The GOP, Ethanol, and the No-Tax Pledge

By :: June 15th, 2011

A majority of Senate Republicans yesterday took a symbolic but hugely important vote to eliminate $6 billion in tax subsidies for the production of ethanol.  And, so far at least, they have not turned into pumpkins.

The symbolism of their vote should not be underestimated. In a small but important way, 34 GOP senators proved to themselves--if to no one else-- that they can vote to “raise taxes.”  Most had signed the infamous pledge demanded by the self-styled protector of the faith, Grover Norquist, that they would never ever vote to raise taxes on anyone in any circumstances. Now, they have.   

To be sure, this was in many ways an easy vote. The subsidy itself is one of the least defensible in the tax code and it benefits a handful of corn farmers and producers in just a few states. Even the powerful Koch brothers, who have bankrolled many GOP candidates and whose firms benefit from the subsidies, endorsed repeal.

Besides, the Senate actually preserved the subsidy thanks to one of those procedural squabbles that makes it so difficult for the world’s greatest deliberative body to do anything. Plus, there is no chance this measure would pass the House, at least as a stand-alone bill. So this was the classic free vote—a chance for a lawmaker to make a point without actually changing the law.

But the point was a powerful one, at least within the GOP caucus where Norquist and the anti-tax absolutists held sway for years. In recent months they have been challenged by Senator Tom Coburn (R-OK) and a handful of others. Coburn’s conservative credentials are impeccable. He believes fervently in small government but, unlike Norquist, opposes spending subsidies and tax subsidies with equal passion. Most important, Coburn deeply believes in deficit reduction and seems to recognize that serious budget cutting is not possible without a mix of spending cuts and tax hikes.

Yesterday’s vote may provide some additional flexibility for those lawmakers participating in deficit reduction talks led by Vice President Joe Biden. The veep’s  group isn’t going to rewrite the tax code, but it is trying to come up with  a formula around which future talks aimed at cutting the deficit by about $4 trillion over a decade can be built.

There will be much arguing about what that recipe should be. Should it be $1 of tax increases for each $3 in spending cuts? Or perhaps 40/60? That’s the kind of difference-splitting that lawmakers do best. But the point is, the ratio of spending cuts to tax increases can’t be 100/0. Coburn and other smart conservatives understand that voters will choke on breakfast when they see what $4 trillion in spending cuts look like. The public’s overwhelmingly negative response to House Budget Committee Chair Paul Ryan’s (R-WI) plan to replace Medicare may have driven the point home.

Yesterday’s ethanol vote says that a majority of Senate Republicans agree with Coburn. Does that mean they are now ready to package hundreds of billions in tax hikes with spending cuts to make a deficit deal? Not all all.  But they have taken an important step in the right direction.