By Bob Sanchez, JMI Policy Director
A recent Washington Post editorial pointed out the folly of subsidizing ethanol production – a folly likely to continue as long as the quadrennial presidential caucuses in corn-rich Iowa are among the key starting points in the race for the White House.As The Post noted, “The feds give companies that combine corn ethanol with gasoline a 45-cent tax subsidy for every gallon of corn ethanol added to gasoline. That’s on top of a tariff on imported sugar cane ethanol from Brazil and federal mandates requiring that steadily increasing amounts of these bio-fuels be produced. The Congressional Budget Office this month estimated the costs to taxpayers of replacing a gallon of gasoline with one of corn ethanol add up to $1.78. The tax incentives alone cost the Treasury $6 billion in 2009.How about the environmental benefits? The CBO calculates that it costs a huge $750 to reduce annual carbon dioxide emissions by one ton using corn ethanol. And that figure relies on assumptions extremely favorable to the industry.”This shows what can happen when the government tries to pick winners and losers in the marketplace, paying a huge price to encourage domestic production of corn ethanol while blocking competition from other sources. We all wind up paying a price twice – at the pump and through our taxes. Worse, our grandkids will pay again as the bills come due from our reckless deficit spending. When even a newspaper widely perceived as liberal can question a program pushed by the environmental movement, maybe there’s hope that the public’s awakened sense of concern about deficits and wasteful spending can bring results. The key, though, may be to abolish tiny Iowa’s outsized role in picking our nation’s leaders.
2010
