It’s Time to End the Ethanol Boondoggle


Elections can make a difference — but only if policies change. The midterm elections were a clear indication that Americans seek a smaller, leaner government. That means ending the sweetheart deals that are impoverishing our future — and raising our taxes. Dieting isn’t easy, but some cuts don’t take positive action: All Congress has to do is to stop filling the hog trough.

The myriad subsidies for ethanol (a/k/a government “moonshine”) meet this criteria ideally. If we can’t end this boondoggle, what can be cut?

Ethanol was once the darling of all, but as the costs and the lack of environmental benefits became more evident, it has become deservedly controversial.

Fiscal conservatives have become aware that ethanol subsidies are nothing more than a series of non-transparent taxes — raising producer and consumer costs, threatening relations with our Latin American neighbors, and further burdening our already over-indebted economy. The program includes an ethanol mandate requiring refiners to blend too much ethanol, a protectionist tariff to ensure that we use more expensive domestic ethanol, and a tax rebate to partially offset refiners’ costs.

This constitutes a series of hidden taxes on the economy:

• A tariff tax: Which blocks us from gaining the advantage of more efficient production of ethanol elsewhere — such as sugarcane ethanol from Brazil. We pay an ethanol tariff (a tax on trade) raising the cost of ethanol and embarrassing a non-protectionist America.

• A hidden gas tax: Every time we fill our tanks with gas we find that we’ve added up to 10 percent ethanol, which gives us lower mileage. Same price, less mileage! If gas taxes are to go up, make that tax increase transparent — don’t bury it in moonshine mandates!

• A tax on capital: Even the rebate to refiners (45 cents to offset their costs) diverts scarce capital into this special-interest program, making capital less available (and, thus, more expensive) to other investments that would advance the public interest.

Even environmentalists who once favored this program have abandoned support, as analysis found that the ethanol program yielded negligible environmental results and raised food prices around the world. Moreover, ethanol production is a water-intensive sector: Excessive corn demand increases fertilizer use, exacerbating soil erosion, mean ing increased stress on the waters of the Gulf of Mexico.

The ethanol subsidy program constitutes one of the most egregious of the panoply of special-interest subsidies benefiting the few at the expense of the many. And, unlike so many of these parasitic programs, Congress need not take on a fierce repeal fight. Since the ethanol program was enacted as only a “temporary measure,” it must continuously be renewed. Today, even some of the largest corn ethanol producers say the subsidies are no longer necessary.

Yet, special interest lobbyists who originally pushed this program through continue to fight fiercely for its continuance. All Congress must do to eliminate this burden on our economy is simply to do nothing! The programs will expire on Dec. 31, 2010 unless it is renewed! Americans are looking for bipartisan actions to reduce government — this program is an ideal first step in renewing the American Dream of limited government.

And now is the time. The American electorate has spoken: It wants Congress to cut spending, to reduce the burden that special-interest groups have imposed on the American citizenry. Democrats and Republicans should hear the message from the voters: When you go back to Washington, please do less. Let’s hope they heed this message. Government moonshine was never a good idea — it’s time for Congress to go on the wagon.