Republicans To Cut Ethanol Subsidies ?

A few months ago the Republicans blocked an attempt by the Democrats in Congress to abolish about $20 billion in subsidies given to the big oil companies. At the time, the Republicans said they would not agree to any kind of tax increases (and they considered eliminating subsidies to be a tax increase). Now it looks like they may be changing their minds.

Several Republicans are now talking about abolishing the subsidies for corn-based ethanol (which is about 45 cents-a-gallon). Even some Republicans from agricultural states are ready to go along with this as they hunt for new ways to cut the deficit -- like Sen. Tom Coburn (Oklahoma) and Sen. Dan Coats (Indiana). The ethanol subsidy costs the U.S. government about $6 billion a year.

It's about time for the Republicans to come up with some real cuts to the budget after increasing the deficit by nearly $400 billion a year with their tax cuts for the rich -- cuts that don't involve slashing programs that help ordinary Americans. I doubt if they can get enough of their Republican cohorts to go along with these cuts (since it would take money away from big business), but the subsidy cuts actually make a lot of sense.

There was a time when these subsidies were needed to get the ethanol industry off the ground -- to help pay for research and plant construction. That time is now over, and it is time for the industry to pay their share of taxes. There are those who think this would inhibit the production of ethanol since it would make each gallon a bit more expensive. But this is unlikely to happen thanks to the government's Renewable Fuel Standard which mandates an ethanol mix in gasoline through the year 2022.

And even if it did reduce the use of corn-based ethanol, would that necessarily be a bad thing. The use of corn to make fuel has contributed to food shortages (both for humans and animals) and resulted in higher food prices. As a nation we should be weaning ourselves off of corn-based ethanol and on to ethanol made from waste products.

However, if the Republicans actually get in a subsidy-cutting mood they shouldn't stop with corn-based ethanol. The president recently called for a $4.5 billion cut in subsidies for the big oil companies. I think that should be a minimum figure for cutting those subsidies -- I personally like the $20 billion cut the Democrats had tried to make a few months ago. After all, the big oil company profits amounted to nearly a half-trillion dollars last year, and it is obvious they no longer need the subsidies.

Far too many corporations paid little or no taxes last year due to subsidies and loopholes. It would help bring the deficit down to make them pay their fair share, and it would also help to create new jobs. Currently these corporations don't need to re-invest their profits to lower their tax bills, but if the subsidies and loopholes disappear there will once again be an incentive to re-invest much of their profit (and that re-investment will produce new jobs).

This country is still hurting from the jobs lost by the recession. It makes no sense to give the corporations a free ride while ordinary Americans are hurting.