Two days after rejecting a similar measure, the Senate voted today to repeal a key ethanol tax credit as of July 1:
[Democratic Senator Dianne] Feinstein’s amendment to an economic development bill would quickly end the credit of 45 cents for each gallon of ethanol that fuel blenders mix into gasoline. The credit led to $5.4 billion inforegone revenue last year, according to the Government Accountability Office.
The amendment also ends the 54-cent per gallon import tariff that protects the domestic ethanol industry.
Thursday’s vote was a turnaround from Tuesday, when just 40 senators voted for [Republican Senator Tom] Coburn’s identical amendment, well shy of the 60 needed to advance it.
But the politics of Tuesday’s battle were clouded by Democratic anger at Coburn’s surprise procedural move last week that set up the vote. Democratic leaders had whipped against the amendment heading into Tuesday’s vote, but two aides said they did not do so ahead of the vote Thursday.
Both Iowans in the Senate voted against the Feinstein amendment, which passed 73 to 27 (roll call). Tom Harkin was one of 13 Democrats to vote no, and Chuck Grassley was one of 14 Republicans to vote no. Most of the opposition came from significant corn-producing states.
U.S. Secretary of Agriculture Tom Vilsack called today’s Senate vote “ill advised” and warned that jobs would be lost. His full statement is after the jump. I will update this post with reaction from Harkin and Grassley if it becomes available. Their comments on Tuesday’s ethanol vote are here.
UPDATE: Philip Brasher writes for the Des Moines Register,
The vote was largely symbolic in that the House is expected to reject the provision because tax measures are supposed to originate in the House, not in the Senate. But the sweeping defeat was a powerful indication of how the industry’s once legendary political clout on Capitol Hill has all but disappeared because of the federal deficit and concerns about the impact of the biofuel on food prices and the environment. The subsidy and tariff are due to expire at the end of the year and the industry is trying to continue some kind of subsidy after that to go with the annual usage mandates that require refiners to add ethanol to gasoline. The mandate rises each year until 2015 before leveling off at 15 billion gallons. […]
Sen. Lamar Alexander, R-Tenn., said that the rising cost of food is a sleeper issue around the country and that the vote to kill the ethanol subsidy was a “vote to lower food prices and to lower the national debt.” […]
The ethanol industry did achieve one victory today when the Senate rejected, 59-41, a proposal by Sen. John McCain, R-Ariz., to block the Obama administration from subsidizing the installation of ethanol pumps and storage tanks. However, the House approved a similar measure 283-128 earlier in the day as part of an appropriations bill for the Agriculture Department. That Senate vote’s important, however, because it shows the industry has support there for shifting at least some of the federal aid it’s now getting into infrastructure subsidies, according to energy policy analyst Kevin Book.
Statement from Secretary of Agriculture Tom Vilsack, June 16:
“The Administration supports efforts currently underway in the Senate to reform and modernize tax incentives and other programs that support biofuels. However, today’s amendments are not reforms and are ill advised. They will lead to job loss as our nation begins its economic recovery and pull the rug out from under industry, which will lead to less choice for consumers and greater dependence on foreign oil.”
“We need reforms and a smarter biofuels program, but simply cutting off support for the industry isn’t the right approach. Therefore, we oppose a straight repeal of the Volumetric Ethanol Excise Tax Credit (VEETC) and efforts to block biofuels infrastructure programs.”