Two reasons for hope surfaced last week and it appears that realistic thinking, at least on these two issues, is trying to struggle to the top in Washington, D.C. Although the decisions are not final and lawmakers can still shoot them down, a glimmer of hope has nonetheless emerged.
By a 73 to 27 vote, the U.S. Senate voted last week to eliminate the Volumetric Ethanol Excise Tax Credit, or VEETC, and the ethanol import tariff. It seems that the message is getting around Washington: tax-payer subsidies for corn-based ethanol production are no longer needed by the industry. But, before you celebrate, keep in mind that the vote by itself will not eliminate the subsidy, estimated to cost tax-payers $5 billion per year.
Instead, the repeal now becomes part of another piece of legislation - the future of which is uncertain. So, Washington lawmakers will still have another chance to undo their correct decision and end up doing the wrong thing. After all, bundling many issues together into complex packages for a yea or nay vote is the Washington way.
That’s why it makes me nervous waiting for the final decisions that will become law of the land. Still, there is reason to be optimistic. With lawmakers searching for ways to save money and cut spending, it seems that the corn-based ethanol tax credit subsidy, and the ethanol import tariff, will soon be things of the past.
The other glimmer of hope that emerged last week was the approval of the U.S. House ag appropriation committee’s proposed 2012 budget. The approved budget denies the USDA funding to implement its controversial Grain Inspection, Packers and Stockyards Administration, or GIPSA, proposed rule on livestock production and marketing.
If both of these measures are passed into law, they have potential to lower record-high feed costs that are mounting pressure on livestock producer margins. It is time Washington realizes that they need to support farmers instead of penalize them with burdensome regulations and a faulty national energy policy.
While the ethanol tax credit vote is largely symbolic, the take-home message is clear: The nation’s energy policy needs to be much less dependent on corn. According to Iowa State University economist Bruce Babcock, corn prices would be 17 percent lower if the ethanol subsidies had been eliminated in 2010.
The House Appropriations Committee’s budget that denies the USDA from enacting the GIPSA rule would thwart the government over-reach that critics say is contained in the proposal. It sends a clear message to the USDA: The GIPSA proposal needs to be re-written in a way that does not exceed the mandate contained in the 2008 Farm Bill.
While still a long way from law, the two initiatives indicate that some lawmakers realize the current path we are on penalizes livestock producers. By passing these two initiatives, lawmakers can indicate their support of livestock producers, rather than penalizing them.
Rather than threatening penalties and putting up road blocks to food production, the government must ask “what can we do to help American farmers produce more food, more efficiently?” Passing these initiatives would represent a positive attitude toward food production. The upcoming debate on the 2012 Farm Bill would be a great place to apply this proactive mindset.
It remains to be seen whether these two positive developments will be passed as is, watered down or rejected completely. However, the mere fact that they have been proposed is reason for hope.