You have to admire the focus of biofuel proponents. Regardless of the collateral damage or uncomfortable baggage, getting federal subsidies trumps all other considerations. Soybean organizations have been pinging me for several days about getting an extension on the biofuel tax credit which seems to be the only way this fuel makes economic sense.
Like all the other mentions I saw in the ag press, this blurb does not mention all the otherTo press the issue with members of the U.S. Senate, ASA has renewed the nationwide Action Alert to its members and supporters asking them to contact their Senators to urge them to pass the biodiesel tax credit extension immediately upon their return from the Memorial Day recess."I strongly encourage all soybean farmers to contact their Senators directly over the next week, in-person, via phone and email, to explain the need for the Senate to extend the biodiesel tax incentive," Joslin said. "The biodiesel tax incentive expired on Dec. 31, 2009, and since that time, biodiesel production and consumption has dramatically declined, biodiesel production facilities have closed, and thousands of biodiesel industry workers have lost their jobs." [More]
As the Congress now considers yet another deficit-increasing, budget-busting spending bill, one must ask: when will those who now control the Executive and Legislative Branches of the federal government begin to take responsibility for containing the ongoing spending binge?More curiously, it is the much-despised (by farmers) Democratic leadership that is the good guy here. Republicans are steering clear of this measure, which they will undoubtedly characterize as a tax increase.
According to the Congressional Budget Office (CBO), the latest version of the so-called “jobs” bill before the Senate will increase spending outlays by $126 billion over the next ten years, and add $79 billion to the federal deficit during that time. Over the first five years, the deficit effect is starker still: of the $109 billion in new spending in these years, $103 billion would be added to the deficit. Most of the partially-offsetting tax increases under the law would become effective only later.
The bill is thus primarily a borrow-and-spend-bill, with some tax-and-spend thrown in. But it is, in all respects, a bill that piles still more spending on top of current historic highs. [More]
In a statement released with fellow Republican Senator Mike Enzi of Wyoming that Snowe posted to her Web site, she called the tax a “poison pill” that would “cripple” so-called S corporations, the most common business structure. The proposal would force such corporations to pay as much as a 15.3 percent payroll tax on earnings reinvested in the business rather than taken in salary, she said.For my money (heh), this is closing a loophole - not a tax increase. Regardless, I believe we need tax increases to attack the deficit -but NOT now. But for many upset with the deficit this bill is really ugly.
“This is a job-killing tax hike that will force entrepreneurs across the nation to retrench and reconsider any plans for hiring employees or expanding their business,” Snowe said in the statement.
Democrats control 59 of the Senate’s 100 members and need 60 votes to clear a procedural hurdle that could lead to passage of the jobs bill. The measure would reinstate unemployment aid for jobless workers who’ve exhausted benefits, renew about three-dozen tax breaks and impose higher taxes on executives of buyout firms and other investment partnerships.
The provision raising Snowe’s ire is aimed at closing the so-called John Edwards loophole in tax law, a name coined by Republicans after the former North Carolina senator organized his law practice in a way that to avoided the 2.9 percent Medicare tax on about $26 million in earnings. Edwards, a Democrat later nominated to be vice president, was the sole shareholder in his S corporation.
‘Reputation and Skill’
The legislation would impose the Medicare tax and applicable Social Security taxes on such earnings when the company’s “principal asset” is the “reputation and skill” of less than four employees. Social Security taxes of 12.4 percent apply only to the first $106,800 of an individual’s earnings; Medicare taxes have no cap. [More]
Let me offer a prediction. Farmers will harangue Congress to pass this bill and then rail about out-of-control spending with their next breath. I also wonder if there is any legislation so odious that would cause soybean producers to wait for the next bus. Reinstate the draft? Repeal the interest deduction? Create real "death panels"?
I'm not sure.
Meanwhile, the ethanol lobby is not about to let a good crisis go to waste.
The most disgusting aspect of the blowout in the Gulf of Mexico isn't the video images of oil-soaked birds or the incessant blather from pundits about what BP or the Obama administration should be doing to stem the flow of oil. Instead, it's the ugly spectacle of the corn-ethanol scammers doing all they can to capitalize on the disaster so that they can justify an expansion of the longest-running robbery of taxpayers in U.S. history.This angle smells like a winner to me. With Palin snuggling up to pols in Des Moines, and Obama on board with renewables-at-any-cost, highlighting the spill can be good for the mandate push. And even better, mandates don't require a budget offset.
Listen to Matt Hartwig, communications director for the Renewable Fuels Association, an ethanol industry lobby group: "The Gulf of Mexico disaster serves as a stark and unfortunate reminder of the need for domestically-produced renewable biofuels." Or look at an advertisement that was recently placed in a Washington, D.C., Metro station: "No beaches have been closed due to ETHANOL spills. … America's CLEAN fuel." That gem was paid for by Growth Energy, another ethanol industry lobby group. [More]
Investors are sniffing around ethanol again as a result.
With oil prices hovering around a modest $70 a barrel, coupled with the poor economy, ethanol startups have had difficulty attracting investors.I will not belabor my opposition to an industry that cannot remove the training wheels, so let me offer this remark about my interpretation of these events:
Now the disaster in the Gulf of Mexico could help change that. The horror of the Deepwater Horizon/BP oil spill has focused more attention on the need for alternative fuels, Florida companies planning to produce ethanol say.
"We can displace enough oil through biofuels and renewable energy that we don't need to rely on offshore drilling for oil," said Brad Krohn, principal and manager of Highlands EnviroFuels LLC, Lake Placid. "Until now it has been difficult to get our projects financed. We believe this is a prime opportunity for both federal funding from government agencies as well as private investment." [More]
Go long corn. Watch China for beans.
And to our protein industry, we corn growers seem to be saying: Buy your own Congresshumans.