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Kudos to Congress for letting ethanol subsidy expire

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DETROIT (Jan. 3, 2012) - - The current do-nothing, argue-over-everything Congress managed to do something right before adjourning Dec. 23, by — surprise, surprise — doing nothing. Congress failed to extend a 30-year tax subsidy for corn-based ethanol that cost taxpayers $6 billion annually and ended a tariff on imported Brazilian ethanol. Ending that egregious subsidy was the right thing to do on so many fronts that it's hard to enumerate them all. Here are a few reasons to praise Congress' action/inaction:

  • It saves $6 billion a year. That's a pittance compared with the savings from ending the war in Iraq, which had the added benefit of saving American lives. But even in Washington, D.C. - - at least outside the Pentagon - - $6 billion is real money.
  • Supporters of corn-based ethanol claimed it was an interim step on the way to cellulosic ethanol, which would use leftover wood chips, corn stalks (rather than kernels) and other waste products to create ethanol. But after 30 years, that's a lame argument.
  • It's not like the subsidy is a critical price support that is keeping family farmers from going bankrupt and losing their land. Growing demand from China has boosted crop prices. The subsidy was icing on the cake, pushing corn prices just that much higher.

James B. Treece is industry editor at Automotive News, a Detroit-based sister publication of Tire Business.

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