WSJ rips Gingrich for defending ethanol subsidies

Newt Gingrich has been touring Iowa lately, attempting to generate interest in a run for the 2012 GOP presidential nomination, and he’s been going the traditional route of defending farm subsidies, especially for ethanol.  Gingrich blasted the media for its skeptical approach to ethanol subsidies, especially the Wall Street Journal, saying that “big urban newspapers want to kill it because it’s working,” and then questioned the WSJ’s values.  The editors have responded in an unsigned editorial titled “Professor Cornpone,” and they give Gingrich both barrels:

Here’s how he put in Des Moines, with that special Gingrich nuance: “The morning that I see the folks who are worried about ‘food versus fuel’ worry about the cost of diesel fuel, worry about the cost of commodities on the world market, worry about the inflation the Federal Reserve is building into our system, all of which is going to show up as higher prices, worry about the inefficiencies of big corporations that manufacture and process food products—the morning they do that, I’ll take them seriously.”

The morning Mr. Gingrich read the offending editorial, if he did, he must have overlooked the part about precisely those concerns. He must have also missed our editorial last month raising the possibility that easy money was contributing to another asset bubble in the Farm Belt, especially in land prices. For that matter, he must have missed the dozens of pieces we’ve run in recent years critiquing Fed monetary policy.

Of course, the ethanol boom isn’t due to the misallocation of resources that always stalks inflation. It is the result of decades of deliberate industrial policy, as Mr. Gingrich well knows. In 1998, then Ways and Means Chairman Bill Archer tried to kill ethanol’s subsidies for good, only to land in the wet cement that Speaker Gingrich had poured.

Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up). An historian of Mr. Gingrich’s distinction surely knows all that.

The WSJ then accuses Gingrich of pandering, but says the problem goes deeper than just check-box politics in Iowa.  If Gingrich seriously thinks that the subsidies for ethanol really are working to do anything more than distort markets and put politics above science, then the Journal argues that his judgment is seriously lacking.  Ethanol gets lower gas mileage, thanks to its lower energy potential, which is one of the reasons that consumers haven’t bought flex-fuel vehicles.  As Jazz Shaw noted earlier, ethanol in higher percentages tends to damage engines not specifically built for the fuel, but this kind of pandering means we’ll all have to deal with those consequences by government fiat.

We have an opportunity to reform government, perhaps the greatest such political opening in almost a century.  Farm subsidies in general have to be on the table, but that’s especially true for ethanol and corn in particular.  Ethanol has simply proven to be too costly, too difficult to transport, and not an effective enough substitute for gasoline to be practical or cost-effective.  Subsidies only hide that fact from consumers at the gas pumps and the showrooms, but the cost to taxpayers for the years of subsidies demonstrate the decades-long failure.  Even Al Gore admits ethanol is a bust, for Pete’s sake.

Republicans don’t need a presidential candidate who wants to conduct business as usual by buying farm votes with promises of our money.  We need a candidate who recognizes the historical moment for change, rather than the opportunity to sell more of the same.