Ted Cruz

How Ted Cruz Defeated Iowa's Ethanol Cartel

His strategy wasn't lovely, but it was a blow to crony capitalism.


I am not a Ted Cruz fan and can't imagine ever voting for a man so vainglorious. But the junior senator from Texas pulled off a rather remarkable feat in Iowa this week: Not only did he come from behind and win the Republican caucus, but he did so despite dissing the Hawkeye State's beloved ethanol fuel mandate. No candidate — Republican

Ted Cruz
DonkeyHotey / Foter / CC BY

or Democrat — had touched this senseless boondoggle and lived to tell the tale.

But was this a freak stunt by a freak politician that can't be replicated? Nyet! Cruz's campaign offers some lessons to politicians wishing to take a principled stand against welfare for powerful lobbies — what he time and again refers to as the "Washington cartel."

Iowa, an agricultural state, has been hooked on federal ethanol largesse since 1980 when Congress first started subsidizing it. Although this subsidy ended in 2011, Iowa's addiction only grew because Congress passed the Renewable Fuel Standard mandate in 2005 requiring refineries to mix ethanol, which is produced from corn, into gasoline in order to cut greenhouse gases and promote energy independence.

Since then, a pledge of allegiance to King Corn has become a rite of passage for any candidate serious about winning the Iowa caucus, never mind that ethanol doesn't meaningfully cut greenhouse gases. It also raises fuel and food prices (by diverting farmland from fruits and vegetables to corn) and gums up cars.

Indeed, as my Reason colleague Jacob Sullum points out, since 1980, all the Iowa primary winners in both parties have been ethanol boosters. Republican Sen. John McCain's opposition to ethanol subsidies in the 2008 elections made his candidacy in the state so unviable that he simply stopped campaigning, finishing fourth and handing the contest to former Arkansas Gov. Mike Huckabee, who supported the subsidy. Meanwhile, on the Democratic side, President Barack Obama pilloried Hillary Clinton's ethanol flip-flop (she was against it before she was for it), and declared ethanol production a national security issue.

Likewise, in this election, on the Democratic side, both Clinton and Bernie Sanders, the fearless crusader against crony capitalism, promised even more federal support for Iowa's biofuel industry. Among Republicans, Trump out-pandered all his rivals. "I love ethanol," he declared, vowing to jack up the EPA's ethanol mandate. The only exceptions were Kentucky Sen. Rand Paul, who has since suspended his presidential bid after placing fifth in the caucus, and Cruz.

Cruz stuck to his guns, despite frontal attacks not only by his rivals but also Iowa's Republican Gov. Terry Branstad — who took the unprecedented step of warning Iowans that since Cruz doesn't support ethanol, it would be a mistake to support him.

But Cruz (rightly) insisted that it was not the government's job to pick "winners and losers" in the marketplace, especially by forcing drivers to pay more at the pump.

He offered his own free market plan to boost ethanol by eliminating EPA's "blend wall" that had artificially kept the amount of ethanol being blended in gas to below 10 percent, he maintained. Knocking it down, while eliminating all the subsidies that Big Oil enjoyed, he said, would expand ethanol's market.

But with oil prices plunging due to the fracking revolution, it is hard to see how ethanol could effectively compete without subsidies and it is unlikely that Iowans were fooled.

So how did Cruz win them over? By putting together a shrewd electoral strategy that thwarted what political scientists call the "public choice" dynamic.

Under this dynamic, policies whose benefits go to a small group but whose costs are dispersed across a large population are hard to undo even when the net costs are greater than the net benefits. Why? Because the beneficiaries have every incentive to mobilize — lobby candidates, influence the media, go the polls — on behalf of the policy. However, ordinary folks don't have an equal incentive to oppose it because the cost to them is too small to be worth the effort. This problem is even more pronounced in a caucus state like Iowa where voting is not just a simple matter of pulling a lever but an evening-long commitment.

But Cruz got his supporters to make the schlep on his behalf not by talking them into an anti-ethanol revolt. (A Des Moines Register survey just before the election found that 42 percent of Iowans disagreed with Cruz on ethanol, 37 percent agreed and the rest were undecided, hardly an electorate champing at the bit to send Big Ethanol a message.) Rather, Cruz assembled a broad but piecemeal coalition of conservative voters by giving each faction something it really, really cared about. He wasn't like McCain, the other anti-ethanol Republican, who threw down the gauntlet to voters and basically told them to take it or leave it.

Cruz's anti-ethanol stance appealed to his core Tea Party, anti-establishment base that saw it as part of his courageous commitment to limited-government, fiscal restraint, and free market principles. But the far bigger factor in Iowa politics are evangelicals — some of them are probably sympathetic to ethanol and some are not.

Cruz appealed to them by playing up his Christian roots — and the story of his dad's redemption, an alcoholic-turned-pastor. His speeches were infused with Biblical references. Just as he convinced Tea Party conservatives that his policy positions seamlessly stemmed from his limited government ideology, he persuaded evangelicals that his policy commitments and religious convictions were coextensive.

