Iowa Public Television


Presidential hopeful wants to cut renewable fuels subsidies

posted on May 27, 2011

<p><strong>Note:</strong> If this video does not play, you may need to download the free <a href="">Flash</a> video plugin for your web browser.</p> <p><a href="" target="_blank"><img alt="Get Adobe Flash Player" src="graphics/plugins/get_flash_player.gif" border="0" height="31" width="88"></a></p>

In April, the government reported economic growth slowed to a crawl in the first three months of the year as higher gasoline prices, persistent unemployment and weakness in the housing sector weighed heavily on the recovery. The numbers were revised Friday, but not much changed...

After crunching the numbers again, the government left its original estimate on gross domestic product unchanged at 1.8 percent.

On Wall Street, where analysts had expected a slight upward revision in GDP, the Dow Jones Industrials took the news in stride and settled Friday with about a 40-point gain. Separately the government reported orders to U.S. factories for big-ticket durable goods fell 3.8% in April in their largest decline in six months.

And the Commerce Department reported new home sales rose 7.3 percent in April to a seasonally adjusted annual rate of 323,000. But the tally is still well below the 700,000 units that would be sold in a "healthy" housing market.

One thing that's almost never in short supply is political rhetoric, especially among those seeking residency at the White House.

Those ranks grew larger this week, when a former Midwest governor traveled to the heart of "Corn Country" to announce his presidential candidacy -- and to call for the demise of federally subsidized ethanol.

Tim Pawlenty, Former Minnesota Governor: "I'm Tim Pawlenty, and I'm running for President of the United States."

Realizing the importance of Iowa's "first in the nation" caucuses, Former Minnesota Governor Tim Pawlenty launched his presidential campaign this week in Des Moines.

Using the State Capitol as a backdrop, the latest entrant in a growing Republican field recited the common "Washington is broken" rhetoric, and characterized his campaign as a "time for truth."

Tim Pawlenty, Former Minnesota Governor: "That's why later this week, I'm going to New York City, to tell Wall Street that if I'm elected, the era of bailouts, handouts, and carve-outs will be over. No more subsidies, no more special treatment. No more Fannie and Freddie, no more TARP, and no more "too big to fail."

Pawlenty called for the demise of a litany of federal subsidies -- including those supporting production of renewable fuels. Acknowledging the political liability of that position in Iowa -- which leads the nation in both corn and ethanol production -- Pawlenty said someone has to speak the truth.

Tim Pawlenty, Former Minnesota Governor: "The hard truth is that there are no longer any sacred programs. The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out. We need to do it gradually. We need to do it fairly. But we need to do it."

Pawlenty noted he's supported ethanol over the years, even signing a mandate in his home state to double the use of the renewable fuel. But he said the approach to government support of the entire energy sector needs to change. Tim Pawlenty, Former Minnesota Governor: "So, as part of a larger reform, we need to phase out subsidies across all sources of energy and all industries, including ethanol. We simply can't afford them anymore."

Iowa Senator Charles Grassley recently proposed legislation earlier this month that would gradually eliminate ethanol subsidies, spreading the cuts over a 5-year period. But, the six-term Republican also believes in uniform government policy across the entire energy sector.

Senator Charles Grassley, R - Iowa, "It would be wrong to just phase out ethanol and not look at the other subsidies, because I think you ought to have a level playing field for all forms of energy. But the legitimacy of phasing it out is, what's the purpose of a subsidy in the first place? A purpose of the subsidy is to get an infant industry started whether that's ethanol, biodiesel, wind, solar, etc. Once you get it started it should live on its own or it shouldn't live."

Pawlenty's tough talk on government largesse was praised by some political insiders who called it, "brave" and "gutsy."

And despite his tough stance on ethanol subsidies, Pawlenty's plan to phase out government support across the entire energy sector was even welcomed by the Iowa Renewable Fuels Association.

In a statement, the president of the Iowa RFA said, "We agree that the massive amount of federally funded petroleum incentives must be a part of any reform discussion. Iowans look forward to Gov. Pawlenty further detailing his plans to ‘phase out' petroleum subsidies, perhaps in a speech in Houston, Texas."

Tags: agriculture biofuels campaign 2012 corn ethanol farm subsidies Iowa news politics presidential candidates renewable fuels Republicans Tim Pawlenty