[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[Senate]
[Pages 4630-4632]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ENERGY SUBSIDIES

  Mr. GRASSLEY. Mr. President, often I come to the Senate floor to talk 
about alternative energy. Most of the time it is about biofuels. 
Sometimes it is about wind, because I am the author of the wind energy 
tax credit. Sometimes it is to speak about it. Hardly ever do I come to 
the floor to talk about it in regard to the attempt to amend a certain 
bill on the floor. I come for that purpose now, and I come to express 
my strong opposition to amendment No. 220 filed at the desk by Senator 
Coburn.
  I don't find any fault with the issue Senator Coburn raises, only 
when it is raised. I sense from some of his arguments and press 
releases that it is raised to bring up the issue of energy and what 
energy should be subsidized or not subsidized, or whether any energy 
ought to be subsidized, and also maybe to point out some things that 
are wrong with the Tax Code. I can't find any fault with any of those 
motives. I only find fault, let's say, in the sense that it is being 
brought up to show that there are some things wrong with the Tax Code 
and the Tax Code ought to be reformed.
  Yes, if anybody said the Tax Code was a perfect piece of work, you 
might think: Well, you have been in Washington too long or you don't 
exercise good judgment or you are not in the real world. So I think it 
is perfectly legitimate to bring up issues about the Tax Code, but in 
the sense of reform of the Tax Code, not as an isolated amendment to 
some other bill, for the simple reason that if you do that, with the 
complexity of our Tax Code--reforming it in that way--every Senator 
attempting to do that would be growing a long gray beard for the years 
it would take to do it piecemeal. Hopefully, we can get it done 
sometime in the context of tax reform and tax simplification, or flat 
tax or fair tax, and also with the corporation tax.
  As to the motive for bringing up subsidies for energy, it is a 
perfectly legitimate subject to bring up, but it ought to be brought up 
in the context of a national energy policy. I believe Senator Coburn is 
like me. He feels if you are going to have a growing economy, you have 
to have a growth in the use of energy, except for possible 
conservation. If you are going to do more for more people, you are 
going to have to have an increase in the use of energy. So it is in 
that vein that I state my opposition to the Coburn amendment.
  Senator Coburn's amendment would raise the tax on domestic energy 
production by repealing an incentive for the use of homegrown renewable 
ethanol. I am astonished, given our current situation, that there are 
some who would prefer less domestic energy production. With conflicts 
in the Middle East and crude oil over $100 a barrel, we should be on 
the same side.
  I have always considered myself on the same side as Senator Coburn on 
energy issues. We should all be on the side of more domestically 
produced energy, and that would be nuclear, it could be alternative 
energy, and it would be drill here and drill now. The tremendous cost 
of America's dependence on foreign oil has never been more clear than 
when you have the conflicts and the revolutions going on in oil-
producing regions of the world--now in the Middle East and northern 
Africa.
  So we have this threat, and in light of that threat, we should have 
an energy policy that says ``all of the above.'' You don't pick and 
choose. I support drilling here and drilling now. I support renewable 
energy. I support conservation, both what might be mandated by public 
policy as well as personal conservation. I think people who know me 
know I have a reputation for conservation for several reasons--maybe 
energy conservation, but also it leaves more money in your pocket. I 
also support nuclear energy. So I believe it is very counterproductive 
for Senators from big oil country to single out energy that comes from 
American agriculture--renewable energy, homegrown energy, not imported. 
I didn't pick this fight. I support energy from all sources. I support 
traditional oil and gas, and more of it, from here. I held 21 meetings 
in 20 different counties Monday through Thursday during the last 
recess, and there wasn't a single person at one of them who didn't say: 
How come we aren't making more use of our own energy? They didn't say: 
We import $730 million a day of oil, but I told them, and it emphasized 
their point.
  Why ship $730 million every day overseas to parts of the world where 
they use the money to train terrorists to kill us? And, of course, 
American taxpayers--American taxpayers--with tax incentives have been 
supporting oil and gas for over 100 years. So the attack on homegrown 
energy is remarkable, isn't it? We shouldn't be fighting each other 
over domestic energy sources. We should be fighting OPEC and foreign 
dictators and oil sheiks who hold our economy hostage. You see it right 
now, because of the anxiety about what is going on in Libya, and 
raising the price of gasoline 75 or 80 cents.
  The author of the amendment has argued that the production of clean 
homegrown ethanol is fiscally irresponsible. It is important to 
remember that the incentive exists to help producers of ethanol to 
compete with the oil industry or, as you so often hear in this town, we 
have to have a level playing field. Remember that the oil industry has 
been well supported by the Federal Treasury for more than a century. 
Oil was discovered in 1859. I don't know how many years later it was 
that there were tax incentives for the production of oil, but it has 
been a long time.
  President Obama, in his budget request for 2012, has advocated 
repealing a dozen or so subsidies to big oil. He has argued that a 
century-old industry no longer needs tax breaks. With oil prices at 
$100 a barrel, and record profits being made, some could certainly 
question why this industry needs any taxpayer subsidy at all. President 
Obama's proposal would repeal $44 billion in oil and gas subsidies over 
a 10-year period of time.
  I wish to remind my colleagues of a debate we had last summer on an 
amendment offered by the distinguished Senator from Vermont, Senator 
Sanders. The amendment he offered would have, among other things, 
repealed about $35 billion of tax subsidies enjoyed by the oil and gas 
industry. Opponents of the Sanders amendment argued that repealing the 
oil and gas subsidies would reduce domestic energy production and drive 
up our dependence on foreign oil. Well, we don't want to do that, do 
we? Opponents also argued it would cost U.S. jobs. We also argued it 
would increase prices at the pump for consumers--something you don't 
want to do when you are in a recession. I tend to agree with these 
arguments in regard to the help that the Federal Treasury gives to oil 
companies. All of my Republican colleagues, and more than one-third of 
the Democrats, did as well. But a repeal of the ethanol tax incentive 
is a tax increase as well that will surely be passed on to the American 
consumer--no different for ethanol in your gas tank than gasoline in 
your gas tank. If you take subsidies off of oil, it raises the price of 
gasoline. If you take the incentives off of ethanol, it raises the 
price of ethanol.
  I know that removing incentives for oil and gas will have the same 
impact as removing incentives for ethanol. We will get less 
domestically produced ethanol, it will cost U.S. jobs, it will increase 
our dependence upon foreign oil, and it will increase the price at the 
pump for the American consumer. We are already dependent upon foreign 
sources for more than 60 percent of our

