“Grassley would swallow anti-ethanol measures to cut deficit” – DeMoines Register

by Marlo Lewis on February 22, 2011

in Blog, Features

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The hand writing was already on the wall last December even though Congress extended the Volumetric Ethanol Excise Tax Credit (VEETC) for another year.

As explained here, ethanol’s policy privileges lost their perceived legitimacy. Beef, hog, poultry, and dairy farmers objected that ethanol policy inflates livestock feed costs, making their products less competitive in global markets. Humanitarian organizations objected that ethanol policy aggravates world hunger by driving up grain costs. Environmental groups objected that corn ethanol production damages water quality and, on a life-cycle basis, probably emits more carbon dioxide than the gasoline it replaces. Budget hawks objected to Congress lavishing billions on a favored few in the midst of a budget crisis. Free market groups objected to the fleecing of consumers compelled to buy a product that delivers less bang for buck than gasoline.

The corn lobby could rally its congressional patrons one last time, but the ideological climate had shifted against them, with even Al Gore recanting his earlier support for ethanol subsidies. If the VEETC had come up for renewal in Dec. 2009, Congress would likely have extended it for five years, not just one. But in 2010 a broad-based Left-Right coalition arose to challenge King Corn, and the tide turned.

And today the DeMoines Register reports that Sen. Chuck Grassley (R-Iowa), the Senate’s chief patron of corn ethanol, said he would vote for the deficit-reducing continuing resolution even though it would (1) block EPA from increasing the amount of ethanol in gasoline from 10% to 15% and (2) prohibit subsidies for corn ethanol infrastructure (E-85 blender pumps and storage tanks). 

The text of the DeMoines Register article follows:

Sen. Chuck Grassley, arguably the most outspoken advocate in Congress for the biofuel industry, said today that he would vote for a deficit-cutting bill even if included some anti-ethanol measures passed by the House.

He said his vote would be “governed by the bigger issue. The bigger issue is whether we’re going to leave this tripling of the national debt to our children and grandchildren and possibly the bankruptcy of our country.”

A House-passed bill that cuts $60 billion from federal spending includes a measure that would block the Environmental Protection from increasing the amount of ethanol that can be added to gasoline from 10 percent to 15 percent. A second provision would bar subsidies for retrofitting service stations to sell higher amounts of ethanol.

Both measures, as is the bill as a whole, are limited to the 2011 budget year, which runs through Sept. 30.

Strong majorities of Republicans, who now control the House, voted for adding the anti-ethanol measures to the legislation. Iowa’s two House Republicans, voted for the overall bill though they opposed the ethanol provisions.

The EPA has approved the higher ethanol limit for 2001 and newer model cars and trucks, but the bill would bar the agency from spending any money to implement the change.

Grassley said that delaying that higher limit is a more immediate concern than the subsidies for ethanol pumps.

“As significant as it is to me because I’m a great ethanol fan, if in fact those things were in the bill to cut the deficit … I’d have to bite the bullet,” he said.

The Senate, which is controlled by Democrats, will write its own version of the House bill that is certain to reject much of what it contains. But the House and Senate will have to reach some agreement to keep the government operating.

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