Ethanol and Other Subsidies
Earlier this week the Senate took a vote on an amendment that called for the immediate elimination of the Ethanol Subsidy. The amendment was proposed by Senator Tom Coburn (R-OK) and it passed by a 72 -27 vote with 33 Republicans voting with 40 Democrats. It will be attached to a federal economic development bill that has an uncertain future. However, it bodes ill for a program that gives ethanol refiners a $.45 per gallon subsidy that in a year amounts to $5 to $6 billion. On the other hand ethanol uses 40% of the U.S. corn crop and has raised food prices dramatically since corn in some form is used in most processed foods. Ethanol also enjoys $.56 per gallon import tariff protection.
The Senate also voted 59-41 to reject a measure that would have eliminated a government program that supports the distribution of ethanol, providing some hope to a Farm-belt industry that is in danger of getting dinged by budget cutting efforts. The House had passed a similar measure earlier in the day, by a vote of 283-128, adding it to an agriculture spending bill.
The White House is against full repeal of the Ethanol Subsidy and has indicated that it will use its veto power if the amendment advances. Agriculture Secretary Tom Vilsack said: "We need reforms and a smarter biofuels program, but simply cutting off support for the industry isn't the right approach."
This small slice of the battle of the budget illustrates the problems that face legislators who are trying to cut the budget. Here's a program that accounts for $5 to 6 billion of government spending and we already have the threat of a presidential veto. What will happen when $2 trillion plus in cuts are put forward? Every taxpayer should understand this important point: every program has a constituency. Every program has lobbyists, supporters and government bureaucrats that depend on it for their livelihood. Over the next several months we will witness a long line of supplicants pleading to save this program or that department or it will bring misery and penury to them or their constituents. When we discuss changes in Medicare, Medicaid and Social Security we will hear that our senior citizens are being sentenced to death by these actions. A recent exchange between Rep. Sheila Jackson Lee and Neil Cavuto of Fox News illustrates the approach that we will see supporters of these programs take. The subject was repealing 'Obamacare' and Rep. Lee posited that doing so would literally be a death sentence for our seniors. I actually witnessed this exchange and believe me when I tell you that combating the mind set of people like Rep. Lee will be next to impossible. Multiply this exchange by every representative in our government and I despair for the meaningful elimination of programs that have outlived their usefulness or are just plain inefficient. I think that we will see partial eliminations of programs rather than their complete elimination. This way the programs' supporters can continue to fight for their survival and hope for a change in political fortunes to resurrect it from the dead. I guarantee you that we will see this approach when the smoke clears in late July. Politicians are notorious for "How about half?".