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 FeinsteinSenate Dems urge Trump to continue nuclear arms control negotiations after treaty suspension Senate Intel leaders ask judge not to jail former aide amid leak investigation Dems demand Pompeo brief Congress on whether he discussed Assange with Ecuadorian official MORE's (D-Calif.) measure – which mirrors a bill she offered with Sen. Tom CoburnThomas (Tom) Allen CoburnThe Hill's Morning Report — Presented by PhRMA — Worries grow about political violence as midterms approach President Trump’s war on federal waste American patients face too many hurdles in regard to health-care access 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 ReidManchin’s likely senior role on key energy panel rankles progressives Water wars won’t be won on a battlefield Poll finds most Americans and most women don’t want Pelosi as Speaker 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 ThuneHillicon Valley — Presented by AT&T — New momentum for privacy legislation | YouTube purges spam videos | Apple plans B Austin campus | Iranian hackers targeted Treasury officials | FEC to let lawmakers use campaign funds for cyber The Year Ahead: Push for privacy bill gains new momentum On The Money: Trump, Dems battle over border wall before cameras | Clash ups odds of shutdown | Senators stunned by Trump's shutdown threat | Pelosi calls wall 'a manhood thing' for Trump MORE (R-S.D.) and Amy KlobucharAmy Jean KlobucharSenate Dems urge Trump to continue nuclear arms control negotiations after treaty suspension Senate approves bill reforming Congress's sexual harassment policy The Year Ahead: Push for privacy bill gains new momentum 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 BluntCongress strikes deal on bill for sexual harassment cases involving lawmakers The Year Ahead: Pressure mounts on election security as 2020 approaches Pressure builds as Pelosi, Schumer, Trump meet over border wall demands MORE (Mo.), Saxby ChamblissClarence (Saxby) Saxby ChamblissCIA's ‘surveillance state’ is operating against us all Juan Williams: GOP plays the bigotry card in midterms A hard look at America after 9/11 MORE (Ga.), Daniel Coats (Ind.), Thad CochranWilliam (Thad) Thad CochranBottom Line Races Dems narrowly lost show party needs to return to Howard Dean’s 50 state strategy Espy files to run for Senate in 2020, setting up possible rematch with Hyde-Smith MORE (Miss.), Chuck GrassleyCharles (Chuck) Ernest GrassleyTop security officials issue stark warning of Chinese espionage efforts Lame-duck Congress should pass First Step Act The Hill's Morning Report — Takeaways from the battle royal in the Oval Office MORE (Iowa), John HoevenJohn Henry HoevenGOP lawmakers say Trump should tamp down trade rhetoric GOP nerves on edge after Sinema takes lead over McSally Trump poised to sign bipartisan water infrastructure bill 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 KirkDems vow swift action on gun reform next year This week: Trump heads to Capitol Hill Trump attending Senate GOP lunch Tuesday MORE (Ill.), Richard Lugar (Ind.), Jerry MoranGerald (Jerry) MoranThe Year Ahead: Push for privacy bill gains new momentum Senators want assurances from attorney general pick on fate of Mueller probe Overnight Defense: Senate rebukes Trump with Yemen vote | Mattis, Pompeo briefing fails to quell Senate concerns with Saudis | Graham demands CIA briefing on Khashoggi | Pentagon identifies three troops killed in Afghanistan MORE (Kan.), Rob PortmanRobert (Rob) Jones PortmanDrug company to offer cheaper opioid overdose treatment after hiking price 600 percent The Hill's Morning Report — Presented by T-Mobile — Congress to act soon to avoid shutdown On The Money: Trump touts China actions day after stock slide | China 'confident' on new trade deal | GM chief meets lawmakers to calm anger over cuts | Huawei CFO arrested MORE (Ohio), Pat RobertsCharles (Pat) Patrick RobertsSenate approves massive farm bill The Hill's Morning Report — Will Trump strike a deal with Chuck and Nancy? This week: Trump, Dems set to meet amid funding fight MORE (Kan.) , John Thune (S.D.), and Roger WickerRoger Frederick WickerAlmost half of US residents don't use broadband internet: study Afghanistan war at a stalemate, top general tells lawmakers Grassley open to legislation making it tougher for Trump to impose tariffs on national security grounds MORE (Miss.).

The ethanol industry fared better on a second vote. Lawmakers voted 41-59 against Sen. John McCainJohn Sidney McCainSenate Armed Services chair not convinced of need for Trump's Space Force Jenny McCarthy: ‘The View’ producers asked me to ‘act Republican’ Flake warns in farewell speech: US political climate 'is not healthy' 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.