This afternoon, the Senate will vote on an amendment to the Economic Development Reauthorization Act (S. 782) sponsored by Senators Tom Coburn (R-OK) and Diane Feinstein (D-CA) that will end the ethanol blender’s tax credit and corresponding import tariff. Senator Jim DeMint’s (R-SC) related proposal to eliminate the ethanol mandate alongside the death tax will also be up for a vote this afternoon. Both amendments are necessary steps in reforming the way energy subsidies are allocated.
As Freedom Action has noted:
The domestic ethanol industry currently enjoys a 45¢ per gallon Volumetric Ethanol Excise Tax Credit, which currently costs taxpayers $5-6 billion annually, and a 54¢ per gallon protective tariff, which prevents lower-cost Brazilian ethanol from competing in U.S. markets. In 2005 and 2007, Congress enacted and then expanded a production quota for ethanol. Currently at 13 billion gallons, the mandate to use ethanol in transportation fuels is scheduled to rise to 36 billion gallons per year by 2022.
Americans For Tax Reform have come out strongly in favor of the Coburn and DeMint Amendments saying that, “The government’s mandate of ethanol usage distorts energy markets and raises prices for consumers. In order to fully repeal the government’s unfair, anti-free market support of ethanol, all three policies must be eliminated—the mandate, the tax credit, and the tariff. Only the combination of the Coburn and DeMint amendments completely kills the government’s support of the ethanol regime.”
It is time that Congress acts decisively to phase out and eliminate these corporate welfare programs that distort energy markets and pass higher prices onto consumers. While politicians are quick to say that they are not in the business of choosing winners and losers, for years they have done just that through burying these types of credits in the tax code. Some, as Sen. Tom Harkin (D-IA) has already expressed, will hide their vote against cloture behind procedural statements, but make no mistake that their actual intention is maintenance of an unsustainable status quo.
By eliminating the mandate, the subsidy, and the tariff, the Senate is signaling that the market is best positioned to set prices and priorities in the energy industry.
UPDATE: Although the Coburn Amendment failed today in a 40-59 vote, Senate Majority Leader Harry Reid (D-NV) has planned more votes on the topic for next week. While the number seems low, many Democrats who would otherwise have supported the measure resisted Senator Coburn’s procedural motion to place the amendment on the calendar. If you’re curious to see how your Senator voted, check out this GovTrack break down.