11 December 2010

Congressional Curing--Ethanol Does Not Prevent Trichinosis

One of the sweeteners to make the bad medicine of the “Tax Rate” deal more palatable to Democrats like Senator Tom Harkin (D-IA) was throwing in Ethanol subsidies. But larding up this strategic compromise between the White House and Congress adds a Tea Party toxin which may politically kill those who swallow it.

The trade offs that Republicans took  for a two year continuation of the Bush era tax rates were bad enough.  Allowing a reinstatement of the 35% estate tax reinstated a fiscally immoral practice.  Settling for only a two year freeze in current rates sacrifices any leverage that conservatives garnered after the historic gains in the Midterm elections.  Fiscally, by extending is a high unemployment benefits for another 13 months (for those who have already had it for 99 weeks) is estimated to cost $60 Billion.

But when the deal looked shaky, the Hill reverted to its discredited tradition of buying support through pork barrel earmarks, which are said to include:

$136 million for mass transit commuters
$138 million for the construction of new energy efficient homes
$792 million for Hurricane Katrina era tax incentive programs
$2 billion for Bio-diesel fuel production
$3 billion for Renewable Energy Incentives   and
$5 billion for Ethanol tax credits.

All of these earmarks seem extraneous to those beyond the beltways, but what really sticks in voters’ craw (aside from Hawkeyes and the ilk) is additional ethanol subsidies.  The Ethanol add on is an outrage that resonates with people and makes them sick to their stomachs.

In Between-the-Beltways parlance, the Tax Deal “compromise” has become Christmas Tree legislation where pigs can fly. These backroom deals are a way to get legislative imprimatur on items that had no way of passing on their own merits. With these earmark augmentations, “The Deal” can be seen as Stimulus II.  And if one includes the “cost” of not adding upper class tax increases to the Federal kitty, this tax compromise could cost $855 billion, which is more than Porkulus.

Risk adverse Senate Republicans will tend to take these terms to declare victory and go home for Christmas.  It was somewhat surprising to hear House Budget ranking member Paul Ryan (R-WI 1st) say conciliatory things to the tax deal compromise “framework”.  But what really was eye opening was Tea Party favorite Congresswoman-elect Kristi Noem (R-ND AL), who both voiced support for the yet finalized Obama-McConnell Tax Rate Deal and supporting ethanol subsidies on the Scott Hennen radio show.

Noem will be a freshmen member of the House Republican Leadership, so carrying the party’s water is part and parcel of the position.  Naturally, North Dakota is an agricultural state, so endorsing ethanol plays to her constituents.  And her support for “The Deal” is academic as Noem is not plenipotentiate until January.

To be fair, it is unclear if Noem supports adding extraneous ethanol earmarks to get “The Deal” past. But these backroom deals, buying votes, adding earmarks and imposing wasteful and deleterious legislative mandates are all contrary to the will of the Tea Party.  The Republican House Leadership noted that the wave of support was not a mandate for them but a second chance.  The oleaginous approach to larding pork into the pot to get something passed is disgusting.  Sure, Bismark said that laws are like sausages, it is better not to see them being made. But at least there is a tasty product in the end.

The time for finalizing 2011 tax tables has passed, so there should be no rush in jamming the Tax Rate deal through, particularly if porcine additives like ethanol may cause political trichinosis.

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