Ethanol Wins

If you wanted proof of how difficult it is to get things done in Washington right now, there was a perfect example of it today. This afternoon, the Senate took a vote on whether to end subsidies for ethanol, which failed 40-59. Now, I know I just railed against Blue Dogs and the Farm Bill, but this is different.

Ethanol is made from sugar using other plants such as corn, wheat and barley. The demand for ethanol has gone up in recent years because it is not a carbon emitter and is being mixed with gasoline used in cars, which then releases less carbon dioxide into the air. The amendment was introduced by Senator Tom Coburn, representing Oklahoma, who is one of the more conservative members of the Senate. He is an ardent opponent of government waste, extreme deficit hawk, and sees the ethanol subsidies as an example of both.  In his speech before the vote today Coburn said:

But we have a way to get same amount of ethanol produced and we put into our cars without spending $3 billion between now $8 billion is what it’s averaged over the last few years. We spent $34 billion of money we didn’t have subsidizing something that’s mandated. I mean, it even goes beyond the Reagan quote, which is a government view of the economy could be summed up in a few short phrases.‘If it keeps moving, tax it. If it stops moving, subsidize it.’

Yes, ethanol is a product America has produced for decades. But as the demand for ethanol has gone up, exporting this product will lead to higher costs for consumers, as farms  won’t be able to make enough money to produce it at the rate that people need. It’s the same situation when we worry about oil during the months of summer.

Export demand for ethanol is projected this year at $900 million bushels, already up $170 million more than originally thought. The price of ethanol recently rose 7 cents, which is the highest it has been since 2008. But it is still used for growing a variety of foods such as maize, potatoes, wheat, sugar-cane, and fruits. When dealing with a lack of funding and having to fight mother nature, it’s hard for farmers to create ethanol and still grow food.

But proponents say using ethanol for fuel will eventually allow America to be energy independent. But right now, while the ethanol industry produces 40 percent of the nation’s corn crop but less than 10 percent of the fuel supply.

Coburn’s amendment would have raised an additional $2.4 billion in tax revenue this year, and we all know we could use the money. But that doesn’t mean his amendment should have passed. While America is a leader, it is not the only country producing ethanol. The country’s farmers would have been at a disadvantage if the subsidies were gone, having to sell their products at a higher rate than their competitors.

Also, remember that list of food mentioned earlier? All of those items would have cost more to grow, leading to higher prices at your local supermarket. Then considering how much chocolate I eat, I would be filing for bankruptcy by the end of the year. Food prices around the world have been steadily rising, along with the population, and without these subsidies those prices will rise even faster. And when we remind ourselves that long term deficits are in the trillions, $3billion is not going to cause that much of a dent.

This wasn’t even part of the Farm Bill, it was introduced as an amendment to the Public Works and Economic Development Act, originally passed in 1965 to create jobs and grow the economy. Without the subsidies it would be hard for farms to make any money right now. It’s also one of the items Eric Cantor wants to eliminate altogether.

Now with all that being said, I decided to write this because it was finally a good example of a serious policy recommendation being proposed. We haven’t seen a lot of them recently, and Senator Coburn should be applauded for trying to do something productive.

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Filed under America, Clean Energy, Congress, Ethanol, Farming, Tom Coburn

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