Pawlenty vs. Ethanol Subsidies

by Ramesh Ponnuru

An interesting passage to put in an announcement speech in Iowa:

I’m here today to tell Iowans the truth, too.

America is facing a crushing debt crisis the likes of which we’ve never seen before.  We need to cut spending, and we need to cut it…big time. The hard truth is that there are no longer any sacred programs.

The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out.  We need to do it gradually.  We need to do it fairly.  But we need to do it.  

Now, I’m not some out-of-touch politician.  I served two terms as Governor of an ag state.  I fully understand and respect the critical role farming plays in our economy and our society.  I’ve strongly supported ethanol in various ways over the years, and I still believe in the promise of renewable fuels – both for our economy and our national security.

But even in Minnesota, when faced with fiscal challenges, we reduced ethanol subsidies.  That’s where we are now in Washington, but on a much, much larger scale.

It’s not only ethanol.  We need to change our approach to subsidies in all industries. 

It can’t be done overnight.  The industry has made large investments, and it wouldn’t be fair to pull the rug out from under it immediately.  But we must face the truth that if we want to invite more competition, more investment, and more innovation into an industry – we need to get government out.  We also need the government out of the business of handing out favors and special deals.  The free market, not freebies from politicians, should decide a company’s success.  So, as part of a larger reform, we need to phase out subsidies across all sources of energy and all industries, including ethanol.  We simply can’t afford them anymore.