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If U.S. is serious about waste, ethanol subsidies must end

The Bush-era tax cuts, scheduled to expire by the end of the year, have been the subject of plenty of national debate. But another federal program, subsidizing ethanol and costing billions of dollars a year, also is scheduled to end on Dec. 31. The federal ethanol program should be exposed as what it is — an ineffective energy policy and an expensive subsidy.

Ethanol is alcohol produced from plants that can be blended with gasoline. Initially, the product was promoted as a way to encourage the use of cleaner fuel and to reduce the consumption of imported oil because ethanol blending stretches the supply of petroleum-based gasoline.

Increasingly, though, people are asking questions about the wisdom and effectiveness of the ethanol program. And the more people learn about the program, the more clear it will become that it should be ended.

A recent editorial in the Wall Street Journal noted that former Vice President Al Gore, a well-known environmentalist, is now opposed to extending the subsidies for ethanol. This shift, the Journal notes, creates “a left-right, anti-boondoggle coalition.” With people from across the political spectrum seeing a variety of problems with the ethanol program, there is hope it will be ended. But, special subsidies build powerful constituencies that will fight to keep the status quo.

Supporters of renewing the subsidies include farmers and the powerful farm-state coalition in Congress. Other supporters include ethanol producers, including Archer Daniels Midland, a company well known for generous campaign contributions and aggressive lobbying.

Ethanol is pitched as a home-grown fuel that pays American farmers instead of Arab sheiks. The real story is more complicated.

Ethanol subsidies do help corn farmers, but diversion of corn to ethanol production has caused the price of corn for animal feed to increase dramatically. This has caused the prices of other foods to go up. It has also caused dramatic cuts to the size of the beef and swine herds in America, which will lead to even higher meat prices.

Ethanol demand for corn has also raised food prices around the world, putting pressure on the most vulnerable people in the poorest countries.

To protect the U.S. ethanol market, the government imposes a tariff on cheaper ethanol from Brazil, where sugar cane is used. Sugar cane produces ethanol more efficiently than corn, but corn is used in the U.S.

Until recently, it took more energy to make a gallon of corn-based ethanol than the energy provided by the gallon of ethanol in the gas tank of a car or truck. Improved technology has improved that equation somewhat, but it’s still a marginal net energy gain.

To really transform and clean up the transportation-energy picture, a federal effort should support conversion of

big-rig trucks, and maybe cars, to run on natural gas, which is plentiful in the United States.Most analysts agree that ethanol might have started out decades ago as a fuel and energy-independence strategy, but now the reality is mostly about politics and corporate profits.The Journal noted that the ethanol subsidy system “serves no purpose other than re-electing incumbents and transferring wealth to farm states and ethanol producers.”As an apparent boondoggle costing taxpayers billions of dollars a year without improving the domestic energy picture or the environment, the ethanol subsidy program should not be renewed. The coming debate in Congress over ethanol will reveal whether facts trump feel-good marketing — and if politicians are serious about ending ineffective and costly federal programs as part of getting federal spending and budget deficits under control.If Al Gore and environmentalists on the left are joined by advocates for ending wasteful-spending on the right, the ethanol program will be ended. Only the farm lobby and a few powerful ethanol producers will stand to fight the sensible decision to end the subsidies.And if President Barack Obama is serious about budget reform and reducing the deficit, he will speak out and add his support for ending the ethanol subsidy program.Let the American people know how the program really works — not what marketing or political messages suggest it does — and the popular support for ending the ethanol subsidies and tariffs on imported ethanol will be clear.

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