The Corner

Ethanol Subsidies: Big Elmer Strikes Again

My recent sighting of an Aston Martin rocketing jauntily down a farm road in West Texas reminded me of how much I hate the farm lobby. Seriously: Who drives a DB-8 in Amarillo, Texas?

Yeah, I do resent seeing that late-model Lexus parked in front of the housing projects next door to my humble New York abode, but I calculate that the $4 million in subsidies collected by, for example, Thomas Kennedy Farms of Lubbock, Texas, is roughly 80 times as objectionable. (And I’m not alone in this; Spruiell informs me that it was a grad-school research project on the farm bill that “radicalized” him.)

So Big Elmer is in the news today, and he’s got himself a jobs program. No points for guessing that it involves ethanol subsidies:

Two advocates of tax incentives for biofuels and ethanol are arguing that extending ethanol tax credits will create jobs and increase the nation’s energy independence. 

Sens. Kent Conrad (D-N.D.) and Charles Grassley (R-Iowa) introduced a bill Tuesday that would extend through 2015 several tax credits including those for volumetric ethanol, small ethanol producers, cellulosic producers and the ethanol import tariff.  

The appearance of the phrase “energy independence” is usually a good indicator that somebody is trying to sell you a magical faerie chariot powered by unicorn juice and pretty rainbows. But set that aside for a second and consider the close proximity here of the phrases “tax incentives” and “import tariff.” Ethanol users are paying a tax penalty to provide a tax break to ethanol producers. How does that make sense, if using ethanol is a good and worthwhile thing that we want to encourage? It does not make sense. Government logic: Ethanol is so important, so green, and so wonderfully job-creating, that we have to give it enormous tax subsidies to maximize the benefits of using it. And it is so very important … that we have to use punitive import tariffs to keep Americans from maximizing the benefits of using it, if the profits are not captured by our political constituents. You want ethanol to be cheaper, you can subsidize the heck out of it, sure — or, you could repeal the tariffs that keep it artificially expensive by protecting local political parasites domestic producers from competition.

Grassley says that allowing the ethanol subsidies to expire could cost the nation 112,000 jobs. (No, I don’t believe that, either, and suspect that he counts ethanol jobs the way the Obama administration counts stimulus jobs.) But Grassley might as accurately have phrased it: Ethanol subsidies rip off American taxpayers so ruthlessly that an army of subsidy collectors equivalent to the entire population of Charleston, S.C., is propped up in economically non-viable activities for the benefit of a small number of politically connected businesses and the politicians who depend upon them. Sounds a little less like a pressing national priority when you put it that way, no?

I remember going to the supermarket as a little kid and noticing as my mother gave dirty looks to the people who would pay for a cart-load of steaks and Smurf-Berry Crunch with food stamps and then pay for a carton of Pall Malls with cash. Drove her bats. But Americans should be giving the same hairy eyeball to Kent Conrad, Charles Grassley, and the ethanol welfare queens who own them. Our agriculture subsidies are a national scandal, one that conservatives in particular should be embarrassed by. I know, senators exist to bring home the bacon — but they should at least have the decency to be ashamed of it.

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Jack Phillips has a right to free speech, which includes freedom from compelled speech.