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Budget-conscious GOP Senators are pushing to eliminate a $6 billion federal ethanol subsidy that is cherished by farm-state Republicans, exposing an intraparty schism that could muddy the party’s message on fiscal discipline.
The GOP ethanol opponents see an opportunity to use their party’s emphasis on cutting federal spending as leverage to support Sen. Tom Coburn’s amendment that would eliminate a tax credit that oil companies receive for blending ethanol into gasoline. But they face formidable opposition from a band of farm-state lawmakers — led by Sen. Chuck Grassley (R-Iowa) — who have long championed ethanol and say any attempt to limit federal support of the corn-based fuel should be part of a broader debate over national energy policy, rather than an ethanol-specific rifle shot.
Although Coburn’s proposal could cause headaches for some conservative lawmakers on both sides of the aisle, a vote could be particularly difficult for Republican lawmakers who are facing potential primary challenges in 2012.
Coburn has vowed to push for a vote as part of the small-business bill the Senate is currently debating, and supporters of the Oklahoma Republican’s proposal are casting a vote as a litmus test of Republicans’ commitment to fiscal restraint.
“You can’t be too serious about cutting government waste and spending if you don’t want to eliminate ethanol subsidies,” said Sen. John McCain (R-Ariz.), a staunch ethanol subsidy opponent.
A vote on Coburn’s amendment may not be imminent: One senior Democratic aide said Tuesday that a vote was highly unlikely, citing bipartisan objections. But Republicans, especially those who are staring at possible primary challenges from the right, are feeling pressure to re-evaluate their prior support for the contentious subsidy.
Utah Sen. Orrin Hatch, the ranking member on the Finance Committee, said he had supported ethanol subsidies in the past because of his “great friendship” with Grassley. But Hatch, who is viewed as vulnerable after his former GOP colleague Bob Bennett was ousted by more conservative Republican candidates last year, said Tuesday that he was not sure how he would vote on Coburn’s proposal.
“I think we’ve got to do everything we can to cut back,” he said. “I’m not so sure because I’m basically for any kind of restraint that we can find. I think we’re in that kind of trouble, we’re going to have to restrain.”
Ethanol opponents hope that concerns about the soaring deficit, coupled with rising gas and food prices, as well as recent reports of increased earnings by ethanol companies could help them to build support for ending the subsidy.