Senate reverses self, votes to end ethanol subsidies

In a reversal vote Thursday, the U.S. Senate voted to nix ethanol subsidies, much to the dismay of federal lawmakers who advocate for farmers and ethanol producers.

Senators voted 73-27 to approve an amendment authored by Sen. Tom Coburn (R-Okla.) and Sen. Dianne Feinstein (D-Calif.) that eliminates a 45-cent-per-gallon tax credit for blending ethanol and gasoline. It also eliminates a 54-cent-per-gallon ethanol tariff.

The news was not welcome to some Democrats, but also to some Republicans, including Iowa’s Sens. Chuck Grassley (R-Iowa) and Tom Harkin (D-Iowa), who live in Midwestern states where ethanol production is a prevalent industry.

Both Harkin and Grassley strongly opposed the amendment, and urged their colleagues to do the same.

“In the policy debates about biofuels, and specifically ethanol, there is a way for everybody to be a winner,” Harkin said through a spokesman Thursday. “We can reform biofuels tax policy, we can achieve deficit reduction and we can strengthen our commitment to alternative fuels. But these amendments here today are not the way to do it.”

Prior to the vote, Grassley warned President Barack Obama the amendments — including one authored by Sen. John McCain (R-Ariz) that prohibits use of federal monies to install ethanol blender pumps — would hurt domestic production.

“These amendments won’t lessen our dependence on foreign oil,” he said in prepared remarks Thursday. “They won’t create a single job. They’ll do exactly the opposite.”

On Tuesday, the Coburn amendment, which Grassley called “misguided and out of touch,” was voted down 40-65, far from obtaining the 60 votes for approval. Democrats, however, decried the amendment, saying Coburn was trying to aggressively force a vote.

Grassley — and some GOP presidential candidates like former Minnesota Gov. Tim Pawlenty — have spoken in favor of phasing out ethanol subsidies over a span of years, but not to repeal them. The tax credit would expire at the end of 2012.

The measures passed by the Senate will now move to the U.S. House, where the Coburn amendment is not anticipated to receive a favorable reception.

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