Support for ending corn ethanol subsidies runs coast to coast
Posted December 1, 2010
As we discussed here and here, a group of 17 Senators led by Democrat Dianne Feinstein and Republican Jon Kyl sent a bipartisan letter yesterday to Senate leadership calling corn ethanol subsidies “fiscally indefensible” and signaling their opposition to any extension of the corn ethanol tax credit—the Volumetric Ethanol Excise Tax Credit or “VEETC”—and the import tariff on foreign ethanol. In response, a smaller group of Senators led by Iowa Republican Chuck Grassley and North Dakota Democrat Kent Conrad issued their own letter today pushing for more of the status quo: billions of taxpayer dollars wasted paying oil companies to blend corn ethanol they are already required to blend by Renewable Fuels Standard.
But as the map below illustrates, while the Feinstein/Kyl letter included representatives from across the country, the Conrad/Grassley letter included only Senators from farm belt states.
Not surprisingly, this is almost identical to the map below showing the state distribution of VEETC value by production in 2009. As I discussed here and here, while the burden of paying for corn ethanol subsidies falls on every American taxpayer, benefits accrue primarily to just a handful of states. Senator Grassley’s own state of Iowa alone accounted for 25% of the VEETC value paid out in 2009.
Support for ending the wasteful corn ethanol tax credit and protectionist import tariff now clearly runs coast to coast. The time has come for Congressional lawmakers to stand up to oil companies and the corn ethanol lobby and let the VEETC and tariff expire at year-end.
UPDATE: For more analysis on just how concentrated corn ethanol production and VEETC benefits are, check out EWG's new post here.