Ethanol

Corny Crony Capitalism in Iowa

Cruz and Paul stand on principle against the federal ethanol mandate while all the other candidates pander.

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The "report card" from America's Renewable Future (ARF), a biofuel industry group, is not complicated. If you are a presidential candidate participating in Monday's Iowa caucuses and you support "the commonsense, bipartisan Renewable Fuel Standard," you get a "good rating," symbolized by a fuel gauge pointing to "full." Otherwise you get a "bad rating," symbolized by a fuel gauge pointing to "empty."

Despite its simplicity, this single-item checklist is a useful test of character—one that all but two candidates fail. That's because they pass muster with ARF by supporting the Renewable Fuel Standard (RFS), a 2005 congressional mandate that forces Americans to buy gasoline mixed with corn-based ethanol. That policy epitomizes the crony capitalism that both major parties decry. 

The RFS, which takes money from American motorists and gives it to corn growers and ethanol producers, is good for the farmers and refiners represented by ARF but bad for pretty much everyone else. All three Democrats and nine of 11 Republicans vying for votes next week in a state where corn is king nevertheless say they want to maintain the ethanol mandate.

The two exceptions, Sens. Ted Cruz (R-Texas) and Rand Paul (R-Ky.), are both "bad" in ARF's reckoning because they want to scrap the RFS. Cruz's position has earned him the ire of Terry Branstad, Iowa's popular six-term governor and the father of Eric Branstad, ARF's state director.

"It would be a very big mistake for Iowa to support [Cruz]," the elder Branstad told reporters last week. "I know he's ahead in the polls, but the only poll that counts is the one they take on caucus night, and I think that could change between now and then."

Branstad did not pretend to be standing up for anything but the parochial interests of the ethanol industry. He argued that eliminating the RFS would hurt Iowa's economy because "we have tens of thousands of jobs and a lot of farm income dependent on that."

But Cruz is not running for president of Iowa, and he deserves credit for standing on principle at the risk of losing votes in this important early contest. "I am a passionate supporter of a free and fair energy marketplace," he wrote in The Des Moines Register this month. "Washington shouldn't be picking winners and losers."

Reducing carbon emissions is the main rationale for propping up the ethanol industry by forcing people to buy its products. Yet the net environmental impact of corn-based ethanol may actually be negative, once you take into account its contribution to smog, the carbon released in producing it, and the land cleared and fertilizer used to grow corn destined for gas tanks, which accounts for two-fifths of the U.S. crop.

The RFS raises food prices and imposes a hidden tax on motorists because ethanol is more expensive than gasoline and produces less energy per gallon. Between 1982 and 2014, Manhattan Institute Senior Fellow Robert Bryce found, ethanol cost an average of 2.4 times as much as an energy-equivalent amount of gasoline.

According to Bryce's calculation, that de facto tax amounts to about $10 billion a year, or $47 per driver. That may not sound like a lot, but why should every motorist in America be subsidizing the special interests represented by ARF?

Back in 2002, Bryce notes, Hillary Clinton, then a New York senator, accurately described the RFS as "equivalent to a new tax" and said there is "no sound public policy reason for mandating the use of ethanol." She changed her tune when she ran for the 2008 Democratic presidential nomination, and this time around she is also keen on the ethanol mandate.

So is Donald Trump, the Republican front-runner, who opposes "changing any part of the RFS." Other Republicans say maybe it wasn't such a great idea, but scrapping it now would be unfair.

Next to profiles in pandering like these, Cruz should wear the Branstads' enmity as a badge of honor.

© Copyright 2016 by Creators Syndicate Inc.

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  1. Rand Paul and Ted Cruz are the only two major candidates I could ever see myself voting for.

    1. AIPAC/Netenyahu, it came out last week, paid Sen. Tom Cotton $1m to circulate his anti-Iran-deal letter. Not in our lifetimes would Ron Paul have ever signed it. Rand signed it. Vomitatious. Ron went to a Pilates class to practice spinning in his grave. Forgive the Trumpster (“I’ll bomb ISIS sooo bad! And take ALL their oil. Grrr.”) for he knows not what he says. Rand’s calculated abandonment of principle is unforgivable.

  2. Unfortunately, the ethanol mafia is not going away as long as Iowa is holding the disproportionate power of leadoff hitter for campaign season.

  3. Cruz’s position has earned him the ire of Terry Branstad[*], Iowa’s popular six-term governor and the father of Eric Branstad, ARF’s state director.

    This story has everything: crony capitalism, special interest pandering, and blatant nepotism! Also, 6 term governor?! WTF Iowa? And these are the clowns that, by virtue of being the first state to caucus, have such an outsized influence on the outcome of the primaries? We are so fucked.

    *At first I read that as “Terry Bradshaw” and thought why the hell does Terry Bradshaw give a fuck about corn subsidies?

    1. I completely agree. Sounds like Iowa is a good place to leave.

      1. Woah, woah, woah. Let’s be fair here. When wasn’t Iowa a good place to leave?

  4. Is the RFS even properly in the president’s jurisdiction. Sure its administered by the EPA but its current form is based on congressional legislation from 2005 and 2007. I dont understand why a candidate wont just come out and say that he isnt running for dictator and if there are things we want to change, we should try to do it through the appropriate legislative process.

    If its all executive bureaucratic EPA garbage, then of course it should be done away with solely on that principle. But if its an act of congress then a president has no authority to ditch it, the current president’s view of governing notwithstanding. Barack Obama should not be a model for the appropriate way to run the executive branch.

  5. I like farmers and have nothing against the state of Iowa, but …. Screw ARF and RFS with a giant corn cob. Besides the fact that the government shouldn’t be in the corn, oil or any other business, ethanol is murder on vehicles. When I used to fly ultraights, I had to either pay extra for the 100 Low Lead that GA planes use or change my fuel lines and carb gaskets often. Ethanol breaks down rubber and plastic and rusts steel faster.

    Let the farmers sell their corn to the highest bidder. Let the oil companies find “filler” that works if oil is so scarce. Let the customers decide with what they want to power their vehicles. GRRRR!!! this stuff makes my blood boil! This is freakin’ low level fruit for anyone claiming they are a fiscal conservative. As is foreign aid and the Department of Education!

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  7. This is one of the things i like about cruz, he’s actually sticking to his principles even though it would be more politically expedient to go with the flow. I think we need someone like that in the white house!

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  9. Terry Branstad, Iowa’s popular six-term governor

    What the…?

  10. Well, this solidifies Cruz as the current best option of the Republicans for me.

    I mean I’ll vote for Trump against Hillary, but that’s just because I want to be on the good screwed side.

    Both are based on screwing the country, but at least with Trump he should be screwing the other guy more than me.

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  11. Hey! There’s much more to Iowa than just corn dammit! We got meth too!! Seriously, Branstache is horrible. Said he would veto any bill that comes across his desk pertaining to Marijuana reform even though the House and Senate could probably get it passed. On top of that, Eric Branstad is most famous here for killing two people in a drunk driving accident when he was 16. No charges were filed even though he fled the scene, left his victims to die in a ditch, and evidence shows he was smashed. Plus after that he had a few more alcohol related charges culminating in an OWI in 2001 and a Marijuana possession charge as well. Talk about irony. Then daddy Cornholio APPOINTS him to his current position. What in the literal fuck man??

  12. I rather expected Rand Paul to be against it, but Cruz was a bit of a surprise for me.

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