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New Bi-Partisan Calls for End to Ethanol Subsidies

by Joel Velasco on Oct 29, 2010

With Americans set to head to the polls next week, consumer watchdog groups, editorial columnists and candidates from across the political spectrum are renewing calls for an end to multi-billion dollar ethanol subsidies at a time of record deficits – all against the backdrop of soaring profits for the nation’s producers. And remember, the sole purpose of the tariff that blocks sugarcane ethanol is to offset these tax credits - if the tax credits go, then the tariff should as well.

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With Americans set to head to the polls next week, consumer watchdog groups, editorial columnists and candidates from across the political spectrum are renewing calls for an end to multi-billion dollar ethanol subsidies at a time of record deficits – all against the backdrop of soaring profits for the nation’s producers. And remember, the sole purpose of the tariff that blocks sugarcane ethanol is to offset these tax credits - if the tax credits go, then the tariff should as well.

The American Spectator details a new report co-published by the conservative National Taxpayers Union and liberal Public Interest Research Group recommending a set of spending cuts that would reduce the national debt by $600 billion before 2015. The report, Toward Common Ground: Bridging the Political Divide to Reduce Spending, declares ethanol tax credits are “bad fiscal policy” and “ripe for reform.”

On The New York Times editorial page, columnist David Brooks says “there have to be cuts” for “biofuels subsidies and useless tax breaks” to help mend America’s ailing economy. (And readers of this blog know there have been over 60 editorials making similar calls throughout this election cycle.) Meanwhile on the Virginia campaign trail, Democratic Rep. Tom Periello and Republican challenger Robert Hurt both vowed to cut ethanol subsidies to help balance the federal budget.

To boot, Bloomberg reports that corn ethanol producers are enjoying surging profits, with plants in Iowa and Illinois collecting upwards of 25 cents for every gallon produced. These are healthy margins and beg the question – should taxpayer dollars continue to support a profitable industry that is inarguably mature?

Spending $6 billion per year to effectively block competition and environmentally friendly alternatives is a bad deal for just about everyone. The time has come to remove the industry’s 30-year-old training wheels and promote market competition so Americans can save more money at the pump, cut dependence on Middle East oil and improve the environment.

copyright 2010 Brazilian Sugarcane Industry Association