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Senate republicans at odds over continuing federal ethanol subsidy.

A plan by Sen. Tom Coburn (R-Okla.) to repeal the 45-cents-per-gallon federal subsidy for ethanol has received support from fellow Republicans who consider themselves fiscally responsible, but considerable criticism from GOP senators who represent major ethanol producing states.

GOP ethanol opponents see an opportunity to use their party's emphasis on cutting federal spending as leverage to support Coburn's amendment that would eliminate a tax credit that oil companies receive for blending ethanol into gasoline. But they face formidable opposition from a band of farm-state lawmakers--led by Sen. Chuck Grassley (R-Iowa)--who have long championed ethanol and say any attempt to limit federal support for ethanol should be part of a broader debate over national energy policy, rather than an ethanol-specific rifle shot.

Although Coburn's proposal could cause headaches for some conservative lawmakers on both sides of the aisle, a vote could be particularly difficult for Republican lawmakers who are facing potential primary challenges in 2012.

Coburn last week reached an agreement with Majority Leader Harry Reid (D-Nev.) that his ethanol tax credit amendment would receive a Senate floor vote at a later time, but in return, Coburn agreed that the proposal would require a two-thirds majority vote for approval. Prior to his negotiations with Reid, Coburn had vowed to tie up the Senate with procedural objections until he won a vote on the ethanol proposal.

The underlying legislation to which Coburn planned to attach his amendment is a small-business research bill (S 493). The federal tax credit is one of three major supports government extends to domestic ethanol industry. The other two are a 54-cents-per-gallon tariff on imports and a mandate that a fixed amount of ethanol be blended into the U.S. transportation fuel supplies.
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Publication:The Food & Fiber Letter
Date:Apr 4, 2011
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