WASHINGTON -- Opponents of ethanol subsidies got a boost Monday from Koch Industries as the company announced its opposition to the giveaways on the eve of a major vote in the Senate.
Sen. Tom Coburn (R-Okla.) is pushing a vote on an amendment Tuesday that would end ethanol subsidies and eliminate tariffs on foreign supplies of the biofuel. That would allow companies to use sugar-based Brazilian ethanol, which is both cheaper and less environmentally damaging than the domestic corn-based variety.
The issue has split the Republican Party, with free market advocates and deficits hawks pushing for elimination of the subsidies and corn-state politicians fighting back. The power broker Grover Norquist has battled Coburn, arguing that ending the handouts is equivalent to increasing taxes, meaning that candidates who signed a no-new-taxes pledge would be breaking their word.
The Kochs' entrance into the debate is unlikely to swing the vote toward Coburn on Tuesday, but threatens to reshape the long-term debate. The Koch brothers are among the biggest backers of the Republican Party and conservative groups. Their importance has only increased in the wake of the Citizens United Supreme Court ruling, which allows the Koch brothers to use their private company's money to secretly fund attack ads or prop up national organizations.
Ethanol is a key national issue for the GOP because of the importance of Iowa's early caucus to the presidential primary. Former Gov. Jon Huntsman (R-Utah) is skipping the state, he has said, because his opposition to the subsidies is toxic in the state.
It is rare for the Kochs to weigh in publicly on specific amendments as they've done in Coburn's case. But it might not be enough to get his amendment over the top. In order to get a vote on it, Coburn pulled a procedural move that irked Senate Majority Leader Harry Reid (D-Nev.), who responded by calling on his caucus to oppose the amendment on procedural grounds.
Coburn and Koch Industries have been in discussion about the political issue for several months. But ultimately, it claims, the Koch's commitment to free-market principles overrode the fact that their company benefits from the subsidies.
"Koch Industries has opposed federal mandates and subsidies for decades," the letter to Coburn reads. "Our aim is to create a free market where consumers decide winners and losers based on which products they decide to buy, instead of government picking winners and losers based on which friends or products it chooses to subsidize. One such government intervention is the tax credit that provides about $6 billion each year to blenders of ethanol."
"We hold this position despite the fact that we benefit from these tax credits," the letter points out.
Koch Industries will, however, continue to exploit the credits, if they aren't repealed.
"We oppose ethanol subsidies because they distort economic signals about price and demand and create inefficiencies that divert resources from productive activities to politically favored ones. We have also opposed subsidies for natural gas vehicles and other biofuels for these same reasons," the Koch letter reads. "Still, our company now produces and blends ethanol, because while we would prefer that there be no government mandates or subsidies, once such laws are in place we will comply with them. We will not place our company or our employees at a competitive disadvantage in the mixed-market economy in which we compete."
Sen. Tom Coburn (R-Okla.) is pushing a vote on an amendment Tuesday that would end ethanol subsidies and eliminate tariffs on foreign supplies of the biofuel. That would allow companies to use sugar-based Brazilian ethanol, which is both cheaper and less environmentally damaging than the domestic corn-based variety.
The issue has split the Republican Party, with free market advocates and deficits hawks pushing for elimination of the subsidies and corn-state politicians fighting back. The power broker Grover Norquist has battled Coburn, arguing that ending the handouts is equivalent to increasing taxes, meaning that candidates who signed a no-new-taxes pledge would be breaking their word.
The Kochs' entrance into the debate is unlikely to swing the vote toward Coburn on Tuesday, but threatens to reshape the long-term debate. The Koch brothers are among the biggest backers of the Republican Party and conservative groups. Their importance has only increased in the wake of the Citizens United Supreme Court ruling, which allows the Koch brothers to use their private company's money to secretly fund attack ads or prop up national organizations.
Ethanol is a key national issue for the GOP because of the importance of Iowa's early caucus to the presidential primary. Former Gov. Jon Huntsman (R-Utah) is skipping the state, he has said, because his opposition to the subsidies is toxic in the state.
It is rare for the Kochs to weigh in publicly on specific amendments as they've done in Coburn's case. But it might not be enough to get his amendment over the top. In order to get a vote on it, Coburn pulled a procedural move that irked Senate Majority Leader Harry Reid (D-Nev.), who responded by calling on his caucus to oppose the amendment on procedural grounds.
Coburn and Koch Industries have been in discussion about the political issue for several months. But ultimately, it claims, the Koch's commitment to free-market principles overrode the fact that their company benefits from the subsidies.
"Koch Industries has opposed federal mandates and subsidies for decades," the letter to Coburn reads. "Our aim is to create a free market where consumers decide winners and losers based on which products they decide to buy, instead of government picking winners and losers based on which friends or products it chooses to subsidize. One such government intervention is the tax credit that provides about $6 billion each year to blenders of ethanol."
"We hold this position despite the fact that we benefit from these tax credits," the letter points out.
Koch Industries will, however, continue to exploit the credits, if they aren't repealed.
"We oppose ethanol subsidies because they distort economic signals about price and demand and create inefficiencies that divert resources from productive activities to politically favored ones. We have also opposed subsidies for natural gas vehicles and other biofuels for these same reasons," the Koch letter reads. "Still, our company now produces and blends ethanol, because while we would prefer that there be no government mandates or subsidies, once such laws are in place we will comply with them. We will not place our company or our employees at a competitive disadvantage in the mixed-market economy in which we compete."
READ THE FULL KOCH LETTER TO COBURN:
June 13, 2011 Senator Tom Coburn 172 Russell Senate Office Building Washington, DC 20510Dear Senator Coburn,Koch Industries has opposed federal mandates and subsidies for decades. Our aim is to create a free market where consumers decide winners and losers based on which products they decide to buy, instead of government picking winners and losers based on which friends or products it chooses to subsidize.One such government intervention is the tax credit that provides about $6 billion each year to blenders of ethanol. Lawmakers in the Senate could take a sensible step by approving an amendment sponsored by Senator Tom Coburn (R-OK.) that would eliminate this credit. We hold this position despite the fact that we benefit from these tax credits.We oppose ethanol subsidies because they distort economic signals about price and demand and create inefficiencies that divert resources from productive activities to politically favored ones. We have also opposed subsidies for natural gas vehicles and other biofuels for these same reasons.Still, our company now produces and blends ethanol, because while we would prefer that there be no government mandates or subsidies, once such laws are in place we will comply with them. We will not place our company or our employees at a competitive disadvantage in the mixed-market economy in which we compete.Our government and public affairs activities are based on principles of economic freedom and property rights that are core values recognized and held by the majority of Americans. Koch will continue to lobby for the repeal of energy subsidies and mandates. We will work to transform the current, mixed-market economy into a true free-market economy.Sincerely,Philip EllenderPresident and COO Public AffairsKoch Companies Public Sector, LLC
No comments:
Post a Comment