The WSJ weighs in, siding with Sen. Tom Coburn.
Senator Tom Coburn of Oklahoma has a fighting chance to begin reforming Washington’s bonehead ethanol policy. That is unless one prominent conservative organization manages to sabotage his effort.
That conservative organization is Grover Norquist’s Americans for Tax Reform, which wants to make sure that if the ethanol subsidy gets the axe, there are corresponding tax cuts that go along with it. The problem with that is, first, adding the tax cuts to the fight makes it that much harder to cut the subsidy, and the subsidy itself is contributing mightily to inflation. Ethanol subsidies mean we’re putting our food in our gas tanks, increasing the price of food while also artificially increasing the price of gas.
Mr. Coburn is collecting votes to take down the Volumetric Ethanol Excise Tax Credit, which ladles out roughly $5 billion a year in benefits to petroleum refiners that blend ethanol into gasoline. The credit flows through to ethanol producers, who can charge some 45 cents a gallon more than the market would otherwise bear.
Ethanol also does nothing for the environment. The subsidy needs to go as a matter of good policy. Coburn is right.
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