The Ethanol Subsidy and How Biofuel Tax Incentives Work

The Ethanol Subsidy and How Biofuel Tax Incentives Work The primary ethanol subsidy offered by the federal government is a tax incentive called the Volumetric Ethanol Excise Tax Credit, which was passed by Congress and signed into law by President George W. Bush in 2004. It took effect in 2005. The ethanol subsidy, which is commonly referred to as the blenders credit, offers ethanol blenders registered with the Internal Revenue Service a tax credit of 45 cents for every gallon of pure ethanol they blend with gasoline. That particular ethanol subsidy cost taxpayers $5.7 billion in foregone revenues in 2011, according to the U.S. Government Accountability Office, the nonpartisan congressional watchdog agency. Debate Over the Ethanol Subsidy Supporters of the federal ethanol subsidy argue that it encourages production and use of the biofuel and thereby reduces the amount of foreign oil needed to produce gasoline, a step toward energy independence. But critics argue that ethanol burns far less efficiently than gasoline, driving up fuel consumption and that it increases demand for corn for fuel and artificially boosts the cost of farm commodities and retail prices of food. They also say such an incentive is unnecessary because legislation enacted in 2007 requires oil companies to produce 36 billion gallons of biofuels such as ethanol by 2022. While born of good intentions, federal subsidies for ethanol have failed to achieve their intended goals of energy independence, U.S. Sen. Tom Coburn, a Republican from Oklahoma and leading critic of the ethanol subsidy, said in 2011. The effort to Kill the Ethanol Subsidy Coburn led an effort to repeal the ethanol subsidy in June of 2011, saying it was a waste of taxpayer money - he said the Volumetric Ethanol Excise Tax Credit cost $30.5 billion from 2005 through 2011 - because consumption remained only a small part of the countrys fuel use. His effort to repeal the ethanol subsidy failed in the Senate by a vote of 59 to 40. While Im disappointed my amendment did not pass, taxpayers should remember that when I offered an amendment to defund the Bridge to Nowhere in Alaska in 2005 we lost that vote 82 to 15, Coburn said in a statement. Over time, however, the will of the people prevailed and Congress was forced to scale back this wasteful and corrupting practice. Today, the earmark favor factory is mostly closed. Only the tax division remains open. Im confident this debate, and many more ahead, will expose the tax code for what it is - an abomination that favors the well-connected over working families and small businesses. History of the Ethanol Subsidy The Volumetric Ethanol Excise Tax Credit ethanol subsidy became law on Oct. 22, 2004, when President George W. Bush signed the American Jobs Creation Act into law. Included in that piece of legislation was the Volumetric Ethanol Excise Tax Credit. The initial bill gave ethanol blenders a tax credit of 51 cents for every gallon of ethanol they mixed with gasoline. Congress reduced the tax incentive by 6 cents per gallon as part of the 2008 Farm Bill. According to the Renewable Fuels Association, gasoline refiners and marketers are required to pay the full rate of tax, which is 18.4 cents per gallon on the total gasoline-ethanol mixture but can claim the 45 cents per gallon tax credit or refund for each gallon of ethanol used in the mixture. The ethanol subsidy benefits multibillion-dollar integrated oil companies such as BP, Exxon, and Chevron. The First Ethanol Subsidy The Energy Policy Act of 1978 was the first federal legislative ethanol subsidy. It allowed for a 40-cent tax exemption per gallon of ethanol, according to Purdue University.The Surface Transportation Assistance Act of 1982 increased the tax exemption to 50 cents per gallon of ethanol.The 1990 Omnibus Budget Reconciliation Act extended the ethanol subsidy to 2000 but decreased the amount to 54 cents a gallon.The 1998 Transportation Efficiency Act of the 21st Century extended the ethanol subsidy through 2007 but reduced it to 51 cents per gallon by 2005.Bushs signature on the Jobs Creation Act changed the way the modern ethanol subsidy worked. Instead, it offered a straight tax credit to producers, the legislation allowed for the blenders credit. President Trump Protects the Ethanol Subsidy During his 2016 campaign, President Donald Trump came out as one of the ethanol subsidy’s strongest supporters. Speaking in Iowa, where corn is king, on January 21, 2016, he said, â€Å"The EPA should ensure that biofuel . . . blend levels match the statutory level set by Congress,† adding that he was â€Å"was â€Å"there with you [farmers] 100 percent† on continuing federal subsidy for ethanol. â€Å"You’re going to get a really fair shake from me.† After Trump took office in January 2017, all seemed well with the ethanol subsidy until early October, when his own EPA administrator Scott Pruitt announced that the agency was considering lowering the EPA-mandated subsidy payment level for ethanol â€Å"slightly† in 2018. The suggestion sent shockwaves through the Corn Belt and its Republican congressional protectors. Iowa Sen. Chuck Grassley accused Trump of a â€Å"bait and switch,† in reference to his empathic campaign promise. Grassley and Iowa’s other Republican senator, Joni Ernst, threatened to block all of Trump’s future EPA appointments. The governors of most Corn Belt states joined in sending Trump warning him than any cutback in the Renewable Fuel Standard program’s subsidies would be â€Å"highly disruptive, unprecedented and potentially catastrophic.† Faced with the potential loss of influence over some of his strongest congressional backers, Trump quickly told Pruitt to back off any future talk of cutting the ethanol subsidy. On July 5, 2018, Pruitt resigned amid multiple accusations of ethics violations involving his excessive and unauthorized personal use of government funds. He was replace within hours by EPA deputy director Andrew Wheeler, a former lobbyist for the coal industry.

