Senate kills off ethanol tax credits in possible break with tax pledge

The Senate voted 73-27 Thursday to kill a major tax break that benefits the ethanol industry, handing a political win to a bipartisan group of lawmakers that call the incentive needless and expensive.



The vote also could have ramifications on future votes to reduce the deficit. Much of the GOP conference supported Feinstein's bill even though it does not include another tax break to offset the elimination of the ethanol tax credit. 

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As such, the vote could also represent a setback for influential conservative Grover Norquist, head of Americans for Tax Reform (ATR), who said a vote for the plan would violate the anti-tax pledge most Republicans have signed unless paired with a separate tax-cutting amendment.

Thirty-three Republicans and 38 Democrats supported the measure along with both of the chamber's Independents, who caucus with Democrats. 

Fourteen Republicans and 13 Democrats voted against it.

Sen. Dianne FeinsteinDianne Emiel FeinsteinCalifornia lawmakers mark Day of Remembrance for Japanese internment Democratic senators ask DOJ watchdog to expand Giuliani probe House passes bipartisan bill to create women's history museum MORE's (D-Calif.) measure – which mirrors a bill she offered with Sen. Tom CoburnThomas (Tom) Allen CoburnOvernight Energy: Experts criticize changes to EPA lead, copper rule | House panel looks into plan to limit powers of EPA science advisers | Senate bill aims for net-zero carbon emissions by 2050 Trump budget proposal funds financially struggling museum in Reagan's childhood home The Hill's Morning Report — Presented by PhRMA — Worries grow about political violence as midterms approach MORE (R-Okla.) – was approved despite opposition from Corn Belt lawmakers who are seeing political support for ethanol wane.



Coburn said the vote sends "a good signal" to ongoing talks to raise the nation's debt ceiling while reducing deficits. He also said he was sure it would be on the table in the deficit-reduction talks led by Vice President Biden. 

Feinstein's amendment to an economic development bill would quickly end the credit of 45 cents for each gallon of ethanol that fuel blenders mix into gasoline.
The credit led to $5.4 billion in foregone revenue last year, according to the Government Accountability Office.

The amendment also ends the 54-cent per gallon import tariff that protects the domestic ethanol industry.



Thursday’s vote was a turnaround from Tuesday, when just 40 senators voted for Coburn’s identical amendment, well shy of the 60 needed to advance it.

But the politics of Tuesday’s battle were clouded by Democratic anger at Coburn’s surprise procedural move last week that set up the vote. Democratic leaders had whipped against the amendment heading into Tuesday’s vote, but two aides said they did not do so ahead of the vote Thursday.

The vote is also tied up in a battle among conservatives about whether Republicans who voted with Feinstein and Coburn had abandoned ATR’s anti-tax pledge that most Republicans have signed. Thirty-four Republicans voted in favor of Coburn's amendment on Tuesday, which signaled many Republicans saw the ethanol tax credit as wasteful and were willing to kill it.

The Club for Growth lobbied in favor of the measure and said senators who voted for it deserved credit for ridding the tax code of "market-distorting tax credits and subsidies."

Norquist had said voting for Coburn would not be a violation of the tax pledge if the amendment paired with Sen. Jim DeMint’s (R-S.C.) amendment that would repeal the estate tax and end the national renewable fuels mandate. But a vote on DeMint's amendment has not been scheduled. 

"As long as the Taxpayer Protection Pledge signers that voted for the Feinstein/Coburn amendment also vote for the DeMint amendment, they will be in keeping wit the pledge they made to their constituents," ATR said in a statement. "Taken together, this elimination of favoritism toward ethanol is not a violation of the Taxpayer Protection Pledge."

Senate Majority Leader Harry ReidHarry Mason ReidReid pushes back on Sanders suggestion that a Democrat with plurality of delegates should be the nominee Harry Reid on 'Medicare for All': 'Not a chance in hell it would pass' The Hill's Morning Report - Sanders on the rise as Nevada debate looms MORE (D-Nev.), on the Senate floor Wednesday night, said the agreement to have a vote on the Feinstein plan “does not preclude the Senate from considering his amendment.”

DeMint, an ally of Norquist, pledged Thursday to use every tool possible to secure a vote on his amendment. 

The politics of ethanol are more regional than partisan, and ethanol backers are floating plans aimed at thwarting efforts to kill the incentives outright. 

Sens. John ThuneJohn Randolph ThuneMcConnell tees up votes on two abortion bills Senate votes to rein in Trump's power to attack Iran As many as eight GOP senators expected to vote to curb Trump's power to attack Iran MORE (R-S.D.) and Amy KlobucharAmy Jean KlobucharThe Democratic nominee won't be democratically chosen At Democratic debate, missed opportunities on immigration Surging Sanders looks for decisive win in Nevada MORE (D-Minn.) – joined by other ethanol allies – are floating legislation that would end the 45-cent per gallon ethanol blender’s credit (which along with the import tariff is slated to expire at year’s end), but maintain a smaller and “variable” blender’s credit for three years when oil prices are below certain levels.



