Guest Post: How Many Senators Does It Take To Screw A Taxpayer?

Submitted by Jim Quinn

How Many Senators Does It Take To Screw A Taxpayer?

 

“Today, the government decides and they misdirect the investment
to their friends in the corn industry or the food industry. Think how
many taxpayer dollars have been spent on corn [for ethanol], and there’s
nobody now really defending that as an efficient way to create diesel
fuel or ethanol. The money is spent for political reasons and not for
economic reasons. It’s the worst way in the world to try to develop an
alternative fuel.” - Ron Paul

When bipartisanship breaks out in Washington DC, check to make sure
your wallet is still in your pocket. Every time you fill up your car
this winter you are participating in the biggest taxpayer swindle in
history. Forcing consumers to use domestically produced ethanol is one
of the single biggest boondoggles ever committed by the corrupt
brainless twits in Washington DC. Ethanol prices have soared 30% in the
last year as the supplies of corn have plunged. Only a policy created in
Washington DC could drive up the prices of gasoline and food, with the
added benefits of costing the American taxpayer billions in tax
subsidies and killing people in 3^rd world countries.

The grand lame duck Congress tax compromise extended a 45-cent
incentive to ethanol refiners for each gallon of the fuel blended with
gasoline and renewed a 54-cent tariff on Brazilian imports. The
extension of these subsidies, besides costing American taxpayers $6
billion per year, has the added benefit of driving up food costs across
the globe, causing food riots in Tunisia, and resulting in the starving
of poor peasants throughout the world. This taxpayer boondoggle is a
real feather in the cap of that fiscally conservative curmudgeon Senator
Charley Grassley. He was joined in this noble effort by another fiscal
conservative, presidential hopeful John Thune. It seems these guys hate
wasteful spending, except when it benefits their states. The
bipartisanship in this effort was truly touching, as Democrats Kent
Conrad and Tom Harkin also brought home the pork for their states.

A bipartisan group of 15 senators signed a letter in late November
demanding an extension of U.S. ethanol subsidies. I wonder if the fact
they have received hundreds of thousands of dollars in campaign
contributions during the past six years from pro-ethanol companies and
interest groups like ADM, Monsanto, the National Corn Growers
Association, and the Iowa Renewable Fuels Association had anything to do
with this demand. You can always count on a Senator to do what’s best
for his re-election campaign rather than what is best for the country.
These symbols of political integrity will always spout the standard
talking points:

• Promoting ethanol reduces our dependence on foreign oil
• Ethanol is green renewable energy
• Ethanol is cheaper than gasoline

As we all know when dealing with a politician, “half the truth, is often a great lie.”

Amaizing 

Corn is the most widely produced feed grain in the United States,
accounting for more than 90% of total U.S. feed grain production. 81.4
million acres of land are utilized to grow corn, with the majority of
the crop grown in the Midwest.  Although most of the crop is used to
feed livestock, corn is also processed into food and industrial products
including starch, sweeteners, corn oil, beverage and industrial
alcohol, yogurt, latex paint, cosmetics, and last but not least, fuel
Ethanol. Of the 10,000 items in your average grocery store, at
least 2,500 items use corn in some form during the production or
processing. The United States is the major player in the world corn
market providing more than 50% of the world’s corn supply. In excess
of 20% of our corn crop had been exported to other countries, but
the government ethanol mandates have reduced the amount that is
available to export.

This year, the US will harvest approximately 12.5 million bushels of
corn. More than 42% will be used to feed livestock in the US, another
40% will be used to produce government mandated ethanol fuel, 2% will be
used for food products, and 16% is exported to other countries. Ending
stocks are down 963 million bushels from last year. The stocks-to-use
ratio is projected at 5.5%, the lowest since 1995/96 when it dropped to
5.0%. As you can see in the chart below, poor developing countries are
most dependent on imports of corn from the US. Food as a percentage of
income for peasants in developing countries in Africa and Southeast Asia
exceeds 50%. When the price of corn rises 75% in one year, poor people
starve.

