As budget watchdogs, we’re always on alert for federal policies ripe for reform. The farm bill, methane rules, flood policy, tax policy, defense spending… There’s always something. Coupled with the glacial speed of policy reform (at times), it’s not every day we celebrate policy wins. But when Bridges to Nowhere are axed and wasteful subsidies die, taxpayers deserve to celebrate!

Next week is prime time.

Wednesday, June 16, marks the 10-year anniversary of the U.S. Senate voting to kill the Volumetric Ethanol Excise Tax Credit (VEETC). The 73-27 bipartisan vote demonstrated just how duplicative, wasteful, and misguided the $6 billion annual tax break really was. While the credit didn’t actually die until Dec. 31, 2011, the Senate vote was the beginning of the end (we hope) of ethanol subsidies.

The Senate vote signified that no special interest in Washington is immune from cuts, no matter how powerful. The corn ethanol lobby – joined at the hip with farm and commodity groups – was accustomed to muscling its way around Washington, D.C. to gain tens of billions of dollars in taxpayer subsidies. That ended in 2011. VEETC was the most egregious ethanol subsidy, but by no means the only one. The federal Renewable Fuel Standard (RFS) was  already requiring ethanol use, creating a  market. We guess lawmakers realized it made no sense to give companies billions of dollars in a tax credit to blend ethanol into gasoline after already mandating it happen.

But as you – savvy Weekly Wastebasket reader – know all too well, bait-and-switch subsidies can be found all over the federal budget, tax code, and more. Seeing the writing on the wall, the ethanol industry lobbied in 2011 for a shift in subsidies, namely ethanol blender pumps. Since ethanol is more corrosive than gasoline, it requires newer pumps, storage tanks, and fueling equipment, which are expensive to upgrade.

Cue taxpayer subsidies… Before Senators cast their VEETC votes in June 2011, the U.S. Department of Agriculture (USDA) was already setting the stage for what’s become another decade of ethanol subsidies tacked onto the VEETC era. Because the industry could no longer justify tax credits for ethanol use, subsidies shifted to infrastructure. USDA later unilaterally spent more than $3 million in Rural Energy for America Program (REAP) funds – intended to be meant for rural wind and solar projects – on ethanol blender pumps. Congress squashed this controversial practice in the 2014 farm bill.

Or at least they thought so…

Like a defiant toddler, USDA ignored Congressional direction the next year, announcing $100 million in biofuels infrastructure spending. The new funding source was the Commodity Credit Corporation (CCC), a USDA slush fund normally reserved for cutting income subsidy checks to farmers. Fast forward to today, and biofuels infrastructure subsidies are still going out the door with CCC funds, again, defying Congress. President Biden has proposed to keep the party alive with $1 billion more for biofuels infrastructure in his FY22 budget request released late last month. Spoiler alert:  duplicative incentives already exist in the tax code.

This is only the tip of the iceberg. Just a handful of other subsidies that continue to bog down taxpayers – despite Congress voting repeatedly in a bipartisan fashion to eliminate wasteful bioenergy subsidies – include:

• Problematic transportation fuel credits: The Senate Finance Committee recently advanced the Clean Energy for America Act. The bill’s new “clean” transportation fuel tax credit, if enacted, could bring wasteful corn ethanol and/or similar subsidies back from the dead. The U.S. already subsidizes biomass-based diesel to the tune of $3 billion annually, distorting markets, picking winners and losers, and causing long-term liabilities. New subsidies would spoil the party.
• Not so “Sustainable” aviation tax credit: Proposed by both the Senate Finance Committee and the President’s recent budget request, a new “sustainable” aviation fuel tax credit may be anything but sustainable if status quo biofuels feedstocks like corn and soybeans – or woody biomass – are used for aviation fuel.

• Broken USDA farm bill energy title: USDA subsidies intended for “advanced” bioenergy have instead been wasted on the mature soy biodiesel and corn ethanol industries despite more than four decades of federal support.

• Misguided COVID-19 relief:  After months of intense lobbying from the ethanol industry, Congress opened the door to ethanol facilities reaping COVID-19 funds. USDA is – as we speak – in the process of shoveling more cash to the industry.

This subsidy bait-and-switch means that next week’s anniversary could be sweeter. But we will still take time to celebrate the nerdy occasion. You don’t get to congratulate Congress every day. Nor do taxpayers normally get a breath of fresh air – especially during a pandemic. Reforming federal policy can take a lifetime, but it doesn’t have to.

Corn ethanol was supposed to be a climate savior, leading to the next generation of non-food-based, low-carbon biofuels. But that isn’t the reality. Independent experts like the National Academies of Sciences found that biofuels tax credits – including those for corn ethanol – may actually worsen climate change. Instead of spending time resurrecting wasteful, special interest subsidies from the dead, Congress should join us in celebrating next week’s anniversary. Cheers to that.