Feinstein in the News
Monday, January 2, 2012
Call it a holiday miracle. For decades, conservative critics have assailed federal ethanol subsidies of 45 cents per gallon as corporate welfare that came to cost taxpayers as much as $6 billion per year. Liberal critics joined the chorus as they noticed that the Volumetric Ethanol Excise Tax Credit drove up corn and feed prices. Also, studies had begun to show that, contrary to expectations, the corn ethanol industry increased net carbon emissions.
Nonetheless Washington continued to renew the ethanol subsidy with irksome regularity, as ambitious politicians refused to oppose a "tax expenditure" - a tax break that is equivalent to a cash payment - dear to voters in the Iowa caucus.
Last month, the unthinkable happened - during the lead-up to the Iowa caucus no less. The do-nothing Congress did nothing in a good way.
It adjourned without extending the 45-cent-per-gallon ethanol subsidy, as well as a 54-cent-per-gallon tariff on imported ethanol.
A federal mandate, however, that requires 15 billion gallons of renewable fuels - including ethanol in 2015 - remains in force.
While failure to renew the two ethanol subsidies is the official cause of death, a bipartisan 73-27 vote on a bill by Sen. Dianne Feinstein, D-Calif, and Tom Coburn, R-Okla., in June marked the first-ever congressional vote to end the tax breaks.
The Senate's message was unmistakable.
Even industry representatives began to acknowledge that it was time to turn off the spigot. A White House effort to "reform" - rather than repeal - ethanol subsidies sputtered out.
Americans for Tax Reform president Grover Norquist had warned Republicans that eliminating the ethanol tax expenditure, without offsetting tax cuts elsewhere, would amount to a tax hike. Most GOP senators ignored him and supported the Coburn-Feinstein measure.
A special-interest tax break born in 1978 lived the high life until 2011.
Now it's gone. The result is good for taxpayers, good for the environment. Happy new year.