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Coburn, Conservative Group Feud Over Ethanol Subsidies

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COBURN
AP

WASHINGTON -- Sen. Tom Coburn, one of three Republican members of a bipartisan group aiming to shrink the deficit, took aim on Tuesday at the conservative group Americans for Tax Reform, arguing their defense of ethanol subsidies amounted to support for "wasteful spending and a de facto tax increase on every American."

A spokesman for Americans for Tax Reform had criticized Coburn Monday, along with fellow Gang of Six Republican Sens. Saxby Chambliss (Ga.) and Mike Crapo (Idaho), over their effort to end ethanol subsidies as part of a broader deficit reduction plan. The six-member group of senators has discussed budget cuts and tax reforms -- including putting an end to loopholes and certain subsidies -- to tackle the nation's debt.

The spokesman for the organization, which is led by conservative lobbyist Grover Norquist, said it supports an end to ethanol subsidies. But it opposes increasing the government's tax revenue without adding equal or greater tax reductions elsewhere -- effectively ruling out tax reform as a means for paying down the $1.6 trillion deficit.

Republican leadership in both chambers seems to agree: Both Senate Minority Leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) have said they will not allow tax increases as part of a deal to decrease the debt.

Coburn struck back in a letter on Tuesday, arguing Norquist and Americans for Tax Reform were being disingenuous by equating an end to ethanol subsidies as violation of conservative values.

"Ethanol subsidies are a spending program wrongly placed in the tax code that increases the burden of government, keeps tax rates artificially high, and forces consumers to pay more for food and energy," the letter reads. "Rather than demanding that Senate conservatives violate their consciences and support distortions in the tax code that increase spending and maintain Washington's power over taxpayer's lives, your organization should assist our efforts."

Coburn has argued ethanol subsidies, which give about $6 billion to ethanol producers, are unnecessary and an inefficient means of expanding energy production. He has also said the subsidies drive up food prices.

A number of outside experts agree with those assertions, including special interest groups in food production, energy, environment and hunger issues. The Government Accountability Office wrote earlier this month that the subsidies are unnecessary to guarantee domestic ethanol production.

The subsidies are set to expire at the end of the year, but Coburn hopes to put an end to them sooner. He and Sen. Ben Cardin (D-Md.) introduced a bill earlier this month that would remove tax incentives for ethanol.

Ryan Ellis, tax policy director at Americans for Tax Reform, responded to Coburn Tuesday, reiterating that the organization supports ending ethanol subsidies if it is possible to do so in a tax-neutral way -- but not if ending them increases the government's overall tax revenue.

"The best policy outcome is to eliminate the ethanol tax credit in a way that leaves money in the hands of taxpayers, not increases the amount of money going to Washington for the Appropriations Committees to spend," he wrote in a letter on Tuesday afternoon. "Your amendment as written to repeal the ethanol credit (unfortunately) does the latter."

This is the second spat between Americans for Tax Reform and the Republican members of the "Gang of Six," after a similarly icy letter exchange in February.

Coburn said on Tuesday he would continue to push for an end to ethanol subsidies despite criticism, including from those who argue it is not the right time to tackle the issue.

"We need to do it any time we can," Coburn told reporters. "We're not going to get out of $1.6 trillion unless we do it $2 billion, $3 billion, $6 billion at a time."

Sen. John McCain (R-Ariz.), who also opposes ethanol subsidies, said on Tuesday he agreed the time was right to end the tax incentives.

"Oh right, 'it's not the right time to suggest saving billions of taxpayer dollars,' " he told reporters, mocking the criticism. "You can't be too serious about cutting waste and spending if you don't eliminate ethanol subsidies."

Additional reporting by Zach Carter.

Around the Web

Let Ethanol Subsidies Expire For Good - Forbes.com

End Ethanol Subsidies, Senators Say - NYTimes.com

Ethanol subsidy deal may come Thursday: trade group | Reuters

Ethanol foes prepare another attack on Capitol Hill

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