One of the best places to see the hypocrisy of the Republican deficit reduction plan is in the GOP's treatment of "corporate welfare." A case in point is the $6 billion a year that taxpayers surrender in subsidies for ethanol at 45 cents a gallon, almost all of which goes to refiners who blend the stuff with gasoline.
The subsidy comes in the form of a tax credit. That expense comes off the top of the dollars that a company otherwise owes Uncle Sam. The plan of House Budget Chairman Paul Ryan, R-Wis., to slash the deficit has a section on "cutting corporate welfare." Somehow Ryan sees the laws the Democrats passed to restrain Wall Street crooks as corporate welfare, and he is very specific about wanting investment banking restored as the "oldest established permanent floating crap game in New York." (From "Guys and Dolls," not Ryan.) And while Ryan's plan details how it will kill Medicare and smother Medicaid, it really offers nothing about tax credits, which some analysts say cost the federal treasury a trillion dollars a year.
There are tax credits that benefit individuals, such as write-offs for a new home furnace or air conditioner, and for replacement windows. Some aid families, like Sen. Charles E. Schumer's college tuition tax credit, and some help manufacturers and homeowners, like the solar panels credit.
But the ones that have the most disastrous effects on federal budgets are credits for fabulously profitable global oil and gas businesses. The Congressional Research Service found that eliminating just one of several goodies enjoyed by the oil and gas exploration business would provide up to $6 billion in new revenue in the next four years.
They're nothing more than boondoggles that have no positive effect on employment other than feeding the armies of lobbyists and special interest lawyers who help keep the racket going.
One of the worst is the credit for ethanol. Making it creates greenhouse gases. Burning it in your car creates more carbon dioxide than gasoline. It was promoted as helping energy independence. However, the United States began importing ethanol three years ago to meet "demand" propelled by bureaucrats who rule that "gasoline" at the pump must contain 10 percent to 15 percent ethanol.
More than 35 percent of the nation's corn crop goes toward making ethanol. Diversion of that basic grain into biofuels, driving up the price of corn and other staples, contributes to the undernourishment of one out of seven people across the world, according to the U.N. Food and Agriculture Organization.
So the taxpayer gifts to the bio-fuels industry are a big stationary target for budget cutters. Obviously ethanol has zero effect on holding down the pump price. Yet House Republican budget trimmers have not yet targeted bio-fuels for elimination. All they need to do is let the subsidy lapse on Dec. 31.
A surprise ally of the ethanol business in the midst of the swirling deficit fight is President Obama's secretary of agriculture, Tom Vilsack. Kate McMahon, a researcher for Friends of the Earth, told me "it is very disappointing to see President Obama" buying into the biofuels line that they create jobs and give us energy independence.
One Republican who is making a strong pitch to end the giveaway is a budget-hawk from Oklahoma, Sen. Tom Coburn. But Coburn is running afoul of conservative ideology that holds that eliminating a tax credit is a tax increase. It's a nice cover for members of Congress to protect their friends and campaign contributors.
Coburn is a member of the so-called bipartisan "gang of six" senators who are searching for ways to close the deficit enough to avoid a crisis over raising the debt ceiling between May 1 and the end of July. Let's hope common sense prevails over ideology. Conscience anyone?