A long-standing axiom for Presidential aspirants has been to kiss the ring of ethanol if you want to have any chance of doing well in the Iowa caucuses. Even Sen. McCain (R-AZ) – a long time opponent of ethanol – made light of his position when he was running for the 2008 Republican nomination. He frequently quipped “I had my glass of ethanol this morning” and that it “tastes good.” Al Gore recently admitted his “certain fondness for farmers in [Iowa]” and ethanol was because he was going to run for President. However, recent significant shifts are emboldening candidates to push back from the table and refuse that bitter elixir – even in Iowa.

With the nation’s fiscal situation looking dire, pretty much all subsidies are getting a closer look (and all of them should). Ethanol subsidies have been a loser for taxpayers for a long time and so it’s not surprising that they’re on the chopping block. In much of the country the antipathy for ethanol nearly equals the support it gets in the land of corn. That has forced politicians into a pickle. Pander in Iowa to gain votes, but then the rest of the country knows you aren’t serious about solving the deficit and reining in waste.

Tim Pawlenty, who as governor of neighboring Minnesota backed ethanol subsidies (not surprising because MN grows quite a bit of corn), called for phasing out ethanol subsidies and all energy subsidies in a Des Moines (!) speech announcing his candidacy. This was echoed days later by potential candidate Sarah Palin who, when asked about ethanol, said “all of our energy subsidies need to be relooked at today and eliminated.” Here here. That’s singing off our sheet of music.

But there are still some non-believers. Mitt Romney continues to belly up to the bar for ethanol. And Agriculture Secretary (and former Iowa Governor) Tom Vilsack and the Obama Administration have embraced the ethanol boosters’ plan to give the industry direct subsidies to build ethanol infrastructure and slowly phase out the subsidy. And herein lies the rub. Unless we hold the politicians accountable, there is a decent chance that they will snatch defeat from the jaws of ethanol subsidy elimination victory.

Ethanol boosters like Growth Energy realize that the $6 billion in tax credits companies receive for blending ethanol is circling the Washington policy bowl. Rather than continue to fight a losing battle, they figure it is better to look like you’re giving in and willing to take a consolation prize. So they have proposed cutting the tax credit before eliminating entirely (which they hope will never happen) and having the federal government pay to create infrastructure for ethanol – blender pumps at gas station to dispense fuel with higher concentrations of ethanol and loan guarantees for pipelines to transport the stuff.

Subsidizing infrastructure for ethanol is even worse than wasting money year after year on the tax credit. At least you could presumably stop the tax credit and it would be done. Building ethanol unique infrastructure is tantamount to federal taxpayers investing in the ethanol industry’s business plans. Pipelines and blender pumps are capital business expenses. If the lucrative industry thinks they are necessary for expansion, they can build them themselves.

Right now the federal government mandates that ethanol be used to the tune of 15 billion gallons a year, subsidizes companies to use it with a tax credit, and protects the industry from foreign competition with a tariff. Instead of layering another direct spending subsidy on top, let’s demand that our elected officials – and those seeking to be elected officials – make eliminating all ethanol subsidies the first step in dismantling our clunky and perverse system of energy subsidies writ large. With a $1.65 trillion budget deficit, we can’t afford to binge drink on subsidies any more, the ethanol party must come to an end.

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TCS Quote of the Week:

“D's want defense cuts; R's want entitlement reform. Both must be on the table. Let's be smart about it.”

– Senate Armed Services Committee member John Cornyn (R-Texas) said via Twitter. The Hill