We join the 99.974 percent of economists in applauding the Senate’s bipartisan vote to repeal the 45-cent-a-gallon tax credit reaped by ethanol refiners and the 54-cent-a-gallon tariff on ethanol imports. That doesn’t mean we’re done with the credit, of course: The refiners, led by ADM, will have a thing or three to say to House Republicans, who are now caught between the Tea Party and their corporate benefactors.
Remember, too, that, even if the $6 billion annual subsidy and the tariff were repealed, the refiners would retain potent protection in the form of an unjustifiable federal mandate requiring the use of 15 billion gallons of corn-based ethanol annually, along with requirements in six states (Florida, Hawaii, Minnesota, Missouri, Montana, Oregon) that auto fuel contain 10 percent ethanol. So if the House did accept the Senate bill, the subsidy would morph from a federal tax expenditure to an invisible tax on consumers in the form of higher fuel prices. Surprise: subsidies are way easier to hand out than to take back.