|November 2, 2005||Posted by Staff under Archive, Progress Report, The Progress Report|
More Corporate Welfare Subsidies for Agribusiness?
Taxpayers for Common Sense is the best organization that monitors excessive government spending. Here is their latest news update.
ETHANOL: AMERICA’S POLITICAL CASH COW The Clinton Administrations recent proposal to replace the gas additive MTBE with ethanol could be a new billion-dollar cash cow for one of Americas largest agricultural giants.
Archer Daniels Midland Co. (ADM), a politically powerful company based in Decatur, Illinois, would benefit most from the new ethanol windfall — not small family farmers in the Midwest. ADM is one of the biggest agricultural companies in the world with over $14 billion in sales last year.
ADM also controls over 55% of the U.S. ethanol market. If all 16 states where MTBE is now used were required by EPA to use ethanol instead, total demands for ethanol would double.
The proposed switch from MTBE to ethanol highlights the political power of the farm lobby and ADM. ADM has given about $4.7 million in contributions to federal lawmakers since 1991. Several of those who received the most ADM money also personally requested that the Administration replace MTBE with ethanol.
Since ethanol was first introduced over two decades ago, the ethanol subsidy – renewed until 2007 two years ago – has cost taxpayers billions. A 1997 study by the General Accounting Office, the investigative arm of Congress, found that ethanol subsidies have cost American taxpayers $7.1 billion.
Gasoline with 10 percent ethanol in it receives a 5.4 cents per gallon federal tax break. What do taxpayers get for the loss in federal revenue? Very little, according to the GAO, says that the benefits from ethanol are minimal.
The GAO also reported that the benefits to the environment and reduced reliance on foreign oil promised at the time of the creation of the ethanol program have generally not been realized.
In fact, according to the Renewable Fuels Association, an industry trade group, ethanol production reduces oil imports by 43.5 million barrels a year – only five days worth of oil imports.
Ethanol is also a poor source of energy, containing fewer British Thermal Units (BTUs) per gallon than gasoline. A cars mileage is reduced by about 3.6 percent when burning ethanol-laced fuel.
Few people outside of Washington know the plain truth about ADMs special relationship with our government. The proposed switch from MTBE represents yet another handout for a powerful company and for farm states in an election year.
The ethanol subsidy doesnt make economic sense. It should be eliminated. Unfortunately, until Members of Congress and the President ignore the millions in campaign contributions, its not going to happen.
For more information, e-mail firstname.lastname@example.org or phone Keith Ashdown at 202-546-8500 ext. 110 ; TCS is at www.taxpayer.net
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