Cruz Shows How Ethanol Lobby Has Lost its Grip on Iowa Voters

By Published on January 31, 2016

Texas Sen. Ted Cruz doubled-down on his long-standing opposition to federal ethanol policies during the most recent GOP debate Thursday, even though this was the Republican candidate’s last big chance to prove to Iowans why they should vote for him.

Federal mandates and subsidies are a big deal for Iowa’s ethanol lobby, so the support for Cruz in Iowa is surprising given his opposition to government picking winners and losers in the energy sector, and it shows just how little sway corn growers and ethanol producers hold over Iowa Republican voters.

Cruz is now ranked second in the state, behind business mogul Donald Trump. The state’s caucus system could reward Cruz’s stronger ground-game as previous Iowa caucus winners with strong turnout-boosting infrastructure consistently outperformed polls.

“[In the past,] If you didn’t bow down to corn you were an apostate,” David Swenson, an Iowa State economics professor, told Time. “It’s still important, but it’s not the same kind of make or break issue that it was then.”

Trump has fully embraced ethanol subsidies and expressed support for the RFS, even saying it doesn’t go far enough. Yet, support for ethanol doesn’t appear to matter as much now as shown by Cruz’s success, but Trump is still pursuing the old ethanol based strategy.

For years, ethanol support was regarded as a must for anyone looking for Iowa’s support. In 2008, Democratic candidate Hillary Clinton opposed ethanol mandates and subsides while she was a Senator, before flipping her position when running for president. This perceived lack of support seriously undermined her campaign in Iowa. Meanwhile, then-candidate Barack Obama argued that embracing ethanol “ultimately helps our national security, because right now we’re sending billions of dollars to some of the most hostile nations on earth.” Obama stacked his campaign with ethanol industry advisers and even declared ethanol production essential to national security. This level of support for ethanol helped Obama to win the Iowa caucuses. In contrast, antipathy toward the ethanol industry doesn’t seem to be hurting Cruz.

Pro-ethanol groups, such as America’s Renewable Future, have launched aggressive attacks on both of the candidates who oppose ethanol subsidies, Ted Cruz and Rand Paul. The group has literally followed Cruz to campaign stops around Iowa since Jan. 4.

The ethanol industry is deeply dependent upon federal subsidies and mandates, such as the RFS, which requires gasoline sold in the U.S. to contain a certain amount of ethanol. More than 60 percent of Iowan corn is used to produce ethanol, and almost all ethanol sold in the U.S. is corn based.

“[M]y tax plan ends all energy subsidies and mandates,” Ted Cruz wrote in The Des Moines Register early this month. “No Washington favoritism for oil and gas, for wind, for solar, or for anyone else.  We should phase out the Renewable Fuel Standard, end all energy subsidies, and ensure a level playing field for everyone.” Rand Paul “does not support the government telling consumers or businesses what type of fuel they must use or sell,” a spokeswomen told The Wall Street Journal last year.

Currently, the federal government requires the use of and subsidizes ethanol. Tax credits for ethanol cost the government up to $40 billion in grants, loan guarantees, tax credits and other subsidies.  Low gasoline prices have reduced demand for ethanol, and recent research suggests that ethanol may be twice as harmful to the environment than gasoline.  The environmental benefits of ethanol are “highly uncertain,” according to analysis by the Congressional Budget Office.


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