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One of the Worst Ideas Ever

If you had any doubt that the ethanol subsidy racket was a bad idea, this report from CBO should settle the matter. CBO explains:

The increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008, the Congressional Budget Office (CBO) estimates. In turn, that increase will boost federal spending for the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program) and child nutrition programs by an estimated $600 million to $900 million in
fiscal year 2009.

So we raised food prices, contributed to world hunger and unnecessarily increased our own domestic spending. But this will all help with global warming, right? Well in the short run it has reduced greenhouse emissions, but:

If increases in the production of ethanol led to a large amount of forests or grasslands being converted into  new cropland, those changes in land use could more than offset any reduction in greenhouse-gas emissions— because forests and grasslands naturally absorb more carbon from the atmosphere than cropland absorbs.

In short, this was a disastrous policy pushed by a combination of environmental alarmists and ag lobbyists.

The law of unintended consequences never fails to disappoint. And it should be a warning to those planning massive, government-centric programs. We better make darn sure there is a problem before embarking on a “solution,” and we should be wary that the downsides of the program(s) don’t outweigh any benefit we hope to achieve. The ethanol fiasco is a lesson worth embracing as we move forward in discussions on healthcare, cap-and-trade, and a myriad of other social engineering schemes which the Obama team is crafting.


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