Expiration of Ethanol Subsidies Holds Hope for Broken Political System

By Daily Editorials

January 18, 2012 4 min read

Congressional gridlock isn't always bad. Sometimes doing nothing yields something.

So it was that when the nation's beleaguered senators and representatives left the Beltway for the holidays, a $6 billion subsidy for ethanol production that had been in place for three decades expired on Jan. 1.

See how easy it can be to cut the federal budget?

But this one was harder than it looked. It took many years for nothing to yield something.

For 30 years, a powerful corn lobby and the prominent Iowa presidential caucus combined to create an entire generation of politicians in both major political parties who defended outdated subsidies originally created to help an upstart industry. The idea was that corn-based ethanol mixed with gasoline theoretically could reduce U.S. reliance on foreign oil.

Hardly an Iowa caucus went by without presidential hopefuls, be they Democrats or Republicans, stumping in the 99 counties of corn country declaring their allegiance to the sweet byproduct of the heartland.

But this year, during the Republican presidential nomination process, the race is dominated by tea sippers. The taste of subsidies is bitter.

The rise of the Tea Party and its distaste for government spending reduced the support within Republican circles for ethanol subsidies. That's particularly so because the market already is tilted toward the corn growers by state and federal mandates that require gasoline to be mixed with various percentages of ethanol.

And liberal Democrats, too, have grown uneasy with the subsidies, in part because of environmental concerns. Other biofuels hold much more promise, and corn-based ethanol subsidies have raised food prices worldwide.

The lesson in this harmonic convergence of Tea Partiers and Occupy Wall Streeters, where the extreme elements of both parties conspired successfully against the middle, is that all corporate subsidies should have a beginning and an end.

It's ridiculous, for instance, that even though the ethanol industry has lost its subsidy, the far more profitable oil and gas industry has billions of dollars in subsidies built directly into the tax code. Yet some of the same Democrats and Republicans who were willing to sacrifice a farm-state handout decry any cut to the high-campaign-spending oil industry as a tax increase or undue hardship for so-called job creators.

There is a lesson here for Missouri lawmakers, who have been struggling for several years with this state's own set of tax subsidies for various industries. Too many of those programs have no end date. They're locked in and don't have to compete with other budget priorities like education and health care spending. They increase every year, and lawmakers do nothing about it.

Any attempt to add a sunset clause, a specific date by which its supporters would have to prove a program's worthiness to get it renewed, are met with cries of panic, as though critics are seeking to kill an entire industry.

It's the nature of our divided political system today that everybody sees every debate as a zero-sum game — you're either for us or you're against us. Reality often is much more nuanced. Killing one subsidy to balance out other budget needs is not akin to being opposed to an industry.

Ethanol will survive. Our republic, too, will make it through these divided times. If the left and right can agree to let the ethanol subsidy expire, there is hope.

REPRINTED FROM THE ST. LOUIS POST-DISPATCH

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