The Corner

Tax Deal Gets Liquored Up

Why do I get the feeling that this tax deal could turn into a porker’s ball that makes the deal-cutting used to pass Obamacare look like Athenian Democracy? This, for one:

The tax legislation that congressional Republicans and the White House have agreed to will include extensions of the biodiesel and ethanol subsidies through 2011, says  Iowa. Charles Grassley, the ranking Republican on the Senate Finance Committee. The $1-a-gallon biodiesel subsidy, which lapsed at the end of 2009, would be retroactive to this year, he said.

Some leading Senate Democrats, including the chairman of the Senate Finance Committee, Max Baucus of Montana, indicated that the energy tax provisions were still to be worked out. “We’re going to have to wait the detail,” said North Dakota Sen. Kent Conrad, a member of the finance committee.

If Congress does extend the biofuels subsidies temporarily, lawmakers will have to decide what to do with them again next year. Grassley said he would consider a proposal by the ethanol industry group Growth Energy to phase out the subsidy for that gasoline additive and use the money for the pumps, pipelines and other infrastructure needed to distribute ethanol.

Grassley wasn’t sure if the tax agreement would extend the ethanol tax credit at its current level – 45 cents per gallon – or reduce it. Grassley said the subsidy should stay at 45 cents, but there have been proposals in the House and Senate this year to reduce it to 36 cents. Industry officials also were trying to confirm details today.

Over on the homepage Harry de Gorter and Jerry Taylor write about why extending the ethanol subsidies is such a terrible idea.

UPDATE: The inevitable porking of the tax bill seems to comprise a significant part of Senator DeMint’s opposition to it, as well. Here’s a transcript of the relevant bit of his interview with Hugh Hewitt, in which he announced he would oppose the deal:


HH: I’ve got some quick questions for you. The first is if the deal reached between the President and the Republican leadership yesterday makes it to the floor of the Senate in substantially the same form, will you vote for cloture to allow a final vote on it? And would you vote for it on that final vote if it cleared cloture?

JD: No.

HH: On both counts?

JD: On both counts. I’m glad the President recognizes that tax increases hurt the economy. I mean, I guess that’s progress. But frankly, Hugh, most of us who ran this election said we were not going to vote for anything that increased the deficit. This does. It raises taxes, it raises the death tax. I don’t think we needed to negotiate that aspect of this thing away. I don’t think we need to extend unemployment any further without paying for it, and without making some modifications such as turning it into a loan at some point. It then encourages people to go back to work. So there’s a lot of problems with it. I mean, and frankly, the biggest problem I have, Hugh, is we don’t need a temporary economy, which means we don’t need a temporary tax rate. A permanent extension of our current tax rates would allow businesses to plan five and ten years in advance, and that’s how you build an economy.

HH: Do you think a left-right coalition exists in either the Senate or the House to defeat the deal?

JD: Well, I was kind of holding my fire to let the liberals blast this thing first. I have a feeling that, I don’t know if it’s pretense or whatever, but a lot of the liberals are upset that the President is not raising taxes on upper income and small businesses. So I was going to try to see if the liberals might go after it first. But it does appear to me that there are going to be problems on the left and the right with this bill. And they’re going to, as they do with so many things here, Hugh, make it a Christmas tree. Harry Reid’s already trying to legalize online gambling using this tax agreement. That isn’t going to happen, but he is trying to work that through to give a payback to the gambling interests that helped elect him.


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