Left-right Senate pair takes aim at ethanol subsidy

Sens. Tom Coburn (R-Okla.) and Ben Cardin (D-Md.) are teaming up in a new push to end tax credits that support the domestic ethanol industry.

The pair — reviving a left-right push against ethanol — introduced a bill Wednesday that would repeal the 45 cents-per-gallon credit, which refiners and gasoline blenders receive for each gallon of ethanol purchased and mixed into gasoline.

“The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers’ pockets where it can be used to spur innovation, stimulate growth and create jobs,” Coburn said in a statement Wednesday.

Congress renewed the credit through the end of 2011 as part of a broader tax agreement in the lame-duck congressional session in December.

Coburn and Cardin, in announcing the bill, pointed to a recent Government Accountability Office report on duplicative federal programs.

The study noted other federal drivers of the ethanol market including the Renewable Fuel Standard — which mandates increasing ethanol use — that was expanded in a 2007 law.

“The ethanol tax credit and the renewable fuel standard can be duplicative in stimulating domestic production and use of ethanol, and can result in substantial loss of revenue to the Treasury,” GAO found, noting that the tax credit resulted in $5.4 billion in foregone federal revenue last year.