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Two senators align against ethanol subsidies

WASHINGTON — Democratic Sen. Dianne Feinstein of California and Oklahoma Republican Sen. Tom Coburn have joined forces with tea party activists to kill $6 billion a year in federal ethanol subsidies.

"Ethanol is the only industry that benefits from a triple crown of government intervention," Feinstein said. "Its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it."

The government pays refiners 45 cents a gallon through a tax credit to refine ethanol. Another 54-cents-per-gallon tariff blocks imports of cheaper and more energy-efficient sugar-based ethanol from Brazil.

The assault on ethanol comes during a wider re-evaluation of federal farm subsidies, long decried by policymakers as wasteful and antiquated but protected by powerful political interests, and which appear to be in serious danger.

This week, Rep. Paul D. Ryan, R-Wis. and the chairman of the House Budget Committee, told reporters, "We shouldn't be giving corporate farms, these large agribusiness companies, subsidies. I strongly believe that."

His budget proposal would take $30 billion out of the farm program over the next decade.

Rep. Eric Cantor, R-Va. and the majority leader, attended the first session of debt-limit negotiations Thursday with a list of areas where he saw a potential agreement between Republicans and the White House, including farm subsidies.

A confluence of factors have lined up against the farm programs. While the rest of the economy remains largely stagnant, commodities prices and farm incomes have remained at a protracted high.

The House Agriculture Committee, while still dominated by farm state members, is now peppered with freshmen who view cuts to these programs as an essential part of the broader attack on the federal deficit, the centerpiece of their campaigns.

Information from the San Francisco Chronicle and New York Times was used in this report.

Two senators align against ethanol subsidies 05/06/11 [Last modified: Friday, May 6, 2011 10:41pm]

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