For more than 30 years, Iowa’s obsession with its ethanol fuel industry has played an outsize role in its presidential caucuses. The winner of every caucus in both parties during that period has strongly backed federal subsidies or mandates for the corn-grown fuel. That winning streak could end this year if Senator Ted Cruz takes Iowa. Polls currently show him with a narrow lead.
In 2008, Fred Thompson told me he didn’t see merit in subsidizing one fuel over another, but in Iowa’s GOP caucus that year “opposing ethanol was like pushing against a mountain.” Hillary Clinton voted against ethanol a total of 17 times in the U.S. Senate, saying she found it “impossible to understand why any pro-consumer, pro-health, pro-environment, anti-government member” could vote for ethanol mandates. In 2007, as she announced for president, she took a sharp turn on the Road to Des Moines and embraced ethanol. This year, she calls ethanol “a success for Iowa and much of rural America.”
But on the Republican side, two candidates have broken ranks. Senator Rand Paul, true to his libertarian principles, supports an immediate phase-out of subsidies. And Cruz addressed the Iowa Agriculture Summit, run by ethanol and wind-subsidy interests, in March 2015. His message: The federal mandate on ethanol, which has cost consumers at least $10 billion since 2007, had to end. In front of a crowd of pro-ethanol farmers and moneymen, Cruz said:
I don’t think Washington should be picking winners and losers. I have every bit of faith that businesses can continue to compete, can continue to do well without having to go on bended knee to Washington asking for subsidies, asking for special favors. I think that’s how we got in this problem to begin with.
In reality, as my colleague Charles C. W. Cooke writes at National Review Online: “Cruz has changed his mind on ethanol in the past. But he did so in 2014.” The Renewable Fuel Standard (RFS) mandates that all gas sold in the U.S. include a certain percentage of biofuels such as ethanol. Cruz had supported a full repeal, but in 2014 he advocated cutting the RFS by 20 percent a year and ending it completely after five years. He has not changed his position since 2014.
Now that Cruz is leading in the Iowa polls, the industry-funded America’s Renewable Future (ARF) is paying 17 staffers to trash Cruz in the state. The group, whose Iowa director is the son of GOP governor Terry Branstad, claims that Cruz has shifted his position in their favor, toward a gradual phase-out. In fact, they are only taking credit for a position that Cruz already held.
Last month, ARF spokesman Majda Sarki told the Washington Post that a Cruz victory would be devastating even though he doesn’t support immediate RFS repeal. If he wins, she said, “it would kill investment in second-generation biofuels” by creating “uncertainty” about federal subsides in the future.
#share#A Cruz victory would also deflate Donald Trump, who has become the biggest booster of ethanol in Iowa. At a Des Moines rally last month, Trump surrounded himself on stage with green-T-shirt-wearing ethanol backers. He then claimed that Cruz was “in the pocket of big oil companies” and taking a “very anti-Iowa” position.
But that’s not what the polls show. A new Des Moines Register survey found that 37 percent of Iowans agreed with Cruz on ethanol and 42 percent disagreed. There rest were undecided. All the GOP candidates kowtowing to ethanol might be miscalculating. Michael Needham, executive director of Heritage Action, told the Washington Post: “When Americans look at the challenges we face as a nation, it is reasonable for them to look at a politician who panders on ethanol and suspect that individual will not make the best commander-in-chief.”
Iowa congressman Steve King — who supports the Renewable Fuel Mandate but is also a top Cruz backer — says that his candidate’s stand on ethanol hasn’t hurt him as much as he feared. He notes that Cruz has been accompanied on his Iowa bus tours by David VanderGriend, a pioneering designer of ethanol plants in Iowa who says Cruz’s position is forward-looking and would reduce federal regulations on biofuels. “If these regulations get out of the way, we can stand on our own,” VanderGriend told the Des Moines Register.
Other experts aren’t so sure. “The boom in domestic U.S. oil production undermines the case for ethanol,” James Lucier, an energy analyst with the Washington D.C.–based energy firm Capitol Alpha, told me. “The U.S. is becoming a net energy exporter.”
#related#Regardless of who is right, a Cruz victory in Iowa could have dramatic political consequences. “If Cruz wins Iowa, it could become untenable for a Republican to embrace the RFS in 2020 and win over fiscal conservatives,” the Washington Post suggested last month.
That would be a good thing. As David McIntosh, a former Indiana congressman who now heads the free-market Club for Growth, points out: “Ethanol has corrupted politicians in both parties, despite the poor case for it, for too long. Our politics will be cleaner and less pandering once people can see the subsidies can be opposed and that opposing them isn’t politically fatal.” It’s unlikely that Democrats would see the light in the wake of a Cruz victory but, hey, there’s always hope.
— John Fund is NRO’s national-affairs correspondent.