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Senate sidetracks move to repeal ethanol tax credits, despite claim it is waste of money

By Associated Press, Published: June 14

From Washington Post

WASHINGTON — The Senate refused to kill a $5 billion annual subsidy for ethanol on Tuesday, backing continued government aid for a Farm Belt-based industry over deficit reduction in an era of record red ink.

The 40-59 vote, far short of the 60 needed to advance the measure, reflected regional as well as partisan differences, a split among Republicans — and anything but the final word on the issue.

“We continue to spend money that we don’t have on things that we don’t need,” said Sen. Tom Coburn, R-Okla., a prominent deficit hawk who led the effort to eliminate the subsidy immediately.

Supporters of continued federal spending for ethanol argued it is a leading source of alternative fuel and is needed to reduce U.S. dependence

on foreign oil.

“With conflicts in the Middle East and crude oil priced at more than $100 a barrel, we should be on the same side. Why would anyone prefer less domestic energy production,” Sen. Chuck Grassley, R-Iowa, said on Monday, when the measure was debated at length.

Grassley’s state leads the nation both in harvesting corn and blending it into alternative fuel. Other leading ethanol-producing states are Nebraska, Illinois, Minnesota, South Dakota and Indiana, and all senators from them opposed an end to the subsidy, regardless of political party.

Ethanol is blended with gasoline, and subsidized at 45 cents a gallon, with an additional 10 cents for small producers. These tax breaks long have been supported as a way to reduce oil imports by politicians in both parties, emphatically so for many who campaign across Iowa every four years in the state’s kickoff presidential caucuses.

But a new emphasis on deficit reduction, particularly among Republicans aligned with tea party activists, has contributed to a shift in the political landscape.

As a result, with the current subsidy scheduled to expire at the end of the year, Grassley and other farm state lawmakers support alternative legislation to reduce the tax break without eliminating it for several more years.

Unlike Coburn’s measure, the alternatives put only a fraction of the savings to deficit reduction. Instead, the rest would go for renewal of different tax breaks, including one for firms that purchase pumps to blend ethanol with gasoline.

Given the pressure to cut spending, it was evident even before the vote that the roll call would not be the final word this year in Congress on ethanol.

House deficit hawks are likely to seek to cut or eliminate the subsidy, and the issue also may come up in deficit reduction talks led by Vice President Joe Biden.

Additionally, shortly after Coburn’s legislation was blocked, Senate Majority Leader Harry Reid, D-Nev., announced he would schedule additional votes on the fate of the subsidy at the end of next week.

Coburn’s pre-emptive move forced a quick choice.

White House spokesman Clark Stevens said President Barack Obama opposed the elimination of the subsidy, but was “open to new approaches that meet today’s challenges and save taxpayers money.”

For Republicans, the choice was complicated by opposition from Grover Norquist, the head of Americans for Tax Reform and an inflexible opponent of tax increases. Yeah, he’s pissed because so many ‘Pubs signed his “Oath” of NEVER voting for ANY KIND of tax increase, yet 33 of them bailed. How LAME is Norquist and more importantly the Republican party?

Because the subsidy isn’t scheduled to expire until the end of 2011, he said Coburn’s legislation to end it immediately amounted to a tax increase.

The Oklahoman disagreed, as did other deficit hawks who said the vote marked a chance to go on record for spending cuts.

“It seems to me to be a pretty easy one” to cut, said Sen. Jeff Sessions, R-Ala., who said he had supported the subsidy in the past but had switched his position because of the growing national debt.

Sen. Pat Toomey, R-Pa., elected to his first term last fall, said the current program was “extremely inefficient. It is a waste of taxpayer money.”

But Sen. John Thune, R-S.D., said ethanol takes the place of 445 million barrels of oil annually. “That is the equivalent of $34 billion that we don’t send overseas,” he said.

Other critics noted that Coburn’s state of Oklahoma is part of the nation’s oil patch, and said the oil industry has benefited from government largesse for roughly a century.

“Already, the ethanol community is ahead of every other energy sector in stepping up with an alternative plan,” Grassley said in a statement issued after the vote.

Thune and Sen. Amy Klobuchar, D-Minn., like Grassley, are sponsors of an alternative measure.

In all, 33 Republicans sided with Coburn, several of them first-termers elected with the support of tea party voters eager to cut federal spending.

Another 12 GOP senators opposed the legislation, all from farm states.

Among Democrats, five voted to kill the subsidy. Another 46 voted one independent voted to retain it, but some said their votes reflected an unhappiness that Coburn had decided to force a vote rather than a long-term commitment to the program itself.

Associated Press writer Mary Clare Jalonick contributed to this report.

As always, I encourage you to pay very close attention to “Discretionary Spending” which will show more and more in the coming weeks.


