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The Corner

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Late to the Ethanol Party



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I’ve not paid proper attention to this ethanol brouhaha with Grover Norquist. I gather the topic’s rather moot now given yesterday’s vote, but if I can just chime in for a second. If I understand the Norquist-pledge-purist position, a pledge-taker cannot vote to get rid of an idiotic, market-skewing, statist, tax credit (or if you prefer tax expenditure) because it will amount to an increase in taxes. Here’s how Andrew Stiles explained it yesterday:

. . . 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.

I’m sorry but that’s nuts. I understand why ATR has to write the pledge in as binding and exhaustive a form as possible so as to keep tax-hikers from playing games. But this is simply one of those areas where if the pledge is the law, and the law says you can’t kill an ethanol subsidy, than the law is an ass.*

Imagine there’s a tax credit for performing abortions (for all I know there is one). Would the ATR pledge require that signers not vote to repeal it unless they provide some tax cuts somewhere else? Yes, I understand that getting rid of a tax credit is a tax hike to those who benefit from it. But not all tax credits are equal. This is not a child tax credit, or a business development credit. It’s a credit aimed at a specific industry as part of a larger agenda of industrial planning through the tax code. Ethanol is an economic and environmental absurdity. It’s also precisely the sort of policy that the bulk of tea partiers loathe because it stinks of both green eggheadery and shady backroom deal making. I’m generally sympathetic to Norquist’s pledge, but I think it’s crazy for it to be turned into a tool to defend the statist status quo (statist quo?). Yes, abolishing some market skewing bad policies will increase revenues for the Treasury. Is that really a reason not to abolish them?

 

* That should be “a ass” to conform to the Dickens line. But every time I write it correctly I get grief from readers saying I don’t understand proper grammar.



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