Senate to vote again on cutting ethanol subsidies

Reuters News
Posted: Jun 16, 2011 1:23 PM
Senate to vote again on cutting ethanol subsidies

By Tom Doggett

WASHINGTON (Reuters) - The Senate is scheduled to hold another vote on Thursday on whether to wipeout billions of dollars in support for the U.S. ethanol industry, while also considering another measure blocking new funding to help gas stations sell more of the corn-based fuel.

The Senate will vote on an amendment to end the 45-cent-a-gallon subsidy the government gives refiners and the 54-cent-per-gallon tariff on imported ethanol from Brazil and other countries.

On Tuesday the Senate fell far short of the 60 votes needed on a similar amendment that would have stripped the industry of some $6 billion a year in support. The Senate voted 59 to 40 against limiting debate on the measure from Republican Tom Coburn.

The proposal on Thursday from Democratic Senator Dianne Feinstein and Coburn was expected to be closer. The measure comes in the form of an amendment that would be tacked on to an underlying economic development bill.

"The way we get out of trouble as a nation is a couple of billions of dollars at a time," said Coburn.

Feinstein said she recognized the cut-off of ethanol aid on July 1 would be painful in the Farm Belt: "If we're going to carry out the mandate of a prudent government, we've got make a lot of changes and none of it is going to be easy."

The ethanol industry is already struggling as high prices for the corn feedstock is crimping profits for producers.

Republican Senator Dan Coats of Indiana, one of the major corn and ethanol-producing states, said voters know "we're spending too much." But he said lawmakers should find a way to address expensive ethanol subsidies that is not so draconian.

The White House said on Thursday it opposed a "straight repeal" of the tax credit for ethanol blenders "as well efforts to block programs that will give consumers more access to biofuels."

Still, the White House said it was "open to new approaches that meet today's challenges and save taxpayers money" when it came to ethanol incentives.

Lawmakers will also vote Thursday on a separate amendment from Republican Senator John McCain to prevent federal funding to help pay for ethanol blender pumps and storage tanks at gasoline stations.

"It's time to say: 'Enough is enough.' This industry has been collecting corporate welfare for far too long," he said.

A similar vote will be held on Thursday in the House of Representatives to prevent Agriculture Department funding for tanks and blender pumps that the ethanol industry wants so stations can sell gasoline with higher blend rates.

The Renewable Fuels Association ethanol trade group said even if the Senate amendments pass, the underlying legislation they are attached to would have a difficult time clearing the Senate.

(Reporting by Tom Doggett; Editing by Lisa Shumaker)