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Senate, House votes go against agricultural interest

By JERRY HAGSTROM

In what appears to be the worst day for traditional American agricultural interests in decades, the Senate voted to end ethanol tax breaks immediately while the House of Representatives voted to end payments to settle the Brazil cotton case as well as to cut a wide range of other programs including nutrition.

It's unlikely, however, that either of these bills will become law in the form in which they were passed. The Obama administration opposes a quick end to the ethanol tax break, and both the Senate and the administration have to weigh in on the Agriculture appropriations bill that contains the Brazil measure.

The agriculture lobbies and their supporters in Congress, who have successfully defended agriculture subsidies for decades, suddenly seemed to lose control of the process.

The Senate had voted to keep the 45-cent-a gallon Volumetric Ethanol Excise Tax Credit on Tuesday, but on a new vote Thursday voted 73 to 27 to end it and the 54-cent import tariff. The vote on Tuesday had been 40 to 59.

Sen. John McCain, R-Ariz., sponsor of a bill to block funding for ethanol infrastructure, lost that vote 41 to 59. But the House of Representatives voted 283-128 to block USDA from using funds next year to help fuel stations offset the costs of installing ethanol blender pumps.

“You can see there is waning support for these ethanol subsidies,” said Rep. Jeff Flake, R-Ariz., told DTN in an interview off the House floor. “For those of us who are rediscovered fiscal conservatives there’s little room for ethanol subsidies.”

The Senate vote would end the tariff on June 30, but for that to happen the House would have to pass an identical measure by then and President Obama would have to sign it. Sen. Dianne Feinstein, D-Calif., led the effort to end the ethanol tax break and Sen. Tom Coburn, R-Okla., who had lost the Tuesday vote, backed her.

The shift in votes was largely in Democrats, according to a DTN analysis. Only five Democrats and one independent voted for the Coburn amendment on Tuesday, but on Thursday 38 Democrats and the Senate’s two independents voted with 33 Republicans to kill the ethanol blenders’ credit. Fourteen Republicans and 13 Democrats, most coming from ethanol-producing states, voted against Feinstein's amendment.

Meanwhile, the House voted to pass a $125.5 billion fiscal year 2012 Agriculture appropriations bill that cuts $2.6 billion in discretionary programs for nutrition, research, conservation and rural development compared with fiscal year 2011. It also strips the $147 million annual payments to Brazilian cotton farmers that the United States has been making to satisfy the World Trade Organization case that it lost.

Agriculture did not lose every battle in the House. Members defeated an amendment that would have set a farm-payment cap at $125,000 and an amendment that would have lowered income eligibility to $250,000 adjusted gross income.

House Agriculture Committee Chairman Frank Lucas, R-Okla., said, "I was very disappointed that a number of my friends voted unknowingly to create a trade war with Brazil," DTN reported. The efforts to cut farm programs were led by Flake and Rep. Ron Kind, D-Wis.

“Mr. Kind did a very eloquent job, and Mr. Flake, of packaging their product in a way that ignored the trade implications, ignored the potential trade war, ignored all of that,” Lucas said.

To emphasize the Obama administration’s opposition to a quick end to the ethanol tax break, both Agriculture Secretary Tom Vilsack and the White House put out statements.

“President Obama has outlined a plan to reduce our oil imports by one-third by 2025,” Vilsack said. “Biofuels play a central role in this plan, which is why this administration continues to support and invest in the development of these important, domestically produced fuels.”

“The administration supports efforts currently under way in the Senate to reform and modernize tax incentives and other programs that support biofuels.” Vilsack continued. “However, today’s amendments are not reforms and are ill-advised. They will lead to job loss as our nation begins its economic recovery and pull the rug out from under industry, which will lead to less choice for consumers and greater dependence on foreign oil. We need reforms and a smarter biofuels program, but simply cutting off support for the industry isn’t the right approach. Therefore, we oppose a straight repeal of the Volumetric Ethanol Excise Tax Credit and efforts to block biofuels infrastructure programs.”

White House spokesman Clark Stevens noted that the administration has outlined a plan to reduce oil imports by one-third by 2025.

“Increased production of biofuels is an important part of that plan, and the administration is taking steps to reduce barriers to increased use of the biofuels we have today while investing in the development of next generation biofuels,” Stevens said. “With respect to incentives, the administration is open to new approaches that meet today’s challenges and save taxpayers money. As we have made clear, the administration opposes a straight repeal of the Volumetric Ethanol Excise Tax Credit as well efforts to block programs that will give consumers more access to biofuels.”

“Agriculture is under assault in this Congress,” said House Agriculture Committee ranking member Collin Peterson, D-Minn., who also mentioned cuts to the Commodity Futures Trading Commission (CFTC).

“We first saw it with the Ryan budget, which cut $178 billion from agriculture programs,” Peterson said. “And today, Congress approved a bill that makes disproportionate cuts to agriculture, including vital conservation and nutrition programs. Additionally, the bill includes an unprecedented nearly $2 billion in changes to mandatory spending, taking funds from carefully negotiated farm bill programs. Furthermore, the funds that would allow the CFTC to move ahead with financial reforms and bring about a more open and transparent derivatives market were slashed. I fear that if Congress continues to chip away at farm programs we will be left without an adequate safety net and the end result could potentially cost the government more money, not less."

Rep. Rosa DeLauro, D-Conn., emphasized the cuts to nutrition programs and the CFTC in her statement after the bill passed.

“I was proud to vote against this disastrous bill today, which I believe is a failure of Congress’s responsibility to the American people,” DeLauro said.

“The Women with Infant Children program, which provides nutrition assistance for low-income pregnant women, mothers, and their young children, has been gutted by over $650 million and other nutrition programs for seniors and those in need are woefully underfunded,” she said. “Funding for the Food and Drug Administration is drastically cut by more than $280 million, putting the health and safety of American families at risk. The Commodity Futures Trade Commission, which seeks to protect American consumers and curb the excessive Wall Street speculation that drives up gas prices, is also gutted by this bill — funded $136 million below the president’s request.”

But congressional opponents of ethanol and outside groups opposed to ethanol said the votes signaled that the days of Congressional support for ethanol are numbered.

The National Wildlife Federation praised the anti-ethanol votes.

"With the tremendous success of Senators Coburn and Feinstein’s amendment in the Senate to end the ethanol tax credit and Representative Flake’s success in the House in prohibiting funding for special ethanol infrastructure, we are happy to see that Congress is finally willing to draw the line with regard to subsidizing the corn ethanol industry,” the NWF said in a statement.

“This industry has been extremely damaging to the environment, causing increased soil erosion, water pollution, and loss of wildlife habitat," the NFW said. "It is far beyond time to stop throwing money after conventional biofuels and to move on to launching the next generation of cleaner, greener bioenergy from native grasses and trees."