These commitments included an unflinching opposition to a gay agenda and abortion rights. In fact, he condemned the Supreme Court's Obergefell ruling legalizing gay marriage as the "very definition of tyranny" and pledged to return the issue to states — a very clever way of uniting both the Tea Party and evangelical Iowans. His little jeremiad against Trump's New York values may have appalled pundits. But it instantly concretized for Iowa's traditional voters the stark contrast between what they stood for — and a creepy playboy who had once said that had Ivanka not been his daughter, he'd date her because "she had a very nice figure."

The upshot was that instead of Trump bringing new voters to the polls as had been widely predicted, Cruz did, expanding the evangelical share of the electorate from 57 percent in 2008 to 64 percent this time. And he pulled 34 percent of this vote, 13 points more than Rubio, his closest rival. What's more, of the folks who voted for candidates based on "shared values," Cruz pulled 17 points more than Rubio, who got the second highest votes from this group.

But Cruz reached out not just to traditional religious voters but also nationalist conservatives worried about security. He backed off not even slightly from his anti-immigrant screeds, pledging to kill any form of legalization for undocumented aliens and building a wall to secure the border. And he dialed up the saber rattling against ISIS, promising to bomb it till the "sand glows."

Much of Cruz's agenda is nasty, unlovely stuff playing on people's fears and demonizing his opponents. Ronald Reagan's sunny and uplifting optimism it is not.

But its genius is that it shows a way to take on powerful special interest groups and dismantle the edifice of crony capitalism that is corroding trust in this country's institutions. There is no reason why a more enlightened conservative can't apply the same formula to appeal to the better angels of Republican voters.

 This column originally appeared in The Week

NEXT: A.M. Links: New Hampshire Primary Today, FBI Confirms 'Ongoing' Probe into Hillary Clinton's Private Email Server, Commuter Trains Collide in Germany

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  1. “Ronald Reagan’s sunny and uplifting optimism it is not.”

    Reagan had more reason to be optimistic. And that optimism got us the first amnesty bill.

    1. Reagan’s sunny optimism is a selective memory here. Sure he had that message – it came right after long sessions of bashing big government waste, regulation, spending, and taxes.

      1. Exactly. “Morning in America” was his 1984 slogan, not his 1980 slogan. It was a lot of hard work getting through the night to that dawn.

      2. “Government is the problem”

    2. Why are you talking about immigration? This article is 0.0% about immigration.

      1. “He backed off not even slightly from his anti-immigrant screeds, pledging to kill any form of legalization for undocumented aliens and building a wall to secure the border.”

        “Much of Cruz’s agenda is nasty, unlovely stuff playing on people’s fears and demonizing his opponents.”

        Reading comprehension problems?


          1. to be fair, he is addressing Hugh, who does have a documented reading comprehension problem.

        2. Not everyone can read the articles. Way to project your litero-normative prejudices, asshole.

  2. The proper uses for alcohol are stouts,porters,gin,scotch and dark red wine.

    1. And sherry enemas. Don’t forget sherry enemas.

    2. Rum. Don’t forget rum.

      Seriously, this rum is a religious experience, and only $40 a bottle (local price in Tucson). Its dangerous, it goes down so easy.


  3. Aw, come on! The fact that ethanol destroys engines is a good thing! It creates jobs! Just like broken windows!

    1. I hate ethanol fuel. Hate it, hate it, hate it.

      1. And there is no tangible value to using it in fuel formulation. Except for ethanol producers, and their political boosters.

  4. “I am not a Ted Cruz fan and can’t imagine ever voting for a man so vainglorious.”

    Is Ted Cruz appreciably more vainglorious than Hillary Clinton or Donald Trump? Or even Chris Christie?

    1. No,the three you named are power hungry and have no empathy for their victims.

      1. Who are Donald Trump’s victims?

    2. Exactly! “Vainglorious” is probably the last reason anyone should eliminate a presidential candidate. With that criteria, you’re left with no one except maybe Bernie, but unaccomplished losers always choose socialism. It’s a survival strategy.

      1. You are only allowed to support pure candidates if you are Libertarian which means you will have to vote for someone who will be lucky to get 1% of the vote. That is the sacrifice you must make to purify your Libertarian soul.

        1. I can’t. I’ll bet all of the libertarian candidates have paid taxes at some point in their life. None of them are free from sin!

  5. “His little jeremiad against Trump’s New York values may have appalled pundits. But it instantly concretized for Iowa’s traditional voters the stark contrast between what they stood for”

    Apparently it’s not just Iowans. NPR was interviewing a New Hampshire resident this morning and asked her if Bernie Sander’s popularity was primarily because he was a native of Vermont a neighboring state. She said, no that New Hampshire residents didn’t look to kindly on Vermont which was full of New Yorkers wearing fake flannel shirts on the weekend. It was clear she wasn’t a fan of New Yorker values.

    1. I hear they buy their fire wood in wrapped bundles gas stations.

      1. Where else are you going to get it? Do you think it grows on trees?

      2. “Wrapped bundles gas stations” would make a good album name.

