COMMENTARY | For Republicans running for president, one of the most vexing problems is what to do about Iowa’s signature issue, which is to say ethanol subsidies. Following principles suggests opposition. Following political expediency suggests support.
Ethanol is made from corn, which Iowa grows in abundance. Ethanol is used as an additive for gasoline. The subsidy also, incidentally, benefits Iowa corn farmers financially. It also increases the price of food, not only corn, but everything that corn feeds, such as livestock; we are literally burning food as fuel with corn based ethanol. The subsidy also costs the tax payers a considerable amount of money.
Tim Pawlenty, the former governor of Minnesota and presidential candidate, has come out against ethanol subsidies. Mitt Romney, former governor of Massachusetts, has come out for the subsidy, according to the Wall Street Journal.
A Republican, generally adhering to free market beliefs, would be thought to be against the ethanol subsidy. While Pawlenty, who needs to win in Iowa to be a viable candidate, opposes the subsidy, Romney, who has all but written off Iowa, seems to support it. That suggests political expediency is not playing as much a factor in Romney’s calculations as might be believed.
The argument for ending the ethanol subsidy in an era of gigantic budget deficits and a persistent economy downturn that has stretched family budgets should be a no-brainer. So why is Romney supporting the subsidy?
If Romney is not pandering to Iowa farmers he must be instead pandering to people who think that the energy problem can be solved without more oil drilling. Ethanol would certainly be a solution to America’s energy woes if it could survive without the subsidy that artificially lowers its price. But because it can’t, ethanol does not make much economic sense/
The question also arises, if Romney likes the ethanol subsidy, what other subsidies does he like? The notion of the government paying money to an industry in order to make the product it produces more attractive in the market place is something that should be practiced sparingly, if at all. There is an argument for temporary government support to jump start a nascent industry. But such programs need to be small in scope and temporary in length.
The ethanol subsidy program is neither of these things and therefore needs phasing out. That Romney is not willing to do this says much of him as a candidate and potential president.