[[Page 4631]]

oil needs. Why do my colleagues at this time want to increase our 
foreign energy dependence when we can produce it right here at home--
clean burning, environmentally good?
  I wish to ask my colleagues who voted against repealing oil and gas 
subsidies but who support repealing incentives for renewable fuels why 
they have this inconsistency? Where are the amendments from fiscal 
conservatives and deficit hawks to repeal the oil and gas subsidies? 
The fact is it is intellectually inconsistent to say that increasing 
taxes on ethanol is justified but that it is irresponsible to do the 
very same thing on oil and gas production. If tax incentives lead to 
more domestic energy production and good-paying jobs, why are only 
incentives for oil and gas so important in accomplishing that goal?
  It is even more ridiculous to claim that the 30-year-old ethanol 
industry is mature and, thus, no longer needs the support of the 
taxpayers, while the century-old oil industry still receives $35 
billion in taxpayer support. Regardless, I don't believe we should be 
raising taxes on any type of energy production or on any individual, 
particularly during a weak economy.
  The Senator from Oklahoma insists that because renewable fuel is 
required to be used, then somehow it doesn't need an incentive. But 
with oil prices at $100 a barrel, oil companies are doing everything 
they can to extract more oil from the ground. There isn't a mandate to 
use oil, but it has a 100-year monopoly on our transportation 
infrastructure, so essentially it is a mandate.
  When there is little competition to oil, and it is enormously 
profitable--and we will see those reports next week--wouldn't the 
sponsor argue that the necessary incentives exist to produce it without 
additional taxpayer support, if we wanted to be consistent? Oil 
essentially does have a mandate, as I just said. The economics of oil 
production are clearly in favor of the producer, not the consumer. Why 
do they need taxpayer support?
  It is also important to understand the hidden cost of our dependence 
upon foreign oil. We had a peer-reviewed paper published in 2010 
concluding that--and let me say parenthetically, before I quote, the 
leeway is somewhere between $27 billion and $130 billion:

       $27 to $138 billion is spent annually by the U.S. military 
     for protection of Middle Eastern maritime oil transit routes 
     and oil infrastructure, with an average of $84 billion a 
     year.

