Republican presidential candidate Tim Pawlenty has been praised for his “courage” in using part of a speech in Iowa to call for an end to ethanol subsidies.
Pawlenty didn’t call for an abrupt end to the per gallon tax credit for ethanol. Instead, Pawlenty called for phasing it out — a concept the Iowa Renewable Fuels Association had already embraced. Today, Iowa Governor Terry Branstad, a Republican who is an investor in one of Iowa’s ethanol plants, said phasing out those ethanol-production incentives “makes sense.”
“We recognize the federal government has a huge budget problem to deal with and we’ve got to be part of the solution,” Branstad told reporters at the Iowa Energy Forum. “We can’t just say no.”
Bill Couser, a farmer who serves on the board of directors for the “Lincolnway Energy” ethanol plant near Nevada, Iowa, suggested Iowa farmers and the state’s ethanol industry are realists when it comes to the subsidy.
“Can we stand on our own two feet someday? You bet,” Couser said during a question-and-answer session at the Iowa Energy Forum. “I think we’re going to have to because I think that’s what’s coming down the pike.”
Couser is a past president of the Iowa Renewable Fuels Association, too. The industry group’s current president issued a statement after Pawlenty’s speech in Des Moines, suggesting Pawlenty should consider going to Houston, Texas, to outline how he would phase out “the massive amount of federally-funded petroleum incentives.”
According to Jerry Behn, a farmer from Boone who is also a state senator, Iowa farmers believe all subsidies should be subject to the same scrutiny, not just the one for ethanol.
“I think farmers would be really frustrated, as a block, if that subsidy went away and all the other subsidies stayed in place,” said Behn, who was in the audience at today’s Iowa Energy Forum. “I think that’s really what everybody’s looking at.”
Iowa Agriculture Secretary Bill Northey, a Republican and a row-crop farmer from northwest Iowa, said most farmers believe it’s “logical” that the ethanol subsidy will be reduced, if not eliminated.
“It would seem like it’s very logical for all the supports for the fuels to be on the table, including the oil subsidies,” Northey said during an interview with Radio Iowa.
But John Felmy, chief economist for the American Petroleum Institutes, balks at the phrase “oil subsidies”.
“We get tax treatment that is similar to every other industry, but it’s being spun in Washington as being something special to the oil industry,” Felmy said during an interview with Radio Iowa. “when in fact it’s tax treatment that every business gets, but we’ve just been singled out because they want to raise taxes on the industry, but they know that doesn’t work in Washington, so they’ve got to call it subsidies.”
Felmy was among the panel of speakers at the Iowa Energy Forum in Des Moines, staged just four blocks away from the spot where Pawlenty on Monday had called for phasing out “subsidies across all sources or energy and all industries.”
“It’s political spin in Washington calling it subsidies, o.kay? And I’m not commenting on the governor’s individual statement, but in Washington that’s what’s going on,” Felmy said. “They’re basically tax treatment that affects all industries and so why should we be singled out?”
Iowa’s secretary of agriculture suggests otherwise. “To see some of the folks that have been so adamant in opposition to any kind of support for ethanol to defend subsidies for petroleum products, for imported oil, seems like an odd thing,” Northey said.
On Monday, Pawlenty said with “big time” cuts to make, the “hard truth” is there are no more “sacred programs” in the federal budget. And there wasn’t a single boo when Pawlenty told the crowd of about 250 Iowans it was time to phase out ethanol subsidies.
Senator Chuck Grassley, an Iowa Republican who touts his status as the only working farmer in the U.S. Senate, has introduced legislation to significantly reduce the tax credit for ethanol over the next two years. The two Democratic senators from Pawlenty’s home state of Minnesota joined Grassley in that effort — about two weeks before Pawlenty’s big speech about ethanol subsidies in Des Moines.
Radio talk show host Rush Limbaugh has called Pawlenty “gutsy” for his comments on ethanol. The Wall Street Journal’s editorial board praised Pawlenty for taking on “King Corn” in Iowa.