It would steer some savings from ending the credit to deficit reduction while also extending credits for cellulosic ethanol production, small ethanol producers, and installing alternative fuel pumps.

Despite the vote, Feinstein is still seeking to negotiate with industry supporters. Feinstein said that she and Coburn are meeting with Thune and Klobuchar, noting they are "trying to see if there is a compromise in this thing that does what we need to do vis-a-vis deficit reduction and in some way eases it a bit."

Coburn said Reid had offered ethanol supporters a vehicle to try and move a plan that would seek to boost ethanol infrastructure and cellulosic ethanol, a next-wave fuel.

While the White House supports including tax increases as part of a plan to reduce the budget deficit, it supported the ethanol tax credits. 

It issued a statement this week against killing the blender’s credit outright while acknowledging that reforms are needed. 

“With respect to incentives, the administration is open to new approaches that meet today’s challenges and save taxpayers money. We oppose a straight repeal of the Volumetric Ethanol Excise Tax Credit,” White House spokesman Clark Stevens said this week.

The 14 Republican senators voting against Feinstein's amendment were Sens. Roy BluntRoy Dean BluntSenate braces for fight over impeachment whistleblower testimony Booker, Merkley propose federal facial recognition moratorium GOP senators defend Sondland, Vindman ousters: They weren't 'loyal' MORE (Mo.), Saxby ChamblissClarence (Saxby) Saxby ChamblissThe Hill's Morning Report - Gillibrand drops out as number of debaters shrinks Hoekstra emerges as favorite for top intelligence post Republicans say Democrats holding up disaster relief as 'Sandy payback' MORE (Ga.), Daniel Coats (Ind.), Thad CochranWilliam (Thad) Thad CochranBottom Line Mike Espy announces Mississippi Senate bid Biden has a lot at stake in first debate MORE (Miss.), Chuck GrassleyCharles (Chuck) Ernest GrassleyMcSally unveils bill to lower drug prices amid tough campaign Ernst endorses bipartisan Grassley-Wyden bill to lower drug prices Overnight Health Care: Nevada union won't endorse before caucuses after 'Medicare for All' scrap | McConnell tees up votes on two abortion bills | CDC confirms 15th US coronavirus case MORE (Iowa), John HoevenJohn Henry HoevenSenate drama surrounding Trump trial starts to fizzle Bottom Line The Hill's Morning Report — Schiff: Clear evidence of a quid pro quo MORE (N.D.), Mike JohannsMichael (Mike) Owen JohannsMeet the Democratic sleeper candidate gunning for Senate in Nebraska Farmers, tax incentives can ease the pain of a smaller farm bill Lobbying World MORE (Neb.), Mark KirkMark Steven KirkOn the Trail: Senate GOP hopefuls tie themselves to Trump Biden campaign releases video to explain 'what really happened in Ukraine' Why Republicans are afraid to call a key witness in the impeachment inquiry MORE (Ill.), Richard Lugar (Ind.), Jerry MoranGerald (Jerry) MoranThe Hill's Morning Report — AG Barr, GOP senators try to rein Trump in Overnight Defense: Senate votes to rein in Trump war powers on Iran | Pentagon shifting .8B to border wall | US, Taliban negotiate seven-day 'reduction in violence' The 8 Republicans who voted to curb Trump's Iran war powers MORE (Kan.), Rob PortmanRobert (Rob) Jones PortmanWhere do we go from here? Conservation can show the way GOP senators offering bill to cement business provision in Trump tax law Mnuchin defends Treasury regulations on GOP tax law MORE (Ohio), Pat RobertsCharles (Pat) Patrick RobertsOn the Trail: Senate GOP hopefuls tie themselves to Trump Kobach says he discussed his Senate bid with Trump Republicans expect Trump to withdraw controversial Fed nominee MORE (Kan.) , John Thune (S.D.), and Roger WickerRoger Frederick WickerThe Hill's Morning Report - Sanders repeats with NH primary win, but with narrower victory Senators press NCAA on compensation for college athletes Overnight Defense: Inside Trump's 4B Pentagon budget | Highlights include .4B for Space Force, preview of Air Force One paint job | Senate eyes Wednesday debate on Iran war powers | 109 US troops diagnosed with brain injuries from attack MORE (Miss.).

The ethanol industry fared better on a second vote. Lawmakers voted 41-59 against Sen. John McCainJohn Sidney McCainOvernight Defense: GOP lawmaker takes unannounced trip to Syria | Taliban leader pens New York Times op-ed on peace talks | Cheney blasts paper for publishing op-ed GOP lawmaker makes unannounced trip to northeastern Syria Meghan McCain after Gaetz says Trump should pardon Roger Stone: 'Oh come on' MORE’s (R-Ariz.) amendment to prohibit use of federal funds to build ethanol blender pumps or storage facilities.

This story was last updated at 4:11 p.m.