  This is $84 billion in American Treasury spent on the defense of 
shipping lanes to quench our thirst for foreign oil. It is not 
reflected in the price at the pump. It is a hidden cost and the hidden 
cost is paid by the very same people who support the military, our 
Navy, the American taxpayers.
  Milton Copulos, an adviser to President Ronald Reagan and a veteran 
of the Heritage Foundation, testified before Congress in 2006 on this 
very issue. He testified that the hidden cost of imported oil is 
equivalent to adding $8.35 to the price of a gallon of gasoline from 
the Persian Gulf. There is no hidden U.S. military cost attributed to 
homegrown ethanol.
  Do you understand that? You don't have to have the Navy of the United 
States keeping shipping lanes open for the ethanol that you burn in 
your car. No subsidy of $8.35 a gallon for ethanol such as there is for 
oil, according to the Heritage Foundation.
  Let's have a debate on ethanol, but let's debate it in the context of 
a comprehensive energy plan. This debate should include the subsidies 
for all energy production. We do not pick out one versus others. What 
is unique about the subsidy for ethanol? We also have subsidies for 
grain and for biodiesel. When is that going to come up? We had a 
subsidy for wind energy--I know it because I got that legislated 18 
years ago--and a subsidy for solar, subsidy for biomass, subsidy for 
geothermal, subsidy for nuclear energy. Why just ethanol at this point?
  But I said at the beginning, talking about energy subsidies--oil, 
alternative energy, nuclear energy, conservation--is legitimate. But 
don't pick one out. What are we going to do about all the rest of them? 
Are we going to take a subsidy a day? Take wind tomorrow? Take solar 
the next day? There is a context in which to do this. We all say we 
need a national energy policy. These subsidies have to be discussed in 
the context of a national energy policy. Nearly every type of energy 
gets some market-distorting subsidy from the Federal Government. We can 
say that is not right. But do we want alternative energy or don't we 
want alternative energy? Do we want renewable energy or don't we want 
renewable energy? Do you think we would have an ethanol industry today 
if there had not been a tax incentive a long time ago? No.
  What about all the people who say we should not be using corn or 
grain, a food product, for fuel, we ought to be eating it? They say we 
ought to use corn stover, wood chips, switchgrass, other things that 
have cellulose in them and get our ethanol from that. I agree 100 
percent. But how in the heck do we think we would ever get to producing 
ethanol out of corn stover and wood chips and switchgrass, et cetera, 
if we had not had 30 years of engineering to make ethanol out of 
grain--which we did not do very efficiently 30 years ago but now we do 
much more efficiently today. We have to have the first generation for 
the second generation.
  I say an honest energy policy and debate should include ethanol. It 
should include subsidies for oil, natural gas, nuclear, hydropower, 
wind, solar, biomass. How do you think we would ever get hydropower in 
the West if the taxpayers had not paid for the Hoover Dam? It is 
hypocritical to put our economic and national security at risk by 
targeting ethanol while disregarding the subsidies for all other energy 
sources.
  Do you know the debate about alternative energy is a debate about our 
national security because, for this country, the No. 1 responsibility 
of the Federal Government is our national defense and just think how 
weak our national defense is when we have to depend upon oil coming 
from the volatile Middle East, where there is revolution going on right 
now. Wouldn't it be better for it to be domestic crude? Why do you 
suppose the Defense Department, and even our whole aviation industry 
right now, is putting some money into research to develop alternative 
energies, including the stuff we call renewable and even things we do 
not know much about yet? Ethanol from algae is an example. Because our 
military leaders know we should not be dependent on it.
  Just think of the retired generals and admirals out here speaking 
everyday of why we need alternative energy and speaking very highly of 
ethanol. I say it is hypocritical because it has something to do with 
our national security and we do take an oath to uphold that 
Constitution and the national security is our No. 1 responsibility. We 
know State governments and local governments cannot protect us from 
foreign intervention, people who want to kill us. Only the Federal 
Government is qualified and has the power to do it, the constitutional 
power--but also to bring the resources together to get the job done.
  Repealing the ethanol tax incentive will raise taxes on producers, 
blenders, and ultimately consumers of renewable fuel. This amendment is 
a gas tax increase of over 5 cents a gallon at the pump. I don't see 
the logic of arguing for a gas tax increase when we have so many 
Americans unemployed and underemployed, struggling just to barely make 
it from day to day. I know we all agree we cannot and should not allow 
job-killing tax hikes during this time of economic recession and, more 
important, that recession is going to stay as long as there is some 
economic uncertainty. Debates such as this--should we be importing more 
oil--lend themselves to that uncertainty. Unfortunately, those Members 
who have called for ending the ethanol incentive have directly 
contradicted this pledge of not having tax hikes because a lapse in the 
credit will raise taxes, will cost over 100,000 U.S. jobs at a time of 
near 9 percent unemployment and increase our dependence upon foreign 
oil.
  There is a taxpayer watchdog group called Americans for Tax Reform. 
They

