The current state of the federal budget deficit and the need to apply pay-as-you-go rules to new spending may combine to thwart plans to re-extend the ethanol tax credit beyond its Dec. 31 expiration date.
Opponents of ethanol subsidies think they are closer than ever to blocking renewal of an expiring tax credit thanks to PAYGO rules and a recent federal report that downplayed the effectiveness of the tax break.
"It's hard to imagine that legislators will be able to find billions of dollars to pay for extension of these subsidies at a time when we're struggling to find billions of dollars to extend unemployment benefits and expand summer feeding programs," said a spokesman for the Grocery Manufacturers Association.
GMA and the American Meat Institute, Environmental Working Group, Natural Resources Defense Council and Taxpayers for Common Sense say the 45-cents-a-gallon tax credit costs taxpayers almost $6 billion a year and is politically unsustainable.
The coalition opposes extending the tax credit because they say it inflates the price of corn and, in turn, raises costs for livestock feed and meat. Environmental groups argue the tax break gives ethanol a competitive edge over other renewable fuels that produce fewer greenhouse gas emissions and more energy.
