WASHINGTON (AP) — The Senate refused to kill a $5 billion annual subsidy for
ethanol on Tuesday, backing continued government aid for a Farm Belt-based
industry over deficit reduction in an era of record red ink.
The 40-59 vote, far short of the 60 needed to advance the measure, reflected
regional as well as partisan differences, a split among Republicans — and
anything but the final word on the issue.
“We continue to spend money that we don’t have on things that we don’t
need,” said Sen. Tom Coburn, R-Okla., a prominent deficit hawk who led the
effort to eliminate the subsidy immediately.
Supporters of continued federal spending for ethanol argued it is a leading
source of alternative fuel and is needed to reduce U.S. dependence on
“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. Chuck Grassley, R-Iowa, said on Monday, when the
measure was debated at length.
Grassley’s state leads the nation both in harvesting corn and blending it
into alternative fuel. Other leading ethanol-producing states are Nebraska,
Illinois, Minnesota, South Dakota and Indiana, and all senators from them
opposed an end to the subsidy, regardless of political party.
Ethanol is blended with gasoline, and subsidized at 45 cents a gallon, with
an additional 10 cents for small producers.
These tax breaks long have been supported as a way to reduce oil imports by
politicians in both parties, emphatically so for many who campaign across
Iowa every four years in the state’s kickoff presidential caucuses.
But a new emphasis on deficit reduction, particularly among Republicans
aligned with tea party activists, has contributed to a shift in the
As a result, with the current subsidy scheduled to expire at the end of the
year, Grassley and other farm state lawmakers support alternative
legislation to reduce the tax break without eliminating it for several more
Unlike Coburn’s measure, the alternatives put only a fraction of the savings
to deficit reduction. Instead, the rest would go for renewal of different
tax breaks, including one for firms that purchase pumps to blend ethanol
Given the pressure to cut spending, it was evident even before the vote that
the roll call would not be the final word this year in Congress on ethanol.
House deficit hawks are likely to seek to cut or eliminate the subsidy, and
the issue also may come up in deficit reduction talks led by Vice President
Additionally, shortly after Coburn’s legislation was blocked, Senate
Majority Leader Harry Reid, D-Nev., announced he would schedule additional
votes on the fate of the subsidy at the end of next week.
Coburn’s pre-emptive move forced a quick choice.
White House spokesman Clark Stevens said President Barack Obama opposed the
elimination of the subsidy, but was “open to new approaches that meet
today’s challenges and save taxpayers money.”
For Republicans, the choice was complicated by opposition from Grover
Norquist, the head of Americans for Tax Reform and an inflexible opponent of
Because the subsidy isn’t scheduled to expire until the end of 2011, he said
Coburn’s legislation to end it immediately amounted to a tax increase.
The Oklahoman disagreed, as did other deficit hawks who said the vote marked
a chance to go on record for spending cuts.
“It seems to me to be a pretty easy one” to cut, said Sen. Jeff Sessions,
R-Ala., who said he had supported the subsidy in the past but had switched
his position because of the growing national debt.
Sen. Pat Toomey, R-Pa., elected to his first term last fall, said the
current program was “extremely inefficient. It is a waste of taxpayer
But Sen. John Thune, R-S.D., said ethanol takes the place of 445 million
barrels of oil annually. “That is the equivalent of $34 billion that we
don’t send overseas,” he said.
Other critics noted that Coburn’s state of Oklahoma is part of the nation’s
oil patch, and said the oil industry has benefited from government largesse
for roughly a century.
“Already, the ethanol community is ahead of every other energy sector in
stepping up with an alternative plan,” Grassley said in a statement issued
after the vote.
Thune and Sen. Amy Klobuchar, D-Minn., like Grassley, are sponsors of an
In all, 33 Republicans sided with Coburn, several of them first-termers
elected with the support of tea party voters eager to cut federal spending.
Another 12 GOP senators opposed the legislation, all from farm states.
five voted to kill the subsidy. Another 46 voted one independent voted to
retain it, but some said their votes reflected an unhappiness that Coburn
had decided to force a vote rather than a long-term commitment to the