Corn brought $7.55 a bushel Tuesday, about double the mid-June 2010 price.
On that same day, the Senate defeated a measure eliminating the 45-cents-a-gallon ethanol subsidy, which would have cut federal expenses by $6 billion a year and contributed a bit to deficit reduction. Eliminating the ethanol subsidy might also result in a lower price for corn, which would have a ripple effect throughout the food industry, to the benefit of everyone who eats.
This juxtaposition of facts brings to mind a story. The preacher in a country church was railing against sin. Every abomination he condemned drew a chorus of “yes, brother!” “amen!” and “that’s right!” until he called for an end to pipe smoking and whiskey drinking. The heavy silence that greeted that pronouncement was finally broken by a husky voice: “Now you done it. You quit preachin’ and went to meddlin.”
Ethanol subsidies prop up the price of corn and, in turn, prop up farm economies throughout the Middle West. Republican lawmakers are normally budget-cutters. But when it comes to cutting subsidies, which put money in the pockets of their voters, they have second thoughts. Their yeses turn to not-on-your-lifes. When budget-cutting gets into the pockets of voters, the preaching turns to meddling.
But the hard fact is that all budget-cutting gets into someone’s pocket. Every federal dollar saved is a dollar taken away from someone’s income. The challenge is to do the cutting where it will do the least damage.
It will be difficult to find less damaging and more beneficial ways to cut federal spending than ending the ethanol subsidy and eliminating the tariff on imported ethanol.
Repealing the tariff on imported ethanol would eliminate another prop under corn prices and do a little to reduce the U.S. dependence on imported oil. The tariff, by the way, is aimed at Brazil, which produces ethanol from sugar cane — much cheaper than the alcohol being made in the U.S. from corn.
TUESDAY’S VOTE in the Senate demonstrates how difficult it will be to cut federal spending by the $2 trillion House Republicans are demanding as payment for agreeing to lift the debt ceiling so that the U.S. can pay its bills and honor its obligations at home and abroad. A good number of farm state Republicans voted to keep the ethanol subsidy in place; voted, in other words, against deficit reduction.
When and if legislation to eliminate the subsidies the oil industry enjoys is introduced, we will see oil-state Republicans join oil-state Democrats to protect their home state industry; their most loyal and generous supporters.
It is natural to be selfish. And that is the reason why bringing the deficit under control will never happen until our fiscal crisis becomes so severe that both political parties understand they must work together to keep the country from collapsing.
Of course, subsidies to agriculture can be reduced at a time when commodity prices are high enough to cover production costs and produce a good profit.
Of course, it makes no sense to subsidize oil production with oil selling at such high levels.
Of course, we should eliminate the tariff on imported ethanol to reduce the need for importing oil by a tad and help a South American ally.
Of course, it makes no sense to argue that returning to the income tax levels of 2000 — when the federal budget was in balance — would damage the economy.
And, of course, there are many more painful but endurable ways to cut costs and increase federal income to reduce the deficit that can and should be taken.
But none of these obvious remedies will be employed until our “leaders” put the good of the nation ahead of what they — very mistakenly, in my opinion — believe to be the good of their party.
— Emerson Lynn, jr.