[[Page 4632]]

consider repeal of this incentive to be a great big tax increase. 
Americans for Tax Reform states: ``Repealing the ethanol credit is a 
corporate income tax increase.''
  I agree. 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 ethanol-related jobs. 
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 jobs. That is why I 
support a homegrown renewable fuels industry.
  I conclude by asking my colleagues: If we allowed the tax incentives 
to lapse, from where would we import an additional 10 percent of our 
oil? Because there is a policy in this Congress, don't drill in the 
United States, import it. The President was in Brazil, last week I 
believe it was, saying: President of Brazil, you ought to drill off the 
shore of Brazil because we want to import oil from you. At the very 
same time we are slow at issuing permits so we can drill our own oil 
off our own shores, particularly in the Gulf of Mexico.
  Where are we going to go? Are we going to go to the Middle Eastern 
oil sheiks? Send even more billions of dollars over there to give them 
money to train terrorists to kill us or do we want to get it from Hugo 
Chavez, who every day is saying something about how he hates America? 
He is taking the side of Qadhafi right this very day, against the 
revolutionaries of that country, the very people we are trying to help 
bring a better life to and stop genocide. I don't think we want to go 
to the Middle East for 10 percent more of our energy in our cars or to 
Hugo Chavez. I prefer, instead, that we support our renewable fuel 
producers based right here at home, rather than send our workers a pink 
slip. I would prefer to decrease our dependence on Hugo Chavez, not 
increase that dependence on him, and I certainly do not support raising 
the tax on gasoline during this weak economy.
  Let me say something I said at the beginning and then I am going to 
yield the floor; that is, there is a context to talk about this. There 
is nothing illegitimate about anybody bringing up any tax incentive 
anytime they want to or any law that is on the books because they ought 
to be reviewed from time to time. But when it comes to energy policy at 
a time of $4 gas, at a time of anxiety about what is going on in Libya, 
at a time when we all know that people in this country want a national 
energy policy, it ought to be talked about in the context of energy 
legislation. We should talk about subsidy as a generic subject, not 
just picking out ethanol or any other one, just like some people here 
would like to pick out the subsidy for oil and end it--such as the 
President has suggested in his budget. We want to do it in the context 
of a national energy policy and a subsidy that is a subsidy to oil, to 
all renewable energies--and there are a dozen of them, I bet--to 
conservation, and to nuclear energy.
  Let's emphasize nuclear energy. When we are talking about a subsidy, 
do we think we would have a single nuclear plant in the United States 
if 60 years ago the Federal Government, this Congress, hadn't passed 
the Price-Anderson Act to set up Federal support for it, indirect or 
direct, whatever it was. It took that to get it going. We had to 
reinstitute that in 2005 or we still wouldn't be considering any 
nuclear plants.
  We do it in the context of a national energy policy. We do it in the 
context of subsidies on all sorts of energy, not just one of them. If 
we are doing it for tax reform purposes, then it has to be done in the 
context of overall tax reform because, as I said, we start on this 
little tax incentive today and that little tax incentive tomorrow and 
that little tax incentive the next day and we will be here until as 
long as Methuselah lived, in order to get it all done.
  I hope there will be some consideration of this in a generic way, not 
in the specific way of this amendment. That is why I do not support the 
amendment at this time, but I want people to know I do not abhor the 
idea of talking about the ethanol tax credit or any other tax credit, 
except I want to talk about energy tax credits all together.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Kentucky.
  Mr. PAUL. Has morning business concluded?
  The PRESIDING OFFICER. The time for morning business has expired.
  Mr. PAUL. I have a motion to present to the desk.
  The PRESIDING OFFICER. We are not yet on the bill.
  Mr. PAUL. Can we report the bill, please?

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