Post-WWII Jewish Migration

Post-WWII Jewish Migration Approximately six million European Jews were killed in the Holocaust during World War II. Many of the European Jews who survived the persecution and death camps had nowhere to go after V-E Day, May 8, 1945. Not only had Europe been practically destroyed, but many survivors did not want to return to their pre-war homes in Poland or Germany. Jews became Displaced Persons (also known as DPs) and spent time in helter-skelter camps, some of which were located at former concentration camps. As the Allies were taking Europe back from Germany in 1944-1945, the Allied armies liberated the Nazi concentration camps. These camps, which housed from a few dozen to thousands of survivors, were complete surprises for most of the liberating armies. The armies were overwhelmed by the misery, by the victims who were so thin and near-death. A dramatic example of what the soldiers found upon liberation of the camps occurred at Dachau where a train load of 50 boxcars of prisoners sat on the railroad for days as the Germans were escaping. There were about 100 people in each boxcar and, of the 5,000 prisoners, about 3,000 were already dead upon the arrival of the army. Thousands of survivors still died in the days and weeks following liberation and the military buried the dead in individual and mass graves. Generally, the Allied armies rounded up concentration camp victims and forced them to remain in the confines of the camp under armed guard. Medical personnel were brought into the camps to care for the victims and food supplies were provided but conditions in the camps were dismal. When available, nearby SS living quarters were used as hospitals. Survivors had no method of contacting relatives as they were not allowed to send or receive mail. The survivors were forced to sleep in their bunkers, wear their camp uniforms, and were not allowed to leave the barbed-wire camps, all while the German population outside of the camps were able to try to return to normal life. The military reasoned that the Holocaust survivors (now essentially their prisoners) could not roam the countryside for fear that they would attack civilians. By June, word of poor treatment of Holocaust survivors reached Washington, D.C. President Harry S. Truman, anxious to appease concerns, sent Earl G. Harrison, the dean of the University of Pennsylvania Law School, to Europe to investigate the ramshackle DP camps. Harrison was shocked by the conditions he found, As things stand now, we appear to be treating the Jews as the Nazis treated them, except that we do not exterminate them. They are in concentration camps, in large numbers under our military guard instead of SS troops. One is led to wonder whether the German people, seeing this, are not supposing that we are following or at least condoning Nazi policy. (Proudfoot, 325) Harrison strongly recommended to President Truman that 100,000 Jews, the approximate number of DPs in Europe at the time, be allowed to enter Palestine. As the United Kingdom controlled Palestine, Truman contacted the British Prime Minister Clement Atlee with the recommendation but Britain demurred, fearing repercussions (especially problems with oil) from Arab nations if Jews were allowed into the Middle East. Britain convened a joint United States-United Kingdom committee, the Anglo-American Committee of Inquiry, to investigate the status of DPs. Their report, issued in April 1946, concurred with the Harrison report and recommended that 100,000 Jews be allowed into Palestine. Atlee ignored the recommendation and proclaimed that 1,500 Jews would be allowed to migrate to Palestine each month. This quota of 18,000 a year continued until the British rule in Palestine ended in 1948. Following the Harrison report, President Truman called for major changes to the treatment of Jews in the DP camps. Jews who were DPs were originally accorded status based on their country of origin and did not have separate status as Jews. General Dwight D. Eisenhower complied with Trumans request and began to implement changes in the camps, making them more humanitarian. Jews became a separate group in the camps so Jews no longer had to live with Allied prisoners who, in some cases, had served as operatives or even guards in the concentration camps. DP camps were established throughout Europe and those in Italy served as congregation points for those attempting to flee to Palestine. Trouble in Eastern Europe in 1946 more than doubled the number of displaced persons. At the beginning of the war, about 150,000 Polish Jews escaped to the Soviet Union. In 1946 these Jews began being repatriated to Poland. There were reasons enough for Jews not