2018 midterms

Trump to Bring Big Juicy Ethanol Treat With Him to Iowa Rally

Corn is unloaded at a biorefining facility in Iowa, where it will become ethanol. Photo: Sergio Flores/Bloomberg via Getty Images

Donald Trump is rolling into Cedar Rapids, Iowa, tonight (his second rally there since becoming president) for what is designed to be a pre-midterms rescue mission. The locale is not accidental: Cedar Rapids is in the congressional district of Rod Blum, who is among the most endangered House Republican incumbents in the country. Blum, a hard-core conservative, is in a traditionally Democratic district that he flipped in Iowa’s profoundly pro-GOP midterm election of 2014, and held in the equally pro-GOP 2016 presidential election. He’s drawn a very strong opponent in state legislator Abby Finkenauer, and he is unhelpfully under investigation by the House Ethics Committee for failing to disclose a business venture. A recent New York Times/Siena poll showed Blum trailing Finkenauer by 15 percent.

Blum’s not the only Iowa Republican who’s vulnerable: a second GOP House member, David Young, is in a toss-up race. And the state’s Republican governor Kim Reynolds (who moved up to the position when Terry Branstad was appointed Trump’s ambassador to China) has been trailing deep-pocketed Democrat Fred Hubbell in recent polls. All of these candidates, like counterparts throughout the farm belt, have been hurt by Trump’s trade war, and particularly the retaliatory tariffs China has imposed on U.S. crop exports.

But Trump is not showing up at his Cedar Rapids rally empty-handed: he’s bringing Iowa’s corn farmers and biofuels industry a tasty treat from the same heavy-handed White House that screwed up farm exports, as Politico explains:

President Donald Trump has ordered the Environmental Protection Agency to expand sales of corn ethanol, a senior White House official said on Monday, delivering a gift to farm state Republicans a month before the midterm elections….

Trump, a vocal supporter of corn ethanol, will order EPA to allow year-round sales of gasoline with 15 percent ethanol content, an increase over the 10 percent blends that are sold at most gas stations around the nation. The sale of the blends, known as “E15,” is currently prohibited during the summer months in several states because of Clean Air Act restrictions, and corn growers have long sought to expand sales of the higher concentrations.

There are some doubts about how quickly this new policy will actually affect ethanol use, as expressed by the Cedar Rapids Gazette:

 [T]he administration is not proposing more funding to get E15 to the pump — it’s sold at only about 1 percent of the nation’s gas stations now — and rule-making is expected to take months and possibly lead to oil industry lawsuits.

That has Sebastian Pouliot, an Iowa State University professor specializing in agricultural and natural resource economics, skeptical of any immediate impact.

“Are fuel retailers willing to make the investment?” asked Pouliot, who has studied consumer willingness to pay for ethanol blends as high as E85. “That’s not obvious.”

Overall, however, the Trump tilt is unpleasant news for an oil industry that’s being forced to use more ethanol, which increases compliance costs. And one of the losers in a power struggle that is being resolved in the ethanol industry’s favor is Texas senator Ted Cruz. Earlier this year Cruz placed a four-month hold on the nomination of Iowa Secretary of Agriculture Bill Northey to become Undersecretary at USDA, reportedly as part of an effort to force concessions from the ethanol lobby. Aside from losing that power struggle, Cruz has really damaged any future presidential ambitions he might have by annoying Iowans. As you may recall, Cruz gave Trump a rare and momentarily major setback in the 2016 Iowa Caucuses, despite doubts about his willingness to express love for ethanol. Now more than ever he’s an open enemy of that great corn idol.

More broadly, Trump’s new ethanol pander is an example of how far his economic policies have drifted from anything approaching free market principles. What his trade war taketh away from Iowa, his energy policies may giveth back, at least in part. We’ll soon see if voters in Iowa, a key bellwether state in terms of measuring how far Trump has fallen even in favorable territory since his election as president, buy the trade-off.

Trump Brings Big Juicy Ethanol Treat With Him to Iowa Rally