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Senate Dumps Ethanol Subsidies



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The Senate voted overwhelmingly on Thursday to eliminate $6 billion in tax subsidies for ethanol producers. It was a virtual rehashing of a similar vote held days earlier, which reignited a long-running feud between Sen. Tom Coburn and Grover Norquist, president of Americans for Tax Reform (more here).

Thursday’s vote was on an amendment offered by Sen. Dianne Feinstein (D., Calif.), which was essentially identical to a measure Coburn introduced Tuesday, which was rejected 40 to 59. Most Democrats opposed Coburn’s amendment to protest the procedural methods he used to force the vote. This time around, however, the Feinstein amendment, which Coburn cosponsored, passed 73 to 27.

Thirty-three Republicans and 38 Democrats voted yes, along with both Independents. There remains strong disagreement over the extent to which these votes were a rebuke to Norquist and his “Taxpayer Protection Pledge.” From my story on the homepage:

. . . At issue is the “Taxpayer Protection Pledge” that Norquist, president of Americans for Tax Reform, urges all GOP lawmakers (and any willing Democrats) to take. All but seven Republicans in the Senate — including Coburn — and all but six in the House have signed on. Signers promise to oppose any tax increase as well as “any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

Coburn’s amendment eliminated tax breaks for the ethanol industry but did not include any offsetting tax cuts. The Joint Committee on Taxation estimated that his proposal would raise $2.4 billion in new tax revenue over the remainder of the year, which Coburn intended to put toward reducing the deficit. Norquist, therefore, denounced the amendment as a violation of the pledge.

Norquist, however, argues that Republicans are not in violation of the Pledge so long as they also vote in favor of an amendment offered by Sen. Jim DeMint (R., S.C.) that would offset the increase in revenue by eliminating the estate tax. It would also strike the federal ethanol mandate, which requires that the United States consume 36 billion gallons of “renewable fuels” per year by 2022 — nearly half of which will consist of ethanol. The Coburn/Feinstein amendment leaves the mandate in place. DeMint says that Senate Majority Leader Harry Reid (D., Nev.) has assured him that the Senate will vote on his amendment, but the measure is unlikely to pass.

Coburn, on the other hand, has a different take. He has called Norquist’s argument — that eliminating tax subsidies without any offsetting reductions is akin to a tax increase — “ludicrous,” and says ending tax earmarks should be no different than getting rid of other earmark spending. “If you had $6 billion of an earmark in an appropriations bill that was going to the [ethanol] blenders and we took it away, no one would have ever said anything about taxes would they?” Coburn told reporters Thursday. “But the fact that it came off the other side of the balance sheet as a tax credit, which is paid every month to blenders, everybody’s raising heck because we’re not offsetting a stupid tax credit.”

More here.

UPDATE: An insightful take from Tim Carney can be found here.

UPDATE II: Coburn spokesman John Hart e-mails: “Grover’s not well. Republicans put the Abramoff-Norquist earmark era behind them long ago, as Grover is just now realizing… He has become the Ted Stevens [the Alaska senator behind the infamous "Bridge-to-Nowhere"] of tax earmarks. If he keeps this up he’ll be a contestant on Dancing with the Stars.”



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