[Congressional Record Volume 157, Number 85 (Tuesday, June 14, 2011)]
[Senate]
[Pages S3743-S3744]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                ETHANOL

  Mrs. FEINSTEIN. Madam President, I rise today in support of the 
Ethanol Subsidy and Tariff Repeal Act, which Senator Coburn has offered 
and I have cosponsored, along with Senators Burr, Cardin, Collins, 
Corker, Lieberman, Risch, Shaheen, Toomey, and Webb.
  I know the fact that this amendment is on the floor scheduled to be 
voted on at 2:15 this afternoon has caused some deep consternation on 
my side of the aisle. There is objection to the procedures used. I am 
not going to get into that. I am going to say a vote is a vote, and we 
are facing a vote at 2:15 unless something changes.
  To be candid, if there were an offer to bring this to the floor next 
week or the week after for a time specific and a commitment specific, I 
believe the author and myself and our cosponsors would certainly agree 
to that. But in the absence of that offer, it is important that the 
Senate take a position on a program that has become both gross and 
egregious, and I want to explain why I feel that way.
  No other product I know of has the triple crown of government support 
that corn ethanol enjoys in this country. Its use is mandated by law. 
Oil companies are paid by the Federal Government to use it, so there is 
a subsidy, and corn ethanol is protected by a rather high tariff. 
Consequently, it has been very profitable for farmers. This amounts to 
almost $6 billion a year of taxpayers' money that goes to support the 
corn ethanol industry in this country.
  Put another way, that is $15 million each and every day spent on this 
subsidy at a time when, candidly, we simply can't afford it.
  They say there are very few privileges left out there. This is one 
that is enormous, and I think we have to take a look at it. I think if 
this amendment passes, nearly $3 billion is saved between July 1 and 
the end of the year. That is not insignificant. It goes into the 
general fund and it helps abate the deficit.
  Since 2005, we have spent $22.6 billion on this subsidy, and it gets 
more expensive every year. In 2011, the government will spend $5.7 
billion; in 2012, $5.9 billion; in 2013, $6.2 billion. And you can see, 
since the program came into being in 2005--and I voted against it 
then--it was at $1.5 billion; the next year, $2.6 billion; the next 
year, $3.3 billion; the next year $4.4 billion, the next year, $5.2 
billion; and 2010, $5.7 billion of a trifecta of triple-crown subsidies 
to go to recompense people for using corn ethanol. It is wrong.
  On top of this subsidy, we have imposed a 54-cent-per-gallon tariff 
on ethanol products from Brazil, India, and Australia and others that 
could import it more cheaply than it is grown here. This then 
contributes to making the United States more dependent on oil imports 
from OPEC.
  Our amendment is simple. Beginning July 1, we would repeal the 45-
cent-per-gallon ethanol subsidy, which goes overwhelmingly to large oil 
companies, and it would eliminate the 54-cent-per-gallon tariff on 
imported ethanol.
  I believe very strongly that we need to act to repeal these subsidies 
and these tariffs before another $2.7 billion in taxpayer money, which 
is $15 million a day, is wasted over the remaining 6 months of this 
year.
  Let me describe the real-world impact of these unwise subsidies and 
tariffs to our economy.
  Last week, I was in the Central Valley at an event and I would say 
anywhere from six to eight farmers came up to me and said, ``Thank you 
for trying to end the ethanol business. I can no longer afford feed.'' 
I began to think, and so we took a look at what the situation is. The 
fact is this ethanol policy is inflating the price of corn and 
impacting other sectors of the economy.
  Today, approximately 39 percent of our corn crop is now used to 
produce ethanol in this country. Here is where it has gone: The percent 
of corn for 2000, 7 percent; 2005, 14 percent; and 2010, 39 percent of 
the entire corn crop goes to produce ethanol. Corn futures reached a 
record $7.99 a bushel on the Chicago Board of Trade last week. Prices 
are up 140 percent in the past 12 months and continue to rise. In 2006, 
prices were $2 a bushel. Today they are $7.99 a bushel.

  This has been a real spike in the price of feed. If it continues one 
can expect major price increases in grain and food as well. The average 
price of corn has risen 225 percent since 2006.
  Here it is, here it goes on this chart. It goes down slightly and 
then it has gone up.
  In California, the annual feed costs for Foster Farms--this is the 
largest poultry producer on the west coast--has tripled over the past 
year, increasing Foster Farms' cost for feed by more than $2 million. 
This is more than the largest profit the company has ever made.
  I hear similar stories from small producers, from co-ops, from 
dairymen and cattlemen throughout California. The price of feed is 
rising to such an extent that experts are predicting a mass slaughter 
of hogs and dairy cows this summer. In other words, it is becoming 
cheaper to slaughter the animals rather than to feed them. That is 
wrong.
  Paul Cameroon of Imperial County, CA, recently wrote to me:

       As a cattle producer who has never asked for a subsidy of 
     any kind, I only ask that

[[Page S3744]]

     ethanol production stand on its own and allow true supply and 
     demand to dictate the real price of corn.

  It seems to me he is spot on. It seems to me when we look at charts 
like this on grain prices, on the huge subsidy that oil companies get, 
on the protective tariff, we have to say enough is enough. The USDA 
predicts that continued demand from the livestock, ethanol, and food 
industry will reduce corn reserves to the lowest level since the mid-
1990s. These low grain reserves will have repercussions globally. We 
know rising food prices exacerbate global poverty and could intensify 
political unrest in some parts of the world. But the bottom line is, 
diverting 39 percent of our crop toward ethanol is artificially driving 
up corn prices, which in turn is straining people and industries that 
depend on affordable corn.
  In addition to impacting the price of corn, the $6 billion annual 
ethanol subsidy is fiscally irresponsible. If the current subsidy were 
to exist through 2014, as the industry has proposed, the Treasury would 
pay oil companies at least $31 billion to use 69 billion gallons of 
corn ethanol that the Federal renewable fuels standard already requires 
them to use under the Clean Air Act. The biggest recipient receiving 
money is BP. According to reports, it receives $55 million. We cannot 
afford and should not pay oil companies such as ExxonMobil and BP to 
follow the law to the tune of $6 billion a year. As the GAO has found, 
the mandate for the use ``is duplicative in stimulating domestic 
production and use of ethanol, and can''--and is--``resulting in 
substantial loss of revenue to the Treasury.''
  Let me just say one thing about the tariff. The tariff on low-carbon 
sugarcane ethanol, which I proposed repealing in 2006, makes our Nation 
more dependent on foreign oil. How? The combined tariffs on ethanol are 
60 cents per gallon, at least 15 cents per gallon higher than the 
ethanol subsidies they supposedly offset. So this is essentially a 
major trade barrier.
  We have a real problem with this triple crown: We mandate its use, we 
pay people to use it, and then we set a large tariff barrier to prevent 
anybody from importing any ethanol, whether it is corn or sugar, that 
is cheaper. This is expensive, $15 million a day, $6 billion, as I 
said, a year.
  I know many of my colleagues agree with the substance of this 
legislation, and I appreciate very much that the amendment is being 
considered under somewhat unusual circumstances and procedures. I hope 
we can have a fair vote. I hope Members will not disregard the import 
of what we are doing. We are essentially saving the government nearly 
$6 billion a year by simply repealing the subsidy, repealing the 
mandate, and repealing the tariff. I believe the time has come.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from New Mexico.

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