Sen. Dianne Feinstein (D-CA) signaled that Democrats are ready to throw the ethanol lobby under the bus because they no longer are politically correct and cost too much. Under current law, ethanol has been protected with a 54 cents-per-gallon tariff on ethanol imports mostly from Brazil and also receives a 45 cents-per-gallon direct subsidy when it is blended with gasoline.
Feinstein called it “fiscally irresponsible and environmentally unwise.”
The Congressional Budget Office found that ethanol tax credits cost taxpayers $1.78 for each gallon of gasoline it displaces and has also been blamed for driving up the price of corn-based food products.
Senators from both the left and right were signing on to Senator Feinstein’s letter but the corn belt state senators were promising a fight for their sacred cow.
Even Al Gore has admitted the ethanol subsidies have been a disaster not only economically by distorting market prices but ethanol requires more energy to produce than it saves so it actually is a net drag on the greenhouse emissions goal.
And with the deficit in full bloom, Democrats are looking for something to cut except their own throats so ethanol is about to be sacrificed to political expediency, good economics and good environmental policy—a three-fer!
Here’s an excerpt from the letter:
“Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use. We understand that ethanol may be the only product receiving all three forms of support from the U.S. government at this time.
“Eliminating or reducing ethanol subsidies and trade barriers are important steps we can take to reduce the budget deficit, improve the environment, and lessen our reliance on imported oil. We look forward to working with you on responsible energy tax policy.” —Senator Diane Feinstein.