Thank the Tea Party for the End of the Ethanol Tax Credit

Sunsetting the subsidy once seemed impossible. Yet this year it expired just prior to the caucuses that helped it survive for so long.

corn fields.jpg

On the whole, the Tea Party hasn't achieved much in the way of actually shrinking government or putting forward a viable presidential candidate to serve as a champion of the GOP's libertarian wing. But political observers should note one achievement for which the movement can claim substantial credit: the remarkable fact that this year's Iowa caucuses are coinciding with the end of federal subsidies for corn ethanol, an ill-conceived energy policy that endured for so many years partly due to the privileged place the state has in the presidential primaries.

Over at Democracy in America, Erica Grieder ably summarizes the factors that made this change possible:

The roaring Tea-Party movement opposed the subsidies on fiscally conservative grounds, and asked the 2012 Republican candidates to do the same. "It is an indication of your willingness to take on a lot of sacred cows," said one affiliated leader. Then, the budget-cutting frenzy put the subsidies on the table. "We shouldn't be giving corporate farms, these large agribusiness companies, subsidies," said Paul Ryan earlier this year. "I strongly believe that.''

And concurrently, Midwestern farmers seemed to realise they weren't going to win this one and it might look greedy to keep clamouring. In May, after Tim Pawlenty kicked off his presidential campaign with a call to end ethanol subsidies, Kathie Obradovich, a political columnist at the Des Moines Register, accepted the straight talk: "...this isn't 2000 or even 2008. Concern over the national deficit and debt, and the Tea Party's scorn for government handouts, has moved ethanol subsidies off the third rail of Iowa politics."

As early as last July, he added, a poll of likely Iowa caucus-goers revealed something pleasantly surprising: "When asked specifically which they would be more likely to support, a candidate who supports ethanol subsidies because they are important to the Iowa economy, or a candidate who opposes them because they want to get spending under control, caucus goers prefer the candidate who opposes ethanol subsidies by a margin of 56 percent to 31 percent."

There are other factors that made the end of the ethanol tax credit, a $6 billion-per-year line item, possible. "After 30 years of subsidies, the industry is thriving. Oil prices remain high, making ethanol more competitive. The EPA's Renewable Fuel Standard is still in place, which mandates that transportation fuel blend in a certain amount of ethanol, a form of government that's arguably even more valuable than the tax credit," The Washington Post reports. "And U.S. exports of ethanol hit a record high in 2011, with some one billion gallons shipped abroad."

If not for the Tea Party, however, it is unlikely that these other factors would've been enough to end the tax credit. Because of the movement's advocacy, the federal government will save money and it won't be doing as much to incentivize a biofuel that affects global food prices and puts more carbon in the atmosphere than it takes out. Now if only we could get rid of sugar subsidies next...

Image credit: Flickr user Matt Dente