|
CONSERVATIVES FOR CORPORATE WELFARE |
|
|
|
Written by Senator Tom Coburn
|
|
Friday, 11 March 2011 |
Cutting spending in Congress is so difficult because every area of the
budget is defended by an army of special interests and perverse alliances that
often defy reason and common sense.
Nowhere is this more evident than with the federal government's ludicrous $6
billion subsidy of ethanol, which I and Sen. Ben Cardin, D-MD, have proposed to
eliminate. This week on March 09, we
introduced in the Senate a Bill To
Repeal the Volumetric Ethanol Excise Tax Credit.
Within hours on that very day, the senior political columnist for a
conservative newspaper, The Washington Examiner, condemned our bill as "Tom
Coburn's Tax Hike." This illustrates
why the ethanol subsidy endures despite widespread opposition from the Left and
the Right.
On one hand, the Examiner columnist declares, "government support for
ethanol is among the most destructive and wasteful giveaways to special
interests today."
Yet, on the other hand, he says doing away with the subsidy is a "tax-hike"
that would leave money in appropriators' pockets, at which point many
Republicans run for the hills.
This analysis is inaccurate and destructive on several levels.
First, the ethanol subsidy is a spending program, not a tax relief measure.
If it were solely in the discretionary budget and controlled by the
appropriators it would be unmasked as a rank cash payment. Instead, Congress
has shifted the spending program to the tax code to protect it from being cut.
Two, this cash payment is nothing more than corporate welfare
not-so-cleverly disguised as a tax break that, in the real world, has the
impact of a tax increase.
As Pete Sepp with the National Taxpayers Union says, "the refundable VEETC
is a prime example of tax policy at its worst. Congress needs to focus on simplifying
the tax law and cutting rates for everyone, rather than manipulating the tax
law and distorting our economy."
Another damning assessment comes from Matt Kibbe, president of Freedomworks:
"[P]olicymakers in Washington
have opted for a fuel that can only exist in a world of subsidies and
distortions. The energy sector is a prime example of Washington's
inability to second guess the marketplace; it is a confusing world of myriad
and simultaneous subsidies, taxes, spending programs, monopolies, trade barriers
and regulations.
"Current ethanol policy is bad for the economy and for the environment, and
seems driven more by corporate interests rather than any concern for the
nation's energy supply."
Ethanol distorts and manipulates the economy by increasing the price of food
and energy. While I'm pleased groups like Americans for Tax Reform, who
previously opposed the elimination of the subsidy are now neutral, their
neutrality is supporting a de facto tax increase on every American consumer.
For instance, the Congressional Budget Office has said the "cost to
taxpayers of displacing a gallon of gasoline with a quantity of ethanol that
provides the same amount of energy as a gallon of gasoline is $1.78." How's
that for efficiency?
Regarding food prices, CBO said:
"The increased use of ethanol accounted for about 10 percent to 15 percent
of the rise in food prices between April 2007 and April 2008. In turn, that
increase will boost federal spending for the Supplemental Nutrition Assistance
Program (SNAP, formerly known as the Food Stamp program) and child nutrition
programs by an estimated $600 million to $900 million in FY 2009."
The subsidy also exacerbates hunger internationally, which we pay for with
increased food aid and defense spending - both of which are financed with taxes
and borrowing.
Emira Woods with Africa Action calls it a "shameless subsidy." She writes,
"In the midst of a global food crisis and rising hunger, the ethanol industry
expropriates land in Africa and elsewhere to grow food
that fuels cars."
Finally, the ethanol subsidy is a tax on anyone who owns a car. In short,
the subsidy makes it more expensive to drive to the grocery store to buy more
expensive food.
Ethanol is a third less efficient than gasoline - it burns at 68 percent of
the energy content of regular fuel. And, by EPA's own admission, ethanol
reduces fuel economy, ultimately leading to the burning of more fuel to travel
the same distance.
If that isn't bad enough, the ethanol subsidy may damage your engine. AAA,
the nation's biggest motoring organization, has said higher ethanol blends may
damage exhaust systems, engines and fuel pumps, and destroy catalytic
converters.
In a perfect world, the hundreds of earmarks and programs I have targeted
for elimination in my years in Congress would be immediately rolled into lower
tax rates for American citizens. The next best option is to simply cut stupid
spending in whatever form it exists.
Using the tax code to pick winners and losers in the market should be
anathema to conservatives. Eliminating this shameless expenditure should be a
no-brainer, especially on this side of the Iowa
caucuses.
Tom Coburn, M.D., is a
United States Senator (R) from Oklahoma.
|
Discuss this item on the forums. (10 posts)
|
|
