Pro-ethanol conversion on the road to Des Moines
Tim Carney continues to expose the ways in which some businesses seek rents from government, in his DC Examiner column. In this instance, he looks at the way in which the electoral process contributes to the phenomenon of concentrated benefits — for the rent seekers — at the expense of diffuse costs imposed on taxpayers.
Federal subsidies for ethanol, with their costs to taxpayers, drivers, ranchers and food shoppers, might not exist if the nation’s leading politicians didn’t need to come to the Hawkeye State every four years and win over voters, local politicians, county chambers of commerce and farm bureaus.
Washington subsidizes ethanol by granting a special 51-cent per gallon tax credit to gas stations or other blenders when they blend ethanol with gasoline. It also protects corn growers and ethanol distillers in Iowa and throughout the United States by slapping a 54-cent tariff on every gallon of ethanol imported into the country. Those are the biggest subsidies, but there are many others.
You can’t blame Iowans that much. The federal welfare state has many clients, and Iowa is leveraging its power to get a healthy share of the handouts. The blame falls on the politicians who convert to the religion of ethanol on the road to Des Moines.
No short-term political fix can address this problem. Only drastically reducing the size of government (yes, I know it’s unlikely) can address this. As long as the possibility of such subsidies remains out there, such pandering will remain inevitable.