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Memo to Congress: Do Nothing!

Gilbert and Sullivan made fun of the British House of Lords in Iolanthe thus:

When Wellington thrashed Bonaparte,

As every child can tell,

The House of Peers, throughout the war,

Did nothing in particular,

And did it very well.

The American Congress — not itself unknown for doing nothing in particular on occasion — has an opportunity in the next couple of weeks to do nothing at all and render the country a considerable service thereby.

What it needs to do nothing about is ethanol, one of the truly epic boondoggles in American history. As the ball falls in Times Square on New Year’s Eve, both the 45-cent-a-gallon tax credit on ethanol (which goes to companies that blend ethanol and gasoline, i.e., Shell, Exxon, et al.) and the 54-cent-a-gallon tariff on foreign ethanol will expire, unless Congress acts.

The 45-cent tax credit costs the government $5-6 billion a year and is opposed by such strange bedfellows as the Sierra Club and the National Taxpayers Union. Those in favor are, no surprise, ethanol producers and the farmers who grow the corn it is made from. The 54-cent tariff, which, of course, is paid by American consumers, keeps cheaper foreign (mostly Brazilian) ethanol out of the American market.

Ethanol was supposed to be the road to American energy independence (sticking it to big oil into the bargain), while cutting down on the risk to the environment from traditional oil drilling. But even Al Gore is now against it. “One of the reasons I made that mistake [of supporting subsidies for corn ethanol],” he recently said, “is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

Since federal law now mandates that motor fuel contain 10 percent ethanol, both the tax credit and the tariff favor only the few (corn farmers and ethanol producers) at the expense of the many (taxpayers and drivers).

Once a tax or a credit is in place, it is often very hard to get it repealed, because the special interests benefited fight fiercely to see that it remains on the books, while the general interest does not fight nearly as hard to get senators and congressmen to vote to repeal. Political inertia is the lobbyist’s best friend. But in this case, Congress merely has to do nothing: let the tariff and the credit get lost in the hectic final days of the lame duck session and call it a job well done.

Even members of Congress should be able to that.



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