End of the line for ethanol?

Has the federal government’s appetite for ethanol ended?  A bipartisan group of Senators signed a letter today calling for an end to subsidies and tariffs designed to protect and enhance domestic production of ethanol, which has been until recently the darling of the alternative-energy movement.  In a sign of how far ethanol subsidies have fallen from favor, the letter addressed to both Harry Reid and Mitch McConnell has the signatures of such liberal luminaries as Barbara Boxer, Dianne Feinstein, and the newly-elected Chris Coons:

In a clear sign of momentum against ethanol subsidies, a bipartisan group of more than a dozen senators has signed onto a letter urging Senate leaders to let the subsidies expire during this Congress, a move that could put many officials in a tricky political spot and could even have ramifications for the 2012 presidential race.

The letter, which I obtained from a source, was authored by senators Dianne Feinstein and Jon Kyl, and includes a number of Democrats and Republicans, including John McCain, Susan Collins, Richard Burr, and Mike Enzi. This is key, because the question of whether the subsidies should expire is emerging as a key test — just like earmarks — of whether Republicans are serious about reining in spending and the deficit.

While this issue could divide Dems along regional lines, it’s more directly relevant to the GOP. With leading GOP senators now coming out for letting the subsidies expire, this could up the pressure on Republican senators who backed the subsidies in the past, such as Chuck Grassley and Orrin Hatch, putting them on the wrong side of what may emerge as a key litmus test for the Tea Party and potentially dividing the GOP caucus.

Greg Sargent misses the significance of Boxer’s name on this list.  Boxer has a cap-and-trade bill stalled in the Senate, earlier versions of which relied on ethanol to meet its goals.  The ethanol subsidies allowed Midwest farmers to have some buy-in for a bill that would otherwise levy some significant costs on agriculture.  This more or less puts an end to that support, which means that Boxer has acknowledged the death of cap-and-trade.

Will this divide the GOP?  It will make for some contentious discussions on agricultural policy, no doubt, especially in the House where the GOP picked up a number of seats.  But it’s just as likely to hurt Democrats in the Senate, especially those running for 2012 re-elections from ag-heavy states.  Ben Nelson of Nebraska is the obvious incumbent for the hot seat, but Jon Tester in Montana and Mark Pryor in Arkansas also will have to answer for it.

It may, however, have some impact on the 2012 presidential nomination race, which starts in Iowa — the heart of corn country.  It’s not necessary for a GOP candidate to win Iowa in order to win the nomination — Mike Huckabee won it last year and finished a distant third — but it’s usually necessary for a candidate to do well in the caucuses.  Tea Party activists will see an end to subsidies as a success, but will GOP presidential candidates start pandering to corn farmers in Iowa to gain an advantage in the first round of the nominating process?  That may well be a good test for the sincerity of those candidates running as small-government conservatives.

The letter makes clear just how much the government has intervened to coddle ethanol production:

Historically, our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use.  We understand that ethanol may be the only product receiving all three forms of support from the US government at this time.

It’s long past time for those efforts to cease.  Converting food to fuel not only doesn’t work as a replacement for gasoline, it expands starvation by artificially inflating corn prices and making it more difficult to purchase.  This letter might be the first step in dismantling an expensive and ongoing failure.