NYT Op-Ed: Corn Laws for the 21st Century (re ethanol)
Corn Laws for the 21st Century
Mr. Bush is right to ask that the tariff — which mainly affects Brazilian ethanol made from sugar cane — be dropped, and Congress is wrong to resist. Both sides, of course, are playing politics — Mr. Bush, by suggesting that dropping the tariff will quickly ease gasoline prices, which it won’t because demand is currently very strong; and Congress, by catering to the demands of the corn belt, which now supplies nearly all of America’s ethanol.
Instead of offering false promises and preserving perks from another era, however, everyone ought to be focusing on ways to make substitute fuels more plentiful. That means redirecting federal incentives away from corn-belt interests and toward the task of finding gasoline substitutes.
As things work now, every gallon of ethanol — foreign or domestic — gets a tax break of 51 cents. But that subsidy is effectively taken away for foreign ethanol by a tariff of 54 cents a gallon. Thus consumers see relatively little foreign ethanol, and the American farm lobby is happy.
This whole debate misses the point. Americans know that they need alternative fuels — including other forms of ethanol made from cellulose. But for ethanol to become a true alternative fuel for American drivers, Congress must set out to rework, not reinforce, existing subsidies.
Various bills on Capitol Hill would do just that by providing tax incentives, guaranteed loans and direct subsidies to encourage greater production of conventional and cellulosic ethanol, as well as the manufacture of more flex-fuel cars, which run on both gasoline and ethanol. It is on measures like these that Congress should be focusing its energies.
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