After becoming a “retired senior”, God how I hate those words, I began watching and reading everything I can find about our congress and what they haven’t done for us as citizens. I plan to write a bit daily, all of which will be nonpartisan. I am a Republican by nature and registration but not so naïve to believe everything thing they stand for or espouse. Many people who may read this are younger and busy raising kids, working hard, and in general living their lives. The should make themselves aware and informed that the changes are coming to will greatly influence their future medical coverage as seniors.

Since Medicare is on almost all seniors’ mind these days I’ll begin with that.

FRAUD! “Guesstamates” are $60-$70 Billion a YEAR! That comes from the GAO, which means it’s a government agency and it’s likely inaccurate. After lots of research my wag is closer to $100 Billion. Those numbers don’t really “mean” much to us simply because we cannot wrap our heads around a number so huge.

Let’s ask the question, What is Congress doing to stop the fraud? Have you seen anything in the media that addressed it? No. Why is that? Simply not a controversial topic that will draw folks to tune it. It is certainly a bipartisan subject that both parties should be all over. In my humble opinion it has more than a little to do with lobbyists. From OpenSecrets.org comes this; “In all clients spent more than $3.47 billion in 2009, often driven to Washington, D.C.’s power centers and halls of influence by political issues central to the age: health care reform, financial reform, energy policy.”

Efforts to combat Medicare fraud could create significant savings for the Medicare program. Many of the schemes are widespread, well-organized, and very lucrative. The Department of Justice has requested $283.4 million to maintain and expand Medicare fraud enforcement, and has also asked for the adoption of new sentencing guidelines including stiffer penalties for those convicted of Medicare fraud. The current efforts have yielded a return of approximately $4 billion in restitution. Ah, the solution to all government issues, throw money at it! Please notice there has been NO legislature put forward to close the loop holes that Medicare is riff with. I would love opinions on this issue. If this were a public company would the owners/”us” stand for it? Would the public company fire the CEO and immediately put in controls to stop the bleeding? Hell yes! By the time Justice gets the people hired, trained, and put to work we will have had another $100 billion, or more, swallowed by thieves.

What follows is what I began this with, the FACT that congress is doing nothing to help Medicare.

Republicans will now continue to attack Democrats from the left for cutting the program through the Affordable Care Act. They will argue (as Speaker of the House John Boehner (R-OH) does) that the GOP budget preserves benefits for everybody over 54 while the Democrats cut benefits to today’s seniors and will continue to ration their care and allow the program to go bankrupt. There is very little truth to any of that. Read on, it gets better.

Of course, there are different ways to cut benefits. The liberal method is to try to get Medicare to stop paying for ineffective procedures, and to encourage measures of results rather than simply incentivize more spending. Conservatives have decided that any measure seeking to root out waste in Medicare amounts to “rationing” and is unacceptable. They prefer to put beneficiaries into private insurance, and then slowly reduce the subsidy for that insurance, so that customers can shop for cheaper plans.

What the Democrats actually did is cut the rate of growth in Medicare, reduced annual increases in payments to hospitals, skilled nursing facilities, home health agencies and other institutions to spur productivity and cut over-payments to private insurers that are not delivering value for Medicare dollars. They used that money to expand coverage to 32 million Americans — many of whom were receiving uncompensated care at these institutions — extend the life of the Medicare program and invest in new demonstration projects that aim to deliver quality care more efficiently.

Those are just the facts, and the problem for the GOP is that they actually voted for many of these reductions as part of the Ryan budget without investing the savings in coverage expansion or changing the way the government finances health care. Jonathan Cohn gets at the difference in his Kaiser Health News column:

Republicans claim, as Democrats do, that their plan will nudge the whole health care system in the direction of more efficiency — not by changing the behavior of providers, as Democrats prefer, but by changing the behavior of consumers, in ways that will create a more vibrant and competitive market. It’s a highly dubious argument, given that private insurance has higher overhead and less bargaining power than government insurance. (Remember, the Democratic plans would take money back from private insurers serving the Medicare population, for precisely the same reason.) But even if it were true, there’s no credible expert who thinks the savings from competition would be large enough to offset the massive reduction in funding Republicans have in mind.

There is also no credible research showing that forcing individuals to be more cost conscious will significantly lower national health care spending, so the GOP is voting for these cuts without increasing coverage or lowering costs.

Consider this, congress passed the Medicare bill, LBJ signed into law, and it was enacted in 1965. Prior to that only 56% of all seniors had ANY healthcare. The ones who did were paying 20% of wages to have coverage. This is per GAO. Over the years there have been some excellent plans presented in congress to fine tune Medicare, aka close loop holes, . . .all were defeated in the Senate. Sound familiar?

I’m not anti-government but I’m damn sure anti waste. The direction congress is posturing towards is geared to once again have the ‘middle class’, what little is left of it, foot the burden of cuts that don’t have to happen. What can we do about it? Whatever we decide to do but WE need to take action. I began a few months ago writing my congressmen, both state and DC. I hope others will see the need to voice their opinion.


As Paul Harvey once said, “good day”.

Semper Fi America