  6. “But with oil prices plunging due to the fracking revolution, it is hard to see how ethanol could effectively compete without subsidies and it is unlikely that Iowans were fooled.”

    So even when he does something right, it is still for the wrong reasons?

    And wanting to bomb ISIS until the sand glows may or may not be the best strategy, but you can’t say that ISIS doesn’t deserve it.

    And I guess she also forgot Reagan’s stance against The Evil Empire. But I am sure, if she was the same age now, when Reagan was running in 1980 she would say the same things about him.

  7. “More enlightened conservative” = “More left-leaning conservative”. Which means “not so conservative”.

  8. The reason that a more enlightened conservative didn’t use this strategy is because they weren’t smart enough to devise it and then successfully pull it off.

  9. Ted Cruz is where I struggle with the libertarians here. I find the man appealing in the sense that he ostensibly wants the Constitutional Republic to return to its roots. It’s possible he’s lying, but that’s true of all of them. But, Ted Cruz has said some non-libertarian things (all of them do), so he is loathed by libertarians. What I’m curious about is why he’s not seen as at least a decent starting point for the conversation. What I mean is that would you rather have a debate about freedom with Ted Cruz than with Sanders? Trump? Clinton? Do we really not believe that we could push Cruz closer to principled freedom and restoring the Republic than any of the other goons?

    Again, it’s possible he’s merely the best of the worst (I’d agree), and he can certainly come across as a weirdo nag, but is there ever hope for optimism, or are we always doomed to say that until the perfect libertarian comes around and wins, we’re gonna bitch and moan? I’m genuinely curious here. I see both sides, because I love to bitch and moan, especially about Statists running our country into the ground, but a part of me wants to believe we can inch closer to freedom like we’ve inched ever closer to Statism.

    1. You have to understand, Reason clings to the mirage of ‘third-wayishness’, of some other direction that will allow the leftists among them to not feel as if they’ve betrayed the revolution, but rather as if they are the true vanguard of the rEVOLution.

      This stance, as with all organizations that attempt it, has allowed true statist leftists to infest the place.

      They will–regardless of what they may profess or claim after the fact(why, in a recent election one claimed to have actually forgotten who they voted for!)–be voting for the Democrat.

      They are not interested in principled freedom, restoring the republic, or anything one might associate with libertarianism. They are interested only in furthering the causes of the left and undermining any cohesion among those who love liberty.

    2. What I’m curious about is why he’s not seen as at least a decent starting point for the conversation.

      Because he is a social conservative.

      Somebody who would enact the entire libertarian agenda lock, stock and barrel, but isn’t on the squishy left wing of the culture war, isn’t going to get the time of day from Reason. Sorry.

      1. Sure, he’s socially conservative. But from what I’ve heard from him, he translates that into policy by federalism, returning the power to the sates. Drugs? States. Gay Marriage? States. Isn’t that what we want?

        1. No. Many people here want open borders, anarcho-capitalism, and complete removal of all regulations on day one of the next administration. Anything less makes Cruz an evangelical wacko in their minds.

      2. I tend to agree with TGGeko. I would hope that he wouldn’t push his social-conservativism on the country on the Federal level. That’s all I want from my president – to get the Feds to butt out of 95% of the stuff they do. Perhaps I’m wrong, and he’ll be a drug warrior, gay marriage warrior, etc, but it seems increasingly difficult to do that stuff now anyway, and even the left isn’t fighting that hard for drug reform.

        I don’t know. I’m not saying the guy is our libertarian dream, merely that I could imagine a Rand Paul debating him, and trying to keep any war-dreams and socially conservative proclivities in check.

        BTW, did anyone see that Ron Paul says that Cruz is worse than Sanders? Makes me think Ron’s off his nut.

        1. I don’t know if Ron’s half-crazy or if he is so used to being a political dandy that he feels compelled to state everything to be the opposite of what it is.

        2. The frontline of the culture wars has shifted enough that libertarians are more often than not on the same side as conservatives ( as opposed to leftists). The gay marriage issue is now whether you are allowed to refuse to cater to a gay couple, not whether they can marry.

  10. “…champing at the bit…”

    The phrase correctly used. “Chomping at the bit” can cause grammar Nazis to grind their teeth.

    1. So what’s the downside?

      1. Grammar Nazis with dental bills?…

  11. You want to undermine the unscrupulous crony capitalists with a tactic that is all sweetness and light and avoids a few arm-twists and backhands?

    Toughen up chick, the cronies don’t operate that way. Why hamstring the guy willing to fight for us?

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  14. That corn didn’t replace fields of fruits and vegetables Iowa has always been a huge producer of corn. Some hay fields or pasture maybe were turned to corn a couple of years ago when corn went over $6 a bushel but it has been half that over a year if not longer. China has more impact on the price of corn than ethanol does. If those fields were not corn they would be soybeans or wheat most likely. Considering the current prices on those grains are not skyrocketing I don’t think we have a shortage.

    As a farmer I like the use of ethanol and biodiesel but want it to sink or swim via free markets not government handouts.

  15. Ted Cruz “vainglorious” as opposed to all those very humble candidates such as ….????

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