Liberal and Conservative Organizations Unite Against Wasteful Ethanol Spending

The National Taxpayers Union and US PIRG-Education Fund, a conservative and liberal organization, teamed up to produce a list of Federal programs that can be cut at no adverse effect to the American public in a report entitled, “Toward Common Ground: Bridging the Political Divide to Reduce Spending.” While most of the recommendations concern wasteful military programs, there are two programs listed that relate to biomass.

The first program is the refundable tax credits for ethanol. The tax credits targeted go to oil companies that blend ethanol with gasoline, instead of the ethanol producers themselves. The reasoning the report gives is that the oil companies already makes significant profits and the ethanol industry should be mature enough at this point to not be subsidized by taxpayers. Additionally both industries have very healthy profit margins with the subsidy and could likely make a profit with no subsidies.

The second program is to reduce funding for public timber sales that sell at a loss. They claim that, “The Forest Service has spent more on federal timber sales in recent years than it has collected from the companies that harvest the timber.” The report does not address whether the Forest Service has other goals, such as thinning or other forest health reasons.

Overall the authors say the recommendations in the paper could result in $600 billion in savings by 2015, if implemented.

Appendix

Excerpts from “Toward Common Ground”

1.Plan: Eliminate refundable tax credits for ethanol

Explanation: Large oil companies that blend gasoline with corn-based ethanol, rather than the ethanol producers themselves, receive billions of dollars in subsidies each year. The credits combined with the Renewable Fuels Standard set up a taxpayer subsidized mandate, which is bad fiscal policy.

Savings: By 2015, cutting this program will have saved $ 22,650 million.

Source: Joint Committee on Taxation

Link: http://www.jct.gov/publications.html?func=startdown&id=3642

2. Plan: Reduce funding for public timber sales that lose money

Explanation: The Forest Service has spent more on federal timber sales in recent years than it has collected from the companies that harvest the timber. This is an unwise use of taxpayer dollars.

Savings: By 2015, cutting this program will have saved $ 279 million.

Source: CBO 2009 Budget Options

Link: http://www.cbo.gov/ftpdo