Senate maintains ethanol subsidy

By DAVID ESPO

Associated Press

Published: Tuesday, June 14 2011 10:07 p.m. MDT

Sen. John Thune, R-S.D., left, and Senate Minority Leader Mitch McConnell, of Kentucky, right, stand as Sen. Lindsey Graham, R-S.C., speaks to the media after their caucus luncheon on Capitol Hill Tuesday, June 14, 2011 in Washington.(AP Photo/Alex Brandon)

Associated Press

WASHINGTON — The Senate refused to kill a $5 billion annual subsidy for ethanol on Tuesday, backing continued government aid for a Farm Belt-based industry over deficit reduction in an era of record red ink.

The 40-59 vote, far short of the 60 needed to advance the measure, reflected regional as well as partisan differences, a split among Republicans — and anything but the final word on the issue.

"We continue to spend money that we don't have on things that we don't need," said Sen. Tom Coburn, R-Okla., a prominent deficit hawk who led the effort to eliminate the subsidy immediately.

Supporters of continued federal spending for ethanol argued it is a leading source of alternative fuel and is needed to reduce U.S. dependence on foreign oil.

"With conflicts in the Middle East and crude oil priced at more than $100 a barrel, we should be on the same side. Why would anyone prefer less domestic energy production," Sen. Chuck Grassley, R-Iowa, said on Monday, when the measure was debated at length.

Grassley's state leads the nation both in harvesting corn and blending it into alternative fuel. Other leading ethanol-producing states are Nebraska, Illinois, Minnesota, South Dakota and Indiana, and all senators from them opposed an end to the subsidy, regardless of political party.

Ethanol is blended with gasoline, and subsidized at 45 cents a gallon, with an additional 10 cents for small producers. These tax breaks long have been supported as a way to reduce oil imports by politicians in both parties, emphatically so for many who campaign across Iowa every four years in the state's kickoff presidential caucuses.

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