9:24 AM

True, except for the fact that ethanol will still be mandated to be in gasoline for emission purposes. So the price of gas at the pump will just go up when the cost of ethanol goes up.
I guess they could put MTBE back into the gas…..that nasty stuff is STILL showing up in CA ground water 10 years later. Thank you Sen Feinstein and CARB. A true California brain trust!

JeffVader on June 17, 2011 at 1:46 PM

JeffVader on June 17, 2011 at 1:46 PM

I don’t know whether you or anybody else got my point. It takes energy to move an automobile (The energy is affected by the mass of the vehicle and the square of the velocity). That is why your gas mileage drops off rapidly after a certain speed. The main point though, is that we are replacing some of a high energy fuel with a medium energy fuel. That replacement reduces the distance the automobile can move on a given amount of fuel. Hence the mpg drops.

A drop in mpg actually is a bad thing. You use more of the diluted gasoline, there are more trips to the station by you and the fuel truck. It is a specious arguement that ethanol reduces our dependence on foreign energy sources by any significant amount. However, it does make your food cost more and the world hungrier.

If there is anybody out there that can dividethe distance they have traveled by the amount of gasoline they pump to fill their tank (I don’t think so because of our current government educational system); test it your self. Record your mileage and fuel usage of ethanol contaminated gasoline, then find an ethanol free filling station (we have them in Oklahoma) and do the same calculation on your second tank.

The interesting thing about liberals and obamistas is that the science is settled and they never have to be confused by facts.

Old Country Boy on June 18, 2011 at 10:10 AM

These tax credits are not just there to make money for farmers or Monsanto…they are also there to offset the price of gas to consumers.

No. No. No.

N O NO.

Removing the subsidy is the right thing to do, but it is doing consumers no favors unless you remove the wrong-headed mandate along with it.

hillbillyjim on June 18, 2011 at 4:06 PM

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