For Immediate Release December 9, 2010

Contact:  Leslie K. Paige 202-467-5334 Luke Gelber 202-467-5318

CAGW ISSUES SPENDING CUT ALERT ON FEDERAL ETHANOL SUBSIDIES

(Washington, D.C.) – Today, Citizens Against Government Waste (CAGW) issued its weekly spending cut alert. The ethanol program benefits from a plethora of subsidies, including a tax credit for ethanol blenders, a protectionist tariff against foreign ethanol imports, and a Renewable Fuel Standard which creates an artificial market for the additive. The ethanol program should be on the chopping block as Congress and the administration seek to cut wasteful federal spending and reduce the deficit.

Taxpayers have been fleeced on the ethanol program for years. Studies show that increased ethanol production does not improve energy independence or help the environment. A July, 2009 Congressional Budget Office report confirmed that taxpayers lose $6 billion each year on the ethanol program. In 2009, the U.S. produced and sold about 11 billion gallons of biofuels, most of it made from corn. Fuel blenders receive a 45 cents per gallon tax credit, most of which flows back to domestic corn growers in the form of higher prices for their product. Both the tax credit and the tariff are set to expire on December 31st, 2010 and the ethanol lobby is pushing for the credit’s renewal during the lame duck session, possibly by attaching a renewal provision to a bill to extend the tax cuts.

A November 27, 2010 Wall Street Journal article noted that former Vice President Al Gore, ethanol cheerleader and spiritual leader of the climate change movement, has backtracked on his support for the program, saying it was a “mistake,” and that he really only supported it because he had a “certain fondness for the farmers in the state of Iowa” during his presidential run. Gore conceded that “It’s hard once such a program is put in place to deal with the lobbies that keep it going.” No kidding.

Even as groups on both the left and right have exposed the program as a colossal waste, the Environmental Protection Agency announced in October that it would mandate an increase in the amount of ethanol in gasoline to as much as 15 percent, a move which constitutes yet another sop to the ethanol lobby, which has admitted that there are already “lots of gallons of ethanol chasing too few gallons of gasoline.” Their mantras that using ethanol reduces the country’s dependence on foreign oil and creates jobs have been debunked repeatedly.

“The ethanol ruse has gone on long enough,” said Schatz. “It has been among CAGW’s targets for spending cuts for years and is included in CAGW’s Prime Cuts database, a compendium of 763 waste-cutting recommendations that would save taxpayers $350 billion in the first year and $2.2 trillion over five years. The elimination of this program would save taxpayers billions of dollars,” he concluded.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.