Strange bedfellows and ethanol subsidies

STRANGE BEDFELLOWS AND ETHANOL SUBSIDIES…. This may not seem like the sexiest issue on the policy landscape, but the fight over ethanol subsidies keeps getting increasingly interesting.

To briefly recap, there are two existing ethanol subsidies that are due to expire at the end of the calendar year, which means Congress may have to act pretty quickly to save them — if they’re to be saved.

The question is what conservative Republicans are prepared to do about it. On the one hand, congressional Republicans inclined to do what corporate lobbyists tell them to do, and the lobbyists naturally want the industry subsidies to continue. The American Future Fund is a shadowy right-wing group that raised all kinds of secret money to help Republicans win midterm elections, and it just so happens to have been created in large part by a wealthy executive of an ethanol producer. It’s a safe bet he’ll expect his GOP friends to repay his assistance.

On the other, the subsides are expensive, unnecessary, and ultimately counter-productive, and a prime target for anyone who cares even a little about spending cuts.

In a new twist, we’re seeing some unusual alliances coming together.

What could bring together the liberal MoveOn.Org, the Tea Party-aligned FreedomWorks, California Democratic Sen. Dianne Feinstein and Oklahoma Republican Sen. Tom Coburn?

Ethanol subsidies — they’re all against them…. In a letter Monday to congressional leaders, MoveOn.org Political Action, FreedomWorks, and more than four dozen groups called on Congress to let the ethanol tax credit expire at the end of the year.

“At a time of spiraling deficits, we do not believe Congress should continue subsidizing gasoline refiners for something that they are already required to do” under federal law, according to the letter, which was also signed by the Sierra Club, the American Conservative Union, and the Grocery Manufacturers Association.

Feinstein and Coburn are working together on this, and have 15 senators from both parties on their side.

Their efforts, in turn, have prompted a separate, bipartisan group of 15 senators to do the exact opposite, urging Senate leaders to extend the subsidies. “Allowing the provisions to expire or remain expired would threaten jobs, harm the environment, weaken our renewable fuels industries and increase our dependence on foreign oil,” the group, led by Sens. Kent Conrad (D-N.D.) and Chuck Grassley (R-Iowa), wrote in their letter.

I honestly can’t think of the last time this many liberals and conservatives teamed up on both sides of an issue.

Also note, it seems Republicans are in the tougher spot here. High-profile GOP senators like Grassley and Orrin Hatch (R-Utah) want to prove their fiscal conservatism, but they’ve been strong supporters of subsidies like these for years, and their constituents expect them to deliver.

If Dems wanted to use this as a wedge, driving divisions between the party’s activists and the party’s corporate benefactors, there’s still an opportunity to do that.

As for what happens next, it’s hard to say, even if Republicans drop their hostage strategy. One possibility would see a brief extension of the status quo, leaving the next Congress deal with the issue.

My preference would be to see all of the subsidies expire this year, and let the next Congress decide whether to resuscitate them. I’d look forward to seeing how the far-right GOP House majority deals with an issue like this one.