The Federal Ethanol Subsidy is Done

Congress made a New Year’s resolution this weekend:  quit subsidizing ethanol.

 The federal tax credit for the corn-based product expired on Saturday.  After more than three decades and over $20 billion in subsidies paid, the program ended without a fight, reports The New York Times.

 Both sides of the isle supported the end of the subsidy.  Despite a history of being used to court the vote of farmers, the issue barely came up during GOP campaigning in the corn-growing state of Iowa.

Vocal support for the subsidies was mandatory during the 2008 campaign.  Both Romney and Obama toured ethanol plants during last caucus season.  But a July poll by The Iowa Republican found that this year’s caucus-goers were more likely to vote for a candidate who supported an end to the subsidies than one who wanted to keep them.

We are in a fairly prosperous period for agriculture,” Dean C. Taylor, a former president of the Iowa Corn Growers Association told The New York Times. “Agriculture has not been as much of a touchstone for presidential candidates this time around.”

The tax credit was paid to refiners that blended a mandated percentage of ethanol into gasoline, thereby increasing the demand for (and the price of) corn.  A tariff on imported ethanol also expired. Critics said that the subsidies were redundant and costly.

Despite the end of the federal subsidies, the Environmental Protection Agency said this week that ethanol production is expected to grow by 1.25 billion gallons.

The Federal Ethanol Subsidy is Done