Obama ‘Change’ on Ethanol?
by Tim Carney
Issue 111 - July 9, 2008

Barack Obama has a reputation as a reformer and a champion of the downtrodden, but on the most damaging federal boondoggle today, he’s on the side of the status quo and the entrenched interests.

Obama is a devoted champion of ethanol subsidies and mandates, but, with food prices soaring and biofuels’ negative consequences increasingly coming to the fore, will Obama revise his position?

Corn-based ethanol enjoys a plethora of subsidies in the United States, from both state and federal government tax breaks, subsidies and mandates. Government incentives have created an ethanol boom that helps agricultural communities such as Illinois and the crucial electoral state of Iowa, but with millions of acres of farm now dedicated to fuel production instead of food production, the ethanol programs are contributing the spike in food prices — which are now at record levels.

Because corn requires more irrigation and more fertilizer than most crops, the environmental effect of ethanol — touted as a green fuel because it burns more cleanly than petroleum — might be a net negative.

John McCain wants to suspend or abolish the federal mandates that require gas companies to purchase ethanol; and he opposes the other ethanol subsidies, too. Ethanol subsidies, he says, have “contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world.”

Until recently, at least, Obama has been a fierce champion of existing federal ethanol subsidies and mandates. Indeed, he wants more ethanol subsidies.

In March 2005, Obama visited the Pekin, Ill., distillery of the Illinois Biodiesel, the nation’s second-largest ethanol producer. The Pekin Daily Times reported, “Obama said boosting the nation’s ethanol output is a ‘no-brainer.’ …”

In the 2005 energy bill, Obama helped save the first federal ethanol mandate while McCain supported an amendment to kill the mandate.

Protecting and expanding ethanol favoritism is a part of Obama’s presidential campaign. His energy plan calls for “expanding federal tax credit programs” for ethanol. His plan also proposes, “an additional subsidy per gallon of ethanol” for locally funded ethanol plants.

Obama also touts his special tax credit for gas stations that install pumps to dispense E85, a blend of 85 percent ethanol and 15 percent gasoline. Most cars today cannot run on E85, but Obama proposes to outlaw the manufacture of current vehicles, though he puts it in nicer terms: “Obama will work with Congress and auto companies to ensure that all new vehicles have [flex-fuel] capability by the end of his first term in office.”

Where is he on the ethanol mandate that has contributed to the spike in food prices? Obama wants to double-down on the policy, calling for expanding the mandate. He supports preserving the tariff that keeps out foreign ethanol, too.

This ethanol enthusiasm certainly helped him beat Hillary Clinton — a late and unconvincing convert to the ethanol faith — in the Iowa caucuses, a win which catapulted him to the nomination. Iowa is a swing state in November, and the state’s Democratic senator, Tom Harkin, has cited Obama’s ethanol boosterism — and McCain’s opposition — as a reason Obama should carry the state in November.

But recently, he’s had a slightly different tone on the issue. Much of Obama’s ethanol rhetoric of late has focused on “next-generation ethanol,” from sources like switch-grass and wood chips -- still theoretical fuels for which Obama proposes generous research and development subsidies.

On “Meet the Press,” Obama indicated some flexibility on corn ethanol: “If it turns out that we’ve got to make changes in our ethanol policy to help people get something to eat, then that’s got to be the step we take.”

How brave a politician is Obama? How open-minded is he? Will he take superficial steps such as tweaking his ethanol plan or creating new subsidies for food production? Or will he risk the ridiculous “flip-flop” label and risk angering Iowans by calling for an end to harmful mandate?

I called Obama’s campaign about ethanol mandates twice recently, and the campaign neither gave me an answer nor simply directed me to his previous statements. Expecting a liberal corn-belt politician to abandon corn ethanol is pretty audacious, but a guy can hope, can’t he?

Timothy Carney is a columnist with the Washington Examiner, where this first appeared.