Saturday, December 11, 2010

$5 billion in subsidies for corn-based ethanol

The recent tax cut deal worked out between Republicans and the White House is bloated with wasteful spending, the worst of which is $5 billion in subsidies for corn-based ethanol and a continuing tariff to protect against ethanol imports. To the $45 billion already wasted on ethanol, they are going to add another $5 billion.

This is insanity! Almost everyone agrees that ethanol has been a failure. Corn for ethanol competing with corn for food has led to higher corn prices and this has led to hunger in the third world. The increase in corn production has led to an increase in pollutant run-offs which has created a large dead area in the waters of the Gulf of Mexico. It takes almost as much energy to produce a unit of ethanol energy as the energy produced. And, corn-based ethanol may be a greater contributor to global warming than oil. Corn-based ethanol is an inefficient source of fuel and would not exist without government subsidies and protectionism.

Even Al Gore has come out and admitted ethanol was a mistake and he has said the only reason he supported it as a senator and candidate for the Democratic presidential nomination was to gain the support of the Tennessee and Iowa farmers.

One of the leading proponents of ethanol is Iowa's Senator Charles Grassley, the ranking Republican on the Senate Finance Committee. I am not optimistic the government can cut spending.Unless Republicans take a principled stand for fiscal sanity we are doomed. As of yet, I don't see it happening.

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