The U.S. Senate has overwhelmingly voted to end the federal subsidy for corn-based ethanol fuel.
Only 27 of the 100 senators voted to continue the subsidy, which is scheduled to expire at the end of the year. The proposal also calls for ending the federal tariff on imported ethanol. Both of Iowa’s senators were on the losing end of today’s vote, but Senator Tom Harkin says it doesn’t mean the end of tax credits for ethanol.
“It’s just a vote,” Harkin says. “But nothing’s going to happen.”
That’s because President Obama still supports the ethanol subsidy and the House isn’t expected to go along with this Senate proposal for technical reasons unrelated to the substance of the issue itself.
Harkin says he hopes as the year goes along, there’s a “more rational and reasonable” discussion about phasing out ethanol subsidies rather than ending them immediately.
“Not only do they want to end the tax credits, but McCain wants to block any way for ethanol to get to the marketplace and that’s the problem,” Harkin says.
A proposal from Arizona Senator John McCain would forbid the use of federal money to finance “blender pumps” that dispense ethanol or pipelines that transport ethanol.
Critics of ethanol say it diverts needed corn supplies that should be used to produce food instead. Harkin says there are a host of reasons why corn prices are high, but ethanol is not the chief reason according to Harkin.
“First of all, you’ve got higher demand around the world. More and more people want meat protein, so they’re buying the corn for feed for chickens and hogs, cattle, livestock,” Harkin says. “Plus, you’ve got terrible weather patterns that have caused some crops shortages in certain areas and then you’ve got the floods.”
Harkin, who is a Democrat, also argues the tax credit for ethanol has kept pump prices low for consumers. Iowa’s other U.S. Senator, Republican Chuck Grassley, says ending the ethanol subsidy would actually raise gasoline prices for consumers. Grassley dismissed today’s vote as “political theater” as he, like Harkin, says the House has no plans to consider the bill the senate passed today.