At The Economist’s Democracy in America blog, Erica Grieder notes the significance of the end of ethanol subsidies:
The roaring tea-party movement opposed the subsidies on fiscally conservative grounds, and asked the 2012 Republican candidates to do the same. “It is an indication of your willingness to take on a lot of sacred cows,” said one affiliated leader. Then, the budget-cutting frenzy put the subsidies on the table. “We shouldn’t be giving corporate farms, these large agribusiness companies, subsidies,” said Paul Ryan earlier this year. “I strongly believe that.’’ And concurrently, Midwestern farmers seemed to realise they weren’t going to win this one and it might look greedy to keep clamouring. In May, after Tim Pawlenty kicked off his presidential campaign with a call to end ethanol subsidies, Kathie Obradovich, a political columnist at the Des Moines Register, accepted the straight talk: “…this isn’t 2000 or even 2008. Concern over the national deficit and debt, and the tea party’s scorn for government handouts, has moved ethanol subsidies off the third rail of Iowa politics.”
Even more impressively, Erica goes on to cite a survey of likely Iowa Republican caucus-goers which found that a 56 percent majority would be more likely to support a candidate who opposes ethanol subsidies.
Ethanol subsidies, alas, are not the not the most dangerous protection for incumbent firms in U.S. political economy. As a friend recently observed, the “beauty” of ethanol subsidies is that there is a finite amount of arable land, and so there is a theoretical limit to the extent to which firms could exploit ethanol subsidies. The same isn’t true of the implicit and explicit subsidies that have fueled risk-taking in the financial markets.