An agreement has been reached to end ethanol subsidies immediately, three senators announced on Thursday.
Sens. Dianne Feinstein (D-Calif.), Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) wrote a letter to Senate leaders that said their proposal would cut billions from the debt through the rest of the year and invest $668 million in new energy technologies.
“This agreement is the best chance to repeal the ethanol subsidy, and it’s the best chance to achieve real deficit reduction,” Feinstein said in a statement about the agreement. “Absent this agreement, taxpayers stand to lose $1.33 billion – that was the bottom line for me.”
Of the nearly $6 billion annual ethanol subsidy, the senators agreed to repeal the 45-cent-per-gallon ethanol blender credit – saving $2 billion through the rest of 2011 – and to end a tariff of 54 cents a gallon on foreign ethanol by the end of this month.
The remaining amounts would go toward extending a tax credit for green biofuel production for three years, including expanding it to include fuels made from algae. By expanding the production to other energy sources, it would allow the non-corn advanced biofuels industry – the cleanest form of vehicle fuel – to grow and develop, the senators said. The rest of the subsidy also would go toward reducing tax credits for alternative fueling infrastructure, including electricity charging stations and natural gas fueling stations, which will extend through 2014. There also would be a one-year extension of a small producer tax credit.
Feinstein, Klobuchar and Thune also urged the Senate leaders to act quickly on the measure because failure to do so would not only negate the savings and investments they projected but also lose their support.
“If Congress fails to enact this proposal before it adjourns for August recess, the substantial levels of deficit reduction and investment achieved by this compromise will no longer be possible, and we cannot commit our support after that point,” they wrote in the letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).
The Senate already has voted to end the ethanol subsidies, but the repeal provision was included in a bill that has stalled. The senators recommended that their proposal be included in the debt-reduction package that is currently being discussed between President Barack Obama and Congressional leaders from both parties of both chambers of Congress.
“Every month that passes without repeal costs taxpayers $400 million,” Feinstein said. “After years of fighting, there is simply no guarantee a full repeal would be signed into law. I believe this bipartisan agreement should be included in the deficit reduction package that will likely accompany a vote on raising the debt limit, and I hope the president will consider that approach.”
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