Years of political clout built on Iowa’s presidential politics, powerful Members of Congress and industry muscle vanished in minutes last week when the Senate voted by a wide margin to repeal the ethanol tax break.
The defeated look on Sen. Chuck Grassley’s face following the Thursday vote told the story of a long-running battle that has tipped in favor of ethanol’s opponents. After years when the industry was untouchable and easily protected by Members, such as Grassley, from corn-producing states, the Senate voted 73-27 to kill what opponents called a subsidy for ethanol makers.
The six-term Iowa Republican credited Thursday’s vote to demagoguery and misconceptions about ethanol and corn production, not a loss of the Hawkeye State’s political clout or industry influence.
“Nobody knows anything about ethanol. That was their success,” Grassley said during an interview immediately after the vote. “The last time it was an issue in a presidential primary would have been 2000, and then before that ’96. ... But today, it’s not an issue in Iowa — it’s unrelated to this vote, this vote has nothing to do with that. It’s because Iowans are interested in the debt, and Obamacare, mostly the deficit and the economy and jobs.”
However, even Grassley conceded that opposing the tax credit might not be the death knell in the 2012 Republican presidential primary as it might have been in previous caucus contests.
In fact, as was the case in 2008, some presidential candidates running this time around are skipping Iowa altogether, banking on success in the other early states to propel them to the GOP nomination. Even former Minnesota Gov. Tim Pawlenty, who is competing hard for Iowa’s Republican delegates, has announced his opposition to the ethanol subsidy.
Of course, there’s no guarantee the repeal will become law anytime soon, and most GOP presidential contenders still plan to compete in the Iowa caucuses in hopes of gathering momentum for their bids. But, symbolically, the damage has been done.
The ethanol industry has “been helped by the fact that the Iowa caucus was the first ... in the country. But I think it’s simply that, when you’re borrowing 40 cents out of every dollar, you take a sober look at the budget, and ethanol’s triple subsidy sticks out like a sore thumb,” said Senate Republican Conference Chairman Lamar Alexander (Tenn.), who ran for president in 1996. “It probably should have been addressed some time ago, but we didn’t have this big [of] a deficit problem.”
The lopsided Senate vote on a bill by Sens. Tom Coburn (R-Okla.) and Dianne Feinstein (D-Calif.) would eliminate the 45-cents-a-gallon ethanol tax subsidy, and a 54-cent tariff on imported ethanol, worth $5 billion annually. But whether the underlying bill — a reauthorization of the Economic Development Administration — clears the Senate remains uncertain. And, even if it does, the ethanol provision would likely be rejected by the House because revenue bills must originate there.
Lois Lerner, director of exempt organizations for the IRS, arrives for a House Oversight and Government Reform Committee hearing on the investigation of the IRS' targeting of political groups. Lerner invoked her Fifth Amendment right to not testify and caused a protest from some committee members when she offered an opening statement and engaged in dialogue with members before invoking the right.
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