Obama Linked with Ethanol

[Pangloss]

The New York Times is running a piece today about what they characterize as close ties between the Obama campaign and the Ethanol interests in the country. Couple links below (second one included in case you get stuck at login with the first one):

 

http://www.nytimes.com/2008/06/23/us/politics/23ethanol.html?_r=1&hp&oref=slogin

http://www.msnbc.msn.com/id/25324195

 

I'm sure it's no accident that this comes just days after the controversy surrounding Obama's decline of public funding, because it appears to (at least superficially) counter the campaign's claim that it is publically funded, i.e. mainly supported by small donors. This doesn't contradict that claim, but it raises the question of whether an 80% public funding claim actually frees you from obligations to the other 20%.

 

Mr. Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.

 

Not long after arriving in the Senate, Mr. Obama himself briefly provoked a controversy by flying at subsidized rates on corporate airplanes, including twice on jets owned by Archer Daniels Midland, which is the nation’s largest ethanol producer and is based in his home state.

 

The article also paints a sharp contrast with Obama's Republican opponent:

 

Mr. McCain advocates eliminating the multibillion-dollar annual government subsidies that domestic ethanol has long enjoyed. As a free trade advocate, he also opposes the 54-cent-a-gallon tariff that the United States slaps on imports of ethanol made from sugar cane, which packs more of an energy punch than corn-based ethanol and is cheaper to produce.

 

Mr. Obama, in contrast, favors the subsidies, some of which end up in the hands of the same oil companies he says should be subjected to a windfall profits tax. In the name of helping the United States build “energy independence,” he also supports the tariff, which some economists say may well be illegal under the World Trade Organization’s rules but which his advisers say is not.

 

One of the things I liked about the article is that it doesn't fall for the usual media line of "ethanol = good".

 

Many economists, consumer advocates, environmental experts and tax groups have been critical of corn ethanol programs as a boondoggle that benefits agribusiness conglomerates more than small farmers. Those complaints have intensified recently as corn prices have risen sharply in tandem with oil prices and corn normally used for food stock has been diverted to ethanol production.

 

With corn at $8/bushel farmers have no reason to change crops. This needs to be resolved. I think Obama should abandon ethanol.

[bascule]

Pinning the problems of corn ethanol on ethanol in general is silly. That said, the influence the corn industry has over this country is sickening.

[Sisyphus]

Yeah, I'd say he's in the wrong on this one, and it does look like politics overcoming good sense, but I don't think it's about donors and lobbyists. It's about making a serious bid in rural states that are wary of his brand but for whom ethanol has been a huge boon to their economies. If he's going to seriously compete there (and he plans to - his campaign is a 50-state strategy), he's going to have to offer them significantly more than a meat and potatoes Republican would for the same result.

 

As for the position itself, it seems to me the only real problem is that he isn't making it clear enough that he'd like to see a shift from corn to other, more efficient forms of ethanol, which actually do show quite a bit of promise. But, of course, that's not what farmers want to hear, because it's easier and more profitable (for now) for them to maintain the status quo. I'll be very interested to see how he handles this.

[Pangloss]

Pinning the problems of corn ethanol on ethanol in general is silly. That said, the influence the corn industry has over this country is sickening.

 

That's true, and I think Obama can deflect some of this criticism by continuing (and advertising) his support for switch grass.

 

Yeah, I'd say he's in the wrong on this one, and it does look like politics overcoming good sense, but I don't think it's about donors and lobbyists. It's about making a serious bid in rural states that are wary of his brand but for whom ethanol has been a huge boon to their economies. If he's going to seriously compete there (and he plans to - his campaign is a 50-state strategy), he's going to have to offer them significantly more than a meat and potatoes Republican would for the same result.

 

That could be, in fact I would almost get on board with that if it wasn't for the Tom Daschle angle. I was just out in the car listening to Rush Limbaugh, who said (in between musical snippets of "Barack the Magic Negro", ugh!) that Daschle sits on the boards of five different ethanol companies. Still, that's Daschle, not Obama. You may well be spot on there. And while I don't like pandering to ignorance, at least it's a transparent and undisguised motive.

[CDarwin]

This is the ugly side of the Democratic Party: ag subsidies, protectionism, and populism. And Sisyphus is right; I don't think Obama can win if he divorces himself from it entirely.

[swansont]

[McCain'] also opposes the 54-cent-a-gallon tariff that the United States slaps on imports of ethanol made from sugar cane, which packs more of an energy punch than corn-based ethanol and is cheaper to produce.

 

Um, what? The ethanol from sugar gives you more energy than the ethanol from corn? Ethanol is ethanol. I think they're trying to convey that you a better energy return from sugar cane, which McCain later mentions, though IIRC at least part of that is because people tend to grow/harvest it by hand.

[ecoli]

This is the ugly side of the Democratic Party: ag subsidies, protectionism, and populism. And Sisyphus is right; I don't think Obama can win if he divorces himself from it entirely.

Only if enough people know about it, which I'm not sure is the case.

[swansont]

This is the ugly side of the Democratic Party: ag subsidies, protectionism, and populism. And Sisyphus is right; I don't think Obama can win if he divorces himself from it entirely.

 

AFAIK the tariff in question was part of the 2005 energy bill, and the senate vote was 49-6 Republican and 25-19 Democrat. Why exactly is this an ugly side of only the Democratic party?

 

http://projects.washingtonpost.com/congress/109/senate/1/votes/213/

 

(McCain voted against this, while Obama voted for it)

[Pangloss]

I agree that "subsidies, protectionism, and populism" are the ugly side of the current crop of Democratic politicians, though those are certainly labels that can be aimed at Republican politicians as well. The protectionism racket surrounding NAFTA at the moment is particularly painful to watch. Labor leadership is smart enough to know better, and it's teamed up with Democratic politicians to promise something to its voting membership that it does not want and can not deliver.

 

That having been said, I'm in favor of renegotiating trade agreements if there are tangible benefits to be gained (such as equalizing child labor laws and safety standards across the border), and realistically we may have to recognize that now that in the era of globalized free trade this may be the mechanism by which agreements are updated over time. (I.E. you spot an inequality and you get it fixed by exaggerating the purpose and effect of the repairs to the voters.)