It’s why your car runs like shit. Idles rough, no power, stalls out at the light, water running out of your exhaust pipe, ten percent less miles per gallon. And until last week, subsidized by the government:
When the U.S. Congress adjourned for the holidays on Friday, December 23, its departure sealed the fate of subsidized ethanol production.
During its session, the Congress did not renew a tax break for U.S. production of corn-based ethanol that had become increasingly unpopular across a wide area of the political spectrum.
The tax credit amounted to 45 cents per gallon of ethanol that was blended into gasoline. It had been in place since 1980.
As The Detroit News reported the next day, by some estimates, total subsidies to the ethanol industry may have reached $45 billion over that period. That is several times the total loans, grants, and tax credits provided thus far to the U.S. electric-car industry.
In June, the Senate voted 73-27 to end the tax break. That vote, attached to an economic development bill that was stalled, was viewed as symbolic—letting Congressmembers go on record against continuing the subsidies without effectively ending them.
It proved to be a test case that demonstrated the waning support in Congress for the corn-based ethanol industry. Three weeks later, an agreement was reached to end the subsidies for real—and it held for the rest of the year.
Ending the ethanol tax breaks is projected to save about $2 billion over several years. Of that total, two-thirds is to be applied to cutting the national debt, although it represents just one-tenth of 1 percent of the total national debt of $14.3 trillion.
