[Congressional Record (Bound Edition), Volume 156 (2010), Part 13]
[Senate]
[Pages 18603-18604]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           ETHANOL TAX CREDIT

  Mr. GRASSLEY. Madam President, it seems as though every few weeks or 
so there are a lot of misleading and misinformed accusations launched 
at our Nation's renewable fuel producers. It is impossible to come to 
the Senate floor to respond to all of them. But sometimes the claims 
are so outrageous that they require an informed response. So I am here 
to give that response with emphasis on the word ``informed.''
  Earlier this week, a number of my colleagues in the Senate, including 
a few of my fellow Republicans, sent a letter to the majority and 
minority leaders expressing their opposition to extending the tax 
incentives for homegrown ethanol. Homegrown means we are less dependent 
upon people such as Dictator Chavez and our oil sheiks.
  My colleagues argued that the tax incentive for the production of 
clean, homegrown ethanol is fiscally irresponsible. They expressed 
their support for allowing the 45-cent-per-gallon credit for ethanol 
use to expire. It is important to remember that the incentive exists to 
help the producers of ethanol compete with the big oil industry. 
Remember, the big oil industry has been well supported by the Federal 
Treasury for more than a whole century.
  Many of the Republican Senators who signed onto that letter have also 
been leading the effort to ensure that no American sees their taxes go 
up on January 1, 2011, which will happen automatically if we do not do 
something this very month.
  The largest tax increase in the history of the country can happen 
without even a vote of Congress because of the sunsetting law. Of 
course, in that regard, I support the position of my Republican 
colleagues. But a repeal of the ethanol tax incentive is a tax increase 
that will surely be passed on to the American consumer.
  I would like to remind my colleagues of a debate that we had earlier 
this year on an amendment offered by Senator Sanders. The amendment he 
offered would have, among other things, repealed the $35 billion in tax 
subsidies enjoyed by oil and gas. Opponents of the Sanders amendment 
argued that repealing the oil and gas subsidies would reduce domestic 
energy production and drive up our dependance on foreign oil.
  Opponents of the Sanders amendment argued that it would cost U.S. 
jobs and increase prices at the pump for consumers. I agreed with the 
arguments of the opponents. All of my Republican colleagues and more 
than one-third of the Democrats did as well. Thus, the Sanders 
amendment was defeated. That majority against the Sanders amendment 
knew that if we tax something we get less of it. Repealing incentives 
on ethanol would have the very same result.
  Well, guess what. I know removing incentives for oil and gas will 
have the same impact as removing incentives for ethanol. We will get 
less domestically produced ethanol and be more dependent upon those oil 
sheiks. But it will also cost U.S. jobs. It will increase our 
dependence on foreign oil. It will increase prices at the pump for 
American consumers. So whether it is jobs or increased dependence or 
increasing the price of gas, no American would like that to be the 
result. We are already dependent on foreign sources for more than 60 
percent of our oil needs. We spend $730 million a day on imported oil.
  That money is leaving America to the Middle East or nutty dictators 
like Chavez. Why do my colleagues want to increase our foreign energy 
dependence when we can produce that energy right here at home?
  So I would like to ask my colleagues who voted against repealing the 
oil and gas subsidies but are supporting repealing incentives for 
renewable fuels, how do you reconcile such inconsistencies? The fact 
is, it is intellectually inconsistent to say increasing taxes on 
ethanol is justified, but it is irresponsible to do so on oil and gas 
production.
  If tax incentives lead to more domestic energy production and result 
in good-paying jobs, why are only incentives for oil and gas important 
but not for domestically produced renewable fuels? It is even more 
ridiculous to claim that the 30-year-old ethanol industry is mature and 
thus no longer needs the support they get, while the century-old big 
oil industry still receives $35 billion in taxpayer support.
  Regardless, I do not believe we should be raising taxes on any type 
of energy production or on any individual, particularly during a 
recession. Allowing the ethanol tax incentive to expire will raise 
taxes on producers, blenders, and ultimately consumers of renewable 
fuel. A lapse in the ethanol tax incentive is a gas tax increase of 
over 5 cents a gallon at the pump. I do not see the logic in arguing 
for a gas tax increase when we have so many Americans unemployed or 
underemployed and struggling just to get by.
  On Tuesday of this week all of my Republican colleagues and I signed 
a letter to Majority Leader Reid stating that preventing a tax 
increase, meaning mostly income-tax increases, and providing economic 
certainty should be our top priority in the remaining days of this 
Congress. I know we all agree we cannot and should not allow job-
killing tax hikes during a recession.
  Unfortunately, those Members who have called for ending the ethanol 
incentive have directly contradicted this pledge because a lapse in the 
credit will raise taxes costing over 100,000 U.S. jobs at a time of 
near 10 percent unemployment. The taxpayer watchdog

