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End the ethanol subsidy

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The following editorial appeared recently in the Chicago Tribune:

"I'm Al Gore, and I'm an alcoholic."

No, that's not exactly how the former vice president began his recent mea culpa on alternative energy. But he admitted he had an unwise dependence on alcohol — corn-based ethanol as an ingredient in auto fuel, to be precise — and tried to steer others from the same course.

Gore's dependence was not physiological but political. He backed federal support of the industry as a member of Congress because he wanted to win the votes of farmers in his home state of Tennessee and, when he ran for president, in Iowa. "It is not good policy to have these massive subsidies," he says, now that he no longer aspires to elected office.

Maybe his admission has started something. Even many current politicians are swearing off the stuff.

It's not every day that California Democrat Barbara Boxer, one of the most liberal members of the U.S. Senate, joins forces with Arizona Republican Jon Kyl, one of the most conservative. But they and 15 other senators signed a letter calling the existing 45-cent-per-gallon federal subsidy to ethanol fuel and the 54-cent-per-gallon tariff on imported ethanol "fiscally irresponsible and environmentally unwise." They oppose renewal of the two programs, which are scheduled to expire at the end of this year.

Yet there's talk that an extension of the subsidy, and even a boost in the tariff, could be included in the tax deal reached by President Barack Obama and Republican leaders. That would be a terrible mistake.

The fiscal tab of the federal tax credit comes to about $6 billion a year, which is more than the entire savings from President Obama's two-year freeze on federal civilian pay. The more dire our fiscal predicament grows, the harder it is to justify this special-interest expense.

Then there are the environmental questions. Ethanol is actually worse than ordinary gasoline when it comes to some pollutants. True, it does generate fewer greenhouse gas emissions — but that savings could be canceled out if forests are cut down to expand corn production, because trees absorb so much carbon dioxide. Some estimates also suggest it takes more energy to produce a gallon of ethanol than the gallon contains, making the whole exercise pointless.

The excuse for this favor to corn farmers and ethanol producers is that it reduces our dependence on foreign oil. But the effect is modest at best. In 1997, the General Accounting Office (now called the Government Accountability Office) said that "ethanol's potential for substituting for petroleum is so small that it is unlikely to significantly affect overall energy security."

If reducing our reliance on foreign oil producers were truly the goal of federal policy, the government wouldn't be so intent on keeping out foreign ethanol. The high duty on imported ethanol, noted the 17 senators, "discourages transportation fuel imports from Brazil, India, Australia and other sugar producing countries, and leads to more oil and gasoline imports."

In better fiscal times, it was easier to excuse our leaders for having their fun doling out subsidies for ethanol and protecting its makers from competition. But it's time for the party to end.