With Congress and the White House desperately seeking enough common ground on the federal budget to head off a disastrous default, there was a glimmer of hope last week.
A bipartisan Senate majority voted to eliminate the $6 billion-a-year federal subsidy to ethanol producers and to lift a tariff on ethanol imports.
Some procedural and political obstacles still stand between the vote and the end of the subsidy and the tariff. But both were considered politically untouchable for years. Now, they appear to be living on borrowed time.
Pressure is building on Congress and the White House to reduce the huge federal budget deficit -- projected to hit $1.5 trillion this year -- but Democrats generally want to spare government spending as much as possible, and Republicans are still dead set against raising taxes. The 73 votes in the Senate to eliminate the ethanol subsidy suggest that ending special-interest tax breaks is emerging as a deficit-reduction alternative acceptable to both parties.
Finally, tax watchdog groups, using Treasury Department data, have identified hundreds of billions of dollars a year in such giveaways. Eliminating every last one wouldn't be enough to balance the budget, but it would be a big step toward that goal.
It's notable that the 33 Senate Republicans who voted to deep-six the ethanol subsidy, which takes the form of a 45-cent tax credit for every gallon of ethanol blended with gasoline, weren't cowed by threats from anti-tax guru Grover Norquist. He has contended that eliminating even a special-interest tax break represents a tax hike unless it is offset with a new tax cut. Last week's vote from a majority of Senate Republicans to drop the subsidy is a welcome repudiation of Norquist's extreme position.
Congress first approved the tax break for ethanol more than three decades ago to reduce U.S. dependence on foreign oil, an essential goal. But almost all U.S. ethanol is produced from corn, and studies have shown that it yields only slightly more energy than it takes to produce. And the subsidy encouraged U.S. corn farmers to divert almost 40 percent of their crop to ethanol last year, reducing the supply available for food and raising prices.
The ethanol subsidy has been jealously protected by farm state lawmakers from both parties. It has been bolstered by presidential candidates courting support in the first-in-the-nation Iowa caucuses.
The Obama administration, unfortunately, criticized last week's Senate vote. Like the two parties in Congress, the president is going to have to abandon his support for this and other special-interest tax breaks to make a meaningful budget deal possible.
The other part of the Senate vote, to end the 54-cent-a-gallon tariff on imported ethanol, would help diversify the nation's energy supply. The tariff is aimed at the ethanol Brazil produces from sugar cane, a source that yields more energy at a lower cost than corn. A cheaper supply of fuel from sugar would ease prices at the gas pump, where federal regulations require up to 10 percent ethanol in every gallon.
The end of the ethanol tariff would be especially good news in Florida, where efforts to produce homegrown ethanol are still developing. Sugar ethanol shipped to the state from Brazil would be less expensive than corn ethanol trucked from the Midwest.
With such benefits in mind, former GOP Sen. Mel Martinez of Florida introduced legislation in 2008 to lift the ethanol tariff. The bill went nowhere.
Congress is finally coming around. Better late than never.