Categorized | Commentary/Editorial

Palin vs. Romney on Ethanol Subsidies

Traveling today in Pennsylvania, Governor Palin was asked about the indefensible ethanol subsidy, via Scott Conroy at Real Clear Politics:

Asked Tuesday whether she supports the federal subsidy of ethanol, an always critical issue in the presidential nominating cycle, former Alaska Gov. Sarah Palin went one step further and called for the elimination of all energy subsidies.

"I think that all of our energy subsidies need to be relooked at today and eliminated," Palin told RCP during a quick stop at a coffee shop in this picturesque town tucked into the south-central Pennsylvania countryside. "And we need to make sure that we’re investing and allowing our businesses to invest in reliable energy products right now that aren’t going to necessitate subsidies because, bottom line, we can’t afford it."


 "We’ve got to allow the free market to dictate what’s most efficient and economical for our nation’s economy. No, at this time, our country can’t afford the subsidies. Before, though, we even start arguing about some of these domestic subsidies that need to be eliminated — should be — we need to look at ending subsidies and loans to foreign countries and their energy production that we’re relying on, like Brazil."

Now let’s contrast Governor Palin’s sober position on the issue with that of the beltway’s choice: Mitt Romney. This past Thursday, in Iowa, the Mittster reaffirmed his full-throated support for the taxpayer financed boondoggle, via Jonathan Weisman of the Wall Street Journal:

It was an odd setting for a policy pronouncement, but on the sidewalk outside the Historical Building here, former Massachusetts Gov. Mitt Romney embraced ethanol subsidies.


“I support the subsidy of ethanol,” he told an Iowa voter. “I believe ethanol is an important part of our energy solution for this country.” Iowa leads the nation in the production of corn, a main source of ethanol.


His answer, delivered without hesitation, adhered to the orthodox position of politicians vying for Iowa votes.

What a surprise.  While in Iowa, home of the nation’s first caucus, Mitt goes out of his way to smooch the posteriors of ethanol producers.  This is pure political pandering. The ethanol subsidy has done nothing to enhance America’s energy independence.  Indeed it’s nothing more than welfare to wealthy ethanol producers when we can ill-afford it.  We’ve wasted tens of billions of dollars subsidizing ethanol over the past 30 years and it’s still not economic, indeed it wouldn’t even exist absent these taxpayer financed subsidies, as Governor Palin indicated above. And these are only the direct costs.  If we take into account the higher prices consumers pay for all corn-based products due to the diversion of corn to ethanol production, the $.54 per gallon tariff Americans pay for more efficient sugar-based ethanol from Brazil as part of the domestic ethanol protection scheme, and the high costs of storing and transporting ethanol, among other things, American  consumers are out billions of dollars more.

And for what? To enrich a few ethanol producers and the politicians they own? There’s no evidence that ethanol subsidies have lowered our energy costs or made us more energy independent. Quite the opposite. This is a no-brainer. There’s simply no reason, economic or otherwise, to continue this colossal waste of money and misallocation of resources. If the Mittster, whose fans refer to him as some kind of economic genius, can’t be trusted to make the correct call on something as simple as this, what can he be trusted on? And this is the sort of "leader" beltway Republicans want to foist on us in 2012? How would this be qualitatively different than what Obama’s doing? Mitt Romney, we’re told by the beltway establishment, is the serious and weighty option for 2012.  Yet on an issue as simple as this, he chooses to pander to Iowa farmers by supporting the unsupportable, while the allegedly unserious Governor Palin is the one offering serious policy prescriptions and analysis. 

By supporting the elimination of all energy subsidies, Governor Palin has it exactly correct.  There’s no logical reason to subsidize any of these pie-in-the-sky fantasies, whether they be solar tiles, windmills, ethanol, or any of the other myriad schemes the political class can cook up.  If there was any chance that any of these so-called "green" energy sources were going to produce energy reliably and economically, they wouldn’t need subsidies in the first place. The fact that they do, and that entrepreneurs are unwilling to play without them, tells us all we need to know. The free market works.   

Related: James Quinn has much more on the insanity of the ethanol subsidy here.  Read the whole thing.

Update: Ed Morrissey has more:

Palin’s position provides a direct rebuke to Romney, who tried to argue that ethanol deserves federal subsidies because it’s an “important part” of America’s energy future.  The problem with that position is that ethanol isn’t an emerging technology.  It’s been subsidized for decades on the same basis Romney claimed last week.  Subsidies aren’t going to R&D any more; they’re being used to artificially allow ethanol to compete against gasoline on a price basis, which puts government in the position of mandating winners and losers in technology and markets — with predictable results.

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