Ethanol

Cruz's Victory Is a Welcome Sign That the End Is Near for Corny Crony Capitalism

The Texas senator is the first presidential candidate to win in Iowa while opposing federal support for ethanol.

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Fox News

Ted Cruz's victory in Iowa yesterday does not bode well for the Renewable Fuel Standard (RFS), a 2005 federal mandate that props up the biofuel industry by requiring oil refiners to mix ethanol into gasoline. Support for the RFS, and for the ethanol subsidies that preceded it, has long been considered politically smart for presidential candidates hoping to do well in Iowa, where corn farmers and the companies that turn their crop into fuel benefit from federal favoritism at the expense of motorists, livestock farmers, food buyers, and possibly even the environment (although reducing carbon emissions is the main rationale for preserving the mandate). But Cruz, whose principled opposition to the RFS earned him a rare anti-endorsement from Terry Branstad, Iowa's popular six-term governor, came out on top in yesterday's Republican caucus with 28 percent of the vote. Donald Trump—who has been very cozy with the ethanol industry, vowed to oppose "changing any part of the RFS," and slammed Cruz for saying the mandate should be phased out—got 24 percent.

Cruz and Rand Paul were the only two candidates to earn a "bad rating" from America's Renewable Future, a biofuel industry group whose state director is Branstad's son, for opposing the RFS. You can understand why all the other candidates decided to play it safe, even if they thought the RFS is bad policy (and in some cases had even said so), when you look at the history of Iowa caucus winners since 1980, the first presidential election year after Congress started subsidizing ethanol. On the Republican side, all the winners—George H.W. Bush (1980), Bob Dole (1988 and 1996), George W. Bush (2000), Mike Huckabee (2008), and Rick Santorum (2012)—were ethanol boosters. Likewise on the Democratic side: Jimmy Carter (1980), Walter Mondale (1984), Dick Gephardt (1988), Tom Harkin (1992), Al Gore (2000), John Kerry (2004), and Barack Obama (2008) all favored crony capitalism for corn. 

In other words, Cruz is the first presidential candidate to win the Iowa caucus while opposing federal support for corn-based ethanol (along with "all energy subsidies and mandates"). Maybe that's because ethanol's political significance has waned in Iowa recently, or maybe the issue was never as important as candidates believed. Either way, Cruz's victory is another welcome sign that this four-decade-old boondoggle is on its way out.