Ethanol Could Go on GOP Chopping Block
Top Michigan Republican has 'unique opportunity' to 'kill' subsidies
When the Republican majority is seated in the House of Representatives this January, many have high expectations that they will cut government spending as most of the candidates promised on the campaign trail. But the tricky question now is: Where to cut?
Some energy and environmental experts say they should begin with energy subsidies; specifically for ethanol.
Ethanol is a biofuel made mostly from corn in North America and can be used as an additive to gasoline. In some states, there is a mandated 10% blend with gasoline; the idea being to lower the amount of oil needed.
But many experts say this doesn't work.
"Contrary to popular belief, ethanol fuel does little or nothing to increase our energy security or stabilize fuel prices," wrote Kenneth Green, a scholar at the American Enterprise Institute. "Instead, it will increase greenhouse gas emissions, local air pollutant emissions, fresh water scarcity, water pollution (both riparian and oceanic), land and ecosystem consumption, and food prices."
Russ Harding is the senior environmental analyst for the Mackinac Center for Public Policy and says that ethanol subsidies require a lot of water, fertilizer and heavy equipment. This wipes out the environmental gain.
"A lot of environmentalists liked ethanol initially," said Harding. "But you find that in order to make it you need a lot of land and a lot of energy."
Harding says that the corn lobby got Congress to put a tariff on sugar (which can be used to make more efficient ethanol) and give corn farmers subsidies.
"It is an extremely well-protected industry."
But some political experts believe that the new Republican House will be in a unique position to end ethanol subsidies, or at least make it an issue.
Washington Examiner columnist Timothy Carney has written on this issue recently and believes ending some of these subsidies would show the American people that Republicans are serious about cutting back government.
"[Congressman Dave] Camp (R-Midland) is in line to chair the Ways & Means Committee, which writes tax law," wrote Carney in an email. "Two of the biggest ethanol subsidies — the 45-cent-per-gallon tax credit and the 54-cent-per-gallon tariff on imported ethanol — would be under his jurisdiction. He could kill those."
It would require a reversal of course for Camp and others. A look at past votes from Congressman Camp and the Michigan Congressional delegation reveals that the members have often voted to keep, and even raise, farm subsidies. In 2004, every Republican member from Michigan voted for the Bush Administration's national energy policy which would have added a requirement that gasoline sold in the U.S. contain a specified volume of ethanol. Other energy policy votes yield similar result.
In a 2006 press release, Camp was quoted as saying, "With the support of the federal government, our farmers and manufacturers are building new economic opportunities, creating innovative solutions that address the nation's energy needs, and providing consumers with the products that deliver fuel efficiency, lower emissions, and better performance."
But policy experts disagree.
"[Ethanol] is environmentally destructive and has raised food prices," said Green.
"In many ways, this is an issue in which the left and the right find agreement," said Harding. "Unfortunately, many of the Republicans are even more connected to the farm lobby than the Democrats.
"But really, there is just no reason to keep the subsidies."
Congressman Camp's office did not return requests for comment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.