An awkward test of fiscal conservatism

AN AWKWARD TEST OF FISCAL CONSERVATISM…. Conservative writer Tim Carney raised an interesting point the other day that seems likely to put some Republican senators in a very awkward position.

Republicans talk about ending wasteful government intervention. Congressional Democrats say they want to protect the environment. And Barack Obama claims he’s looking for bipartisan cooperation and reform. All of these goals would be served by rolling back ethanol subsidies.

“A Republican takeover of the House of Representatives,” Bloomberg News speculated this week, “may mean that U.S. subsidies aiding ethanol producers will be cut after the party pledged to reduce government spending.”

We’ll find out within months if that’s putting too much stake in GOP rhetoric.

It may not even take that long. Two existing ethanol subsidies are due to expire at the end of the calendar year, which means Congress may have to act during the lame-duck session to save them — if they’re to be saved.

So, what exactly are conservative Republicans planning to do about this? On the one hand, they’re inclined to do what corporate lobbyists tell them to do, and the lobbyists naturally want the industry subsidies to continue. On the other, the subsides are expensive, unnecessary, and ultimately counter-productive. If there was an intellectual consistency to the Tea Partiers’ ideology — a big “if” — this seems like exactly the kind of budget cut the free-market-loving activists could get behind.

And so, as Carney put it, “ethanol becomes a good test for the supposedly reborn Republican Party.” It does, indeed.

What will be especially interesting is if Dems decide the kick the can down the road a bit — extending the subsidies for, say, six months — and letting the next Congress deal with the issue. Or better yet, Dems can simply allow the subsidies to expire this year, and let the next Congress decide whether to resuscitate them.

Would a GOP-led House, and an expanded GOP Senate caucus, rally behind ethanol subsidies costing $6 billion?

The larger political pressures here are also worth keeing an eye on. The American Future Fund, for example, is a shadowy right-wing group that raised all kinds of secret money to help Republicans win midterm elections. The Fund was created in large part by a wealthy executive of an ethanol producer — and it stands to reason he’ll expect his GOP friends to repay his assistance with these subsidies.

This could get especially awkward for some key conservative lawmakers who’ve supported the ethanol policy in the past, including Sen. Orrin Hatch (R-Utah), but who are anxious to prove their fiscal conservatism.

If Dems play this right, the subsidies could be a carefully-applied wedge, driving divisions between the party’s activists and the party’s corporate benefactors. It’s definitely an issue to look out for in the coming months.