to want to remain in Poland but one incident in particular convinced them to emigrate. On July 4, 1946 there was a pogrom against the Jews of Kielce and 41 people were killed and 60 were seriously injured. By the winter of 1946/1947, there were about a quarter of a million DPs in Europe. Truman conceded to loosen immigration laws in the United States and brought thousands of DPs into America. The priority immigrants were orphaned children. Over the course of 1946 to 1950, over 100,000 Jews migrated to the United States. Overwhelmed by international pressures and opinions, Britain placed the matter of Palestine into the hands of the United Nations in February 1947. In the fall of 1947, the General Assembly voted to partition Palestine and create two independent states, one Jewish and the other Arab. Fighting immediately broke out between Jews and Arabs in Palestine but even with the U.N.s decision, Britain still kept firm control of Palestinian immigration as long as they could. Britains complicated process for regulation of displaced Jewish immigration to Palestinian was plagued with problems. Jews were moved to Italy, a trip which they often did on foot. From Italy, ships and crew were rented for the passage across the Mediterranean to Palestine. Some of the ships made it past a British naval blockade of Palestine, but most did not. The passengers of captured ships were forced to disembark in Cyprus, where the British operated DP camps. The British government began sending DPs directly to camps on Cyprus in August 1946. DPs shipped to Cyprus were then able to apply for legal immigration to Palestine. The British Royal Army ran the camps on the island. Armed patrols guarded the perimeters to prevent escape. Fifty-two thousand Jews were interned and 2,200 babies were born on the island of Cyprus between 1946 and 1949. Approximately 80 percent of the internees were between the ages of 13 and 35. Jewish organization was strong in Cyprus and education and job training was internally provided. Leaders on Cyprus often became initial government officials in the new state of Israel. One shipload of refugees heightened concern for DPs throughout the world. The Jewish survivors had formed an organization called Brichah (flight) for the purpose of smuggling immigrants (Aliya Bet, illegal immigration) to Palestine and the organization moved 4,500 refugees from DP camps in Germany to a port near Marseilles, France in July 1947 where they boarded Exodus. The Exodus departed France but was being watched by the British navy. Even before it entered the territorial waters of Palestine, destroyers forced the boat to the port at Haifa. The Jews resisted and the British killed three and wounded more with machine guns and tear gas. The British ultimately forced the passengers to disembark and they were placed on British vessels, not for deportation to Cyprus, as was the usual policy, but to France. The British wanted to pressure the French to take responsibility for the 4,500. The Exodus sat in the French port for a month as the French refused to force the refugees to disemba rk but they did offer asylum to those who wished to voluntarily leave. Not one of them did. In an attempt to force the Jews off the ship, the British announced that the Jews would be taken back to Germany. Still, no one disembarked as they wanted to go to Israel and Israel alone. When the ship arrived in Hamburg, Germany in September 1947, soldiers dragged each passenger off of the ship in front of reporters and camera operators. Truman and the much of the world watched and knew that a Jewish state needed to be established. On May 14, 1948 the British government left Palestine and the State of Israel was proclaimed the same day. The United States was the first country to recognize the new State. Legal immigration began in earnest, even though the Israeli parliament, the Knesset, did not approve the Law of Return, (which allows any Jew to migrate to Israel and become a citizen) until July 1950. Immigration to Israel increased rapidly despite war against hostile Arab neighbors. On May 15, 1948, the first day of Israeli statehood, 1,700 immigrants arrived. There was an average of 13,500 immigrants each month from May through December of 1948, far exceeding the prior legal migration approved by the British of 1,500 per month. Ultimately, the survivors of the Holocaust were able to emigrate to Israel, the United States, or a host of other countries. The State of Israel accepted as many that were willing to come and Israel worked with the arriving DPs to teach them job skills, provide employment, and to help the immigrants help build the wealthy and technologically advanced country that it is today.