Senate debates ethanol subsidies

Photo by Chazz Layne, Flickr

Tempers are flaring over a proposed elimination of ethanol subsidies. The Huffington Post reports that politicians, including Iowa Senator Chuck Grassley, are not short on opinions when it comes to this issue. Those in favor of the measure argue that the subsidies are unnecessary and too costly:

“The days of placing spending programs in the tax code and giving them holy status are over,” [Sen. Tom Coburn, R-Okla.] said. “Ethanol is bad economic policy, bad energy policy and bad environmental policy.”

Coburn’s measure is supported by conservative groups such as the Club for Growth and environmental groups such as the Sierra Club.

“The ethanol subsidy is an abomination, a bad deal for taxpayers and destructive to economic growth,” Club for Growth President Chris Chocola said.

On the other side, those who wish to keep the subsidies site the need to support a domestic fuel source, and the possibility that this measure will cause gas prices to rise further:

“Sen. Coburn’s amendment would raise the tax on domestic energy production by repealing an incentive for the use of homegrown ethanol,” said Sen. Chuck Grassley, R-Iowa. “With conflicts in the Middle East and crude oil priced at more than $100 a barrel, we should be on the same side. Why would anyone prefer less domestic energy production?”

Sen. John Thune, R-S.D., said, “It seems ironic that we would be looking at legislation, at policy that would further drive up the costs of gasoline in this country.”

Some against the measure also argue that the environmental benefits of ethanol over gasoline make the subsidies worthwhile. However, studies show that once the entire process of creating ethanol is taken into account, its environmental benefits are minimal.

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