[[Page 18604]]

group, Americans for Tax Reform, considers the lapse of an existing tax 
credit for ethanol to be a tax hike.
  Now is not the time to impose a gas tax hike on the American people. 
Now is not the time to send pink slips to more than 100,000 ethanol-
related jobs. A year ago at this time I came to the Senate floor to 
implore the Democratic leadership to take action on extending expiring 
tax incentives for the biodiesel industry. They failed in their 
responsibility to extend that incentive and provide support for an 
important renewable industry.
  So while 23,000 American jobs were supported on December 31 last 
year, nearly all of those jobs have disappeared. An industry with a 
capacity to produce more than 2 billion gallons of renewable fuel a 
year is on track to produce less than 20 percent of that capacity this 
year.
  Ethanol currently accounts for 10 percent of our transportation fuel. 
A study concluded that the ethanol industry contributed $8.4 billion to 
the Federal Treasury in 2009, $3.4 billion more than the ethanol 
incentive. Today, the industry supports 400,000 U.S. jobs. That is why 
I support a homegrown, renewable fuels industry, as I know the Obama 
administration does as well.
  I would encourage anyone who is unclear on the administration's 
position to contact Agriculture Secretary Vilsack.
  I would like to conclude by asking my colleagues, if we allow the tax 
incentive to lapse, from where should we import an additional 10 
percent of our oil? Should we rely on Middle East oil sheiks or Hugo 
Chavez? I would prefer we support our renewable fuel producers based 
right here at home rather than send them a pink slip. I would prefer to 
decrease our dependence on Hugo Chavez not increase it.
  I certainly do not support raising the tax on gasoline during a 
recession. I would respectfully ask my colleagues to reconsider their 
support for this job-killing gas tax increase.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from North Dakota.
  Mr. DORGAN. Madam President, I support the comments from my colleague 
from Iowa on the importance of ethanol and the tax incentives and the 
ability to try to make us less dependent on foreign oil and produce 
more renewable energy in our country. So I appreciate the statement he 
has just made.
  I want to talk about the START treaty and the importance of it. But I 
cannot help but respond, at least a bit, to some of the discussion that 
occurred as I walked on the Senate floor about the so-called tax cuts 
or the extension of the tax cuts.
  You know, what is going to confound a lot of people who look back on 
history, perhaps historians who, in a rearview mirror, look back 100 or 
50 years--what is going to confound them about this time, this place, 
and these people, all of us, is what we did that seemed so irrational 
because, particularly economic models, if you are talking about 
economic historians, economic models are based on rational 
expectations. Then they create a model based on what would you do 
rationally.
  Now here is what they are going to see at this moment. They will see 
a country that is at war halfway around the world. They will see a 
country with a $13 trillion national debt and a $1.3 trillion annual 
deficit. And what is the debate? Tax cuts that existed in 2001, through 
legislation I voted against, tax cuts that were extended and were set 
to expire this year would cost $4 trillion in the coming 10 years to 
extend.
  With a $13 trillion debt, we have people coming to the floor of the 
Senate and saying they want to deal with this debt. Then, on the other 
side of the ledger, they say: And we want to extend all of the tax 
cuts.
  That is another way of saying they want to take the $13 trillion 
Federal debt to a $17 trillion Federal debt. And, you know, historians 
are going to say: I thought there was some notion of rational 
expectations. What is rational about a country up to its neck in debt 
deciding: We are going to extend tax cuts even to the wealthiest 
Americans; those who make $1 million a year shall be given a $104,000-
a-year tax cut?
  Why? Because the minority is insisting upon it. Even though, just 
that piece of it, above $250,000 a year in income, even though just 
that one piece will add $1 trillion, that is the cost plus the interest 
to the Federal debt.
  It is unbelievable. And the so-called little guy, the people out 
there who are working for a living and struggling--some of them lost 
their jobs, some lost their homes, some have lost hope--they are 
asking: Well, what about me? Why is it there is such energy to stand up 
for those who are making millions of dollars?
  A guy named Barney Smith from Marion, Indiana stood up at the 
Democratic National Convention in Denver in 2008 and he asked this 
question. Barney Smith had lost his job, a job, that he said, is now 
being performed by someone overseas. Barney Smith said: When are you 
all going to treat Barney Smith like you treat Smith Barney? That is a 
pretty decent question. Who is on the floor standing for the interests 
of the Barney Smiths? I hope, perhaps in the coming days, there will be 
some rational expectations coming from this deliberative body, and that 
rational expectation should not include cutting taxes for the 
wealthiest Americans at a time when America is at war.
  This morning, perhaps at 6 a.m., our soldiers were called out of bed 
halfway around the world, strapped on their ceramic body armor, took up 
their weapons, and went out on patrol. They will be shot at today 
halfway around the world. We are told our responsibility is to provide 
tax cuts for the wealthiest Americans.
  I wish to read a comment from Franklin Delano Roosevelt. I don't see 
a notion in this country about self-sacrifice in order to meet common 
goals and reach the common purpose of our destiny.
  Here is what Franklin Delano Roosevelt said when we were at war then:

       ``Not all of us can have the privilege of fighting our 
     enemies in distant parts of the world. Not all of us can have 
     the privilege of working in a munitions factory or a ship 
     yard, or on the farms or in the oil fields or mines, 
     producing the weapons or raw materials that are needed by our 
     armed forces. But there is one front and one battle where 
     everyone in the United States--every man, woman and child--is 
     in action. . . . That front is right here at home, in our 
     daily lives, and in our daily tasks. Here at home everyone 
     will have the privilege of making whatever self-denial is 
     necessary, not only to supply our fighting men, but to keep 
     the economic structure of our country fortified and secure. . 
     . .''

  That isn't only for soldiers who sacrifice for country. It is for all 
of us. It is distressing to me to see that the serious is treated so 
lightly and the light is treated too seriously in this Chamber. We know 
better. This country is loaded with debt. It is at war. We owe it to 
the American people and to the future to do better and try to steer 
this country toward better times.

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