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Ethanol Subsidies Add Fuel to the Tax Debate

“These are things that were delayed all through this session because they weren’t important enough for Congress to come up with offsets to meet the [pay-as-you-go] implications,” said Steve Ellis, vice president at Taxpayers for Common Sense, which advocates for less government spending. “Clearly, these were not important enough to be done by Congress before, and it’s only because we’re at this last-gasp moment that we see the legislative massaging that makes the American people have contempt for Congress.”

Muddying the 2011 Tax Waters

The ethanol credit is a temporary extension that would run until Jan. 1, 2012. That means that even if Feinstein’s effort doesn’t succeed, it will tee up another big lobbying battle for next year, when frugal Republicans will take control of the House.

“We’re going to keep fighting to see that it gets dropped,” Ellis said.

Pete Sepp, executive vice president at the National Taxpayers Union, said many of the smaller tax items in the pending bill are the usual bargaining chips that Members employ annually to pass larger bills. “From a tax reform standpoint, this will definitely muddy the waters for tax simplification next year,” he added.

Bill Wilson of Americans for Limited Government called the ethanol credits and other sweeteners “a symbol of Congress’ inability to cut spending.”

“Take away all of the other fairly significant economic considerations in the bill, and we think including ethanol subsidies is absurd,” Wilson said.

Craig Cox of the Environmental Working Group said in a Monday statement that elements of the tax compromise show that it’s not just Democrats who are failing to hear the message that voters sent on Nov. 2.

“Members of Congress from the very same farm states and districts that with tea party help just ousted lawmakers engaged in wasteful spending are pushing to extend a costly handout to the corn ethanol industry that does little to reduce America’s oil use,” he said. “The next thing poured into Boston Harbor may very well be barrels of corn ethanol.”

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