Thursday, July 7, 2011

The End for Ethanol?

Proof that democracy can work:
Senate negotiators on Thursday announced a final deal that would end a 45-cent-per-gallon tax credit for ethanol.
I have railed against ethanol subsidies on this blog for some time, even considering somewhat of a litmus test for Republican Presidential hopefuls. However, the news isn't all good:
[the agreement] uses $668 million to support renewable energy efforts such as blender pumps that distribute ethanol, storage tanks for ethanol, plug-ins for electric cars, natural gas development and efforts to produce ethanol from sources other than corn.
News flash senators, far more efficient ways to produce ethanol include switchgrass and sugar cane. But those forms of production don't benefit farmers in Iowa. However, if this gets into law, and its looking good, this is a great day for democracy, where we start to role back subsidies based solely on political expediency.

The WSJ opined yesterday that the Republicans should cave on "corporate tax breaks" like corporate jets in return for a lower tax on business profits. I happen to agree. A simplified tax code has the following beneficial effects:
  • Reduces spending on lobbying efforts.
  • Stimulates growth by removing government from directing investment.
  • Removes tax attorneys as a profit center in big businesses, increasing profits for real, and again stimulating growth.
  • Actually raises more revenue due to fewer loopholes.


  1. think of all the environment we could protect by not growing corn on it!

  2. True enough. In fact, many government actions damage the environment. Subsidizing water for agriculture leads to the bizarre result of growing rice in California's central valley. We end up growing all sorts of crops not really suited for their particular climate, which has negative side effects. Further, when subsidies end, as they inevitably must, economic dislocation causes real pain to decent hard working people.