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Jerry Shenk


Iowa Caucuses: Eulogy for Special Interests?

by Jerry Shenk
 

If you pay taxes and buy groceries, every time you insert the nozzle to fill your tank with ethanol-blended motor fuel, you get hosed six ways.

Federal crop supports and ethanol mandates shower tax and household dollars on corn growers and ethanol refiners to produce a product we are forced to purchase, that increases fuel prices, provides less energy for our money, adds water to our gas tanks, raises food prices and degrades the environment.

In return, giant agri-businesses shower campaign money on politicians of both parties to keep taxpayer and consumer cash — and ethanol — flowing.

The ethanol industry once received nearly $6 billion-per-year from an Ethanol Excise Tax Credit which expired a few years ago. But the current 10 percent ethanol-to-gasoline volume blending mandate effectively accomplishes the same thing — and the industry is pushing for a 15% ethanol blending mandate even though automobile manufacturers say increasing ethanol in gasoline would void warrantees. Crude oil/gasoline prices may drop, but ethanol prices are nearly constant.

The corn-based fuel is a $5 billion cash cow for Iowa, the farm state where the earliest of the presidential caucuses/primaries is held. Iowa produces nearly 30% of the nation's ethanol, so it's unsurprising that the industry's Washington-based lobbyist, the Renewable Fuels Association, is running ads warning Iowa voters to reject any candidate who opposes ethanol subsidies or volume mandates.

Since 1980, every candidate who won Iowa has supported ethanol subsidies and/or the fuel blending mandate. Pandering opportunist Donald Trump supports the mandate, as do most of the Republican field whose free-market principles vanish at the Iowa state line. Hillary Clinton and Bernie Sanders, both of whom routinely rail against special favors for big business, support the ethanol lobby.

Currently, Senator Ted Cruz is leading the Republican polls in the Hawkeye State despite his stated desire to phase out the federal blending mandate over five years and end all energy subsidies. If, as seems increasingly likely, Cruz wins Iowa while firmly grasping the normally-fatal third rail of Iowa politics, he will have defied Big Corn in its heartland and prevailed.

Accordingly, Cruz is an existential threat to the corn lobby and special interests everywhere. They will try to destroy him. If a candidate can confront influential ethanol interests and still win the Iowa caucuses, the bipartisan political coalition supporting ethanol will collapse. Americans will finally witness the emergence of a leader with the courage to stop pandering to special interests.

As a consequence, Cruz will face waves of negative ads from the Renewable Fuels Association and ethanol defenders, including other ambitious, but less-principled candidates, special interests and elected members of both parties who covet special interest campaign funds.

A Cruz win in Iowa could embolden and inject lawmakers with some much-needed spine and seal the fate of dozens of special interest subsidies and sweetheart tax and regulatory deals.

Flexible free markets, not government, should pick winners and losers. This year, Iowa caucuses may signal the demise of government tinkering in markets.

http://www.ldnews.com/story/opinion/2016/01/14/iowa-caucuses-political-eulogy-special-interests/78798918/


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