On Tuesday, the U.S. Senate is expected to vote on an amendment to kill federal tax incentives for the ethanol industry. Sen. Tom Coburn, R-Okla., pushed for the vote to cut the 45-cent-per-gallon tax credit, worth about $6 billion a year, for refiners and gasoline blenders.
Many fiscal conservatives oppose the subsidy. And so do corn-ethanol critics who say many Americans already are struggling to keep up with rising food costs. With the price of corn now at nearly $8 a bushel, up from $3.30 a year ago, Congress should not be encouraging companies to turn corn into fuel, they argue.
But in a speech today at the National Press Club in Washington, Agriculture Secretary Tom Vilsack defended ethanol, saying it helps create jobs for poor people in rural areas. The former Iowa governor said that instead of worsening the budget deficit, the ethanol industry is helping boost economic growth. Eliminating subsidies could hurt the nation's balance sheet because it could "limit our capacity to grow our way out of the deficit," he said.