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Bob Barr Still Supports Ethanol Subsidies

In a piece on The Hill's Congressional Blog, former Republican congressman and the 2008 Libertarian Party presidential candidate Bob Barr expresses support for the extension of a tax subsidy enjoyed by the ethanol industry, the Volumetric Ethanol Excise Tax Credit (VEETC).

Accusing someone of being a shill for industry is not a light accusation, but as a conservative/libertarian, Barr's support is puzzling, and contrary to his previous positions, to the extent that I can see no other explanation other than having a financial interest in supporting ethanol subsidies:

In April of 2009, Barr referred to ethanol as "that still-active ethanol subsidy scam."

In September of 2008, Barr wrote: "The federal government should eliminate restrictions that inhibit energy production, as well as all special privileges for the production of politically-favored fuels, such as ethanol."

Unless this website is out of date, Barr is a senior member in a public relations/consulting firm named Liberty Strategies, Inc., so its certainly possible that one of their clients is the ethanol industry.

One of Barr's main points, that conservatives ought to be against the expiration of the credits because they would represent a tax increase, is a poor argument. He cites a Americans for Tax Reform statement that support for the expiration of these tax credits goes against their pledge not to increase tax rates (or reduce tax credits without lowering taxes elsewhere). ATR posted a response today:

Using the expected 2010 baseline as our metric to determine whether or not a piece of legislation (in this case the extension of the VEETC, or said another way, the reissuing of a tax credit) is in violation of the pledge, we can see that reauthorizing the VEETC would be a tax cut. Thus, if legislators choose not to reauthorize the tax credit, they are not in violation of the pledge as they are keeping revenue consistent with current 2010 projections.

Their statement is somewhat confusing, but the last sentence makes their position clear.

The failure of corn ethanol has been repeated ad naseum on this blog and by most everyone who doesn't have a financial interest in the industry. A recent letter (pdf), signed by a number of free-market groups (including CEI) as well as environmental organizations -- a rare occurrence -- ought to convince our politicians that these subsidies are bad policy, despite Barr's assertions.