It’s not often that we can agree with the Washington Post but yesterday WAPO came out editorially with, Wasting tax dollars on ethanol. Glory be, ..saints be praised, ….strip my gears and call me shiftless, I agree with WAPO!
As with everything that expires, sunsets, or otherwise evaporates at twelve midnight on December 31st, the tax breaks for this farm-state backed snake oil also go the route of Cinderella’s coach. And, it’s long overdue. The farmers took those city slicker environmentalists on a long hay ride and then to the cleaners and got subsidies and tariffs that made them rich. They also raised the price of corn for the poor in Mexico. Better to use that corn for moonshine than ethanol!
But the farm lobby, one of the most powerful in existence, is trying to extend the rent-seeking goodies. And this, as part of the current tax extension negotiations.
“For decades, the idea behind corn ethanol has been that fuel derived from the crop could diminish America’s dependence on distasteful foreign regimes for fuel – it’s done some of this – and cut carbon emissions – it’s done little of this. Congress established an overlapping and expensive system of subsidies, requiring that billions of gallons of ethanol be blended into the nation’s gasoline, slapping tariffs on foreign ethanol and handing those who blend the fuel into gasoline a tax credit of 45 cents a gallon.”
“In other words, the government pays the industry for the privilege of selling to a captive market, spending $6 billion in 2009 on the tax credits alone. Without the tax credits, the amount of corn ethanol produced would still increase over the next 10 years, the Agricultural Policy Research Institute at the University of Missouri calculates. Yet the Congressional Budget Office (CBO) estimates that taxpayers still pay $1.78 to replace a gallon of gasoline with its energy equivalent of corn ethanol. The numbers are far worse when put in terms of greenhouse gases. The CBO reports that it costs a staggering $750 to reduce annual greenhouse gas emissions one ton by burning corn ethanol – and the CBO makes some generous assumptions to get even that figure.”
So, the fact that ethanol harms the environment and unnecessarily wastes taxpayer dollars has created unusual coalitions in opposition: fiscal conservatives, environmentalists, Tea Partiers and MoveOnorgers! Hopefully these strange bedfellows will stop the sop to the farmers. Maybe this year there’s a chance that reason and economics will prevail!