The combination of an asinine ethanol policy and the loosest monetary
policy in the history of mankind are combining to kill poor people
across the globe. I wonder if Blankfein, Bernanke, and Grassley chuckle
about this at their weekly cocktail parties while drinking Macallan
scotch whiskey and snacking on mini beef wellington hors d’oeuvres. The
Tunisians aren’t chuckling as food riots have brought down the
government. This month, the U.N. Food and Agricultural Organization
(FAO) reported that its food price index jumped 32% in the second half
of 2010 — surpassing the previous record, set in the early summer of
2008, when deadly clashes over food broke out around the world, from
Haiti to Somalia.

Let’s Starve a Tunisian

“What is my view on subsidizing ethanol and farmers? Under the
constitution, there is no authority to take money from one group of
people and give it to another group of people for so called economic
benefits. So, no, I don’t think we should do that. Besides, bureaucrats
and the politicians don’t know how to invest money.” - Ron Paul

The United States is the big daddy of the world food economy. It is
far and away the world’s leading grain exporter, exporting more than
Argentina, Australia, Canada, and Russia combined. In a globalized food
economy, increased demand for corn, to fuel American vehicles,
puts tremendous pressure on world food supplies. Continuing to divert
more food to fuel, as is now mandated by the U.S. federal government in
its Renewable Fuel Standard, will lead to higher food prices, rising
hunger among the world’s poor and to social chaos across the globe. By
subsidizing the production of ethanol, now to the tune of $6 billion
each year, U.S. taxpayers are subsidizing skyrocketing food bills at
home and around the world.

The energy bill signed by that free market capitalist George Bush in
2008 mandates that increasing amounts of corn based ethanol must be used
in gasoline sold in the U.S. This energy legislation requires a
five-fold increase in ethanol use by 2022. Some 15 billion gallons must
come from traditional corn-blended ethanol. Nothing like combining PhD
models and political corruption to cause worldwide chaos. Ben Bernanke
and Charley Grassley have joined forces to bring down the President of
23 years in Tunisia. People tend to get angry when they are starving.
Bringing home the bacon for your constituents has consequences. In the
U.S. only about 10% of disposable income is spent on food.  By contrast,
in India, about 40% of personal disposable income is spent on food. In
the Philippines, it’s about 47.5%.  In some sub-Saharan Africa,
consumers spend about 50% of the household budget on food. And according
to the U.S.D.A., “In some of the poorest countries in the region such
as Madagascar, Tanzania, Sierra Leone, and Zambia, this ratio is more
than 60%.”

  

The 107 million tons of grain that went to U.S. ethanol distilleries
in 2009 was enough to feed 330 million people for one year at average
world consumption levels. More than a quarter of the total U.S. grain
crop was turned into ethanol to fuel cars last year. With 200 ethanol
distilleries in the country set up to transform food into fuel, the
amount of grain processed has tripled since 2004. The government
subsidies led to a boom in the building of ethanol plants across the
heartland. As usual, when government interferes in the free market, the
bust in 2009, when fuel prices collapsed, led to the bankruptcy of
almost 20% of the ethanol plants in the U.S.

The amount of grain needed to fill the tank of an SUV with ethanol
just once can feed one person for an entire year. The average income of
the owners of the world’s 940 million automobiles is at least ten times
larger than that of the world’s 2 billion hungriest people. In the
competition between cars and hungry people for the world’s harvest, the
car is destined to win. In March 2008, a report commissioned by the
Coalition for Balanced Food and Fuel Policy  estimated that the
bio-fuels mandates passed by Congress cost the U.S. economy more than
$100 billion from 2006 to 2009. The report declared that “The policy favoring ethanol and other bio-fuels over food uses of grains and other crops acts as a regressive tax on the poor.” A 2008 Organization for Economic Cooperation and Development (O.E.C.D.) issued its report on bio-fuels that concluded: “Further
development and expansion of the bio-fuels sector will contribute to
higher food prices over the medium term and to food insecurity for the
most vulnerable population groups in developing countries.” These forecasts are coming to fruition today.

It Costs What?

The average American has no clue about the true cost of ethanol. They
probably don’t even know there is ethanol mixed in their gasoline. The
propaganda spread by the ethanol industry and their mouthpieces in
Congress obscures the truth and proclaims the clean energy mistruths and
the thousands of jobs created in America. The truth is that producing
ethanol uses more energy than is created while driving costs higher. The
jobs created in Iowa are offset by the jobs lost because users of
energy incur higher costs and hire fewer workers as a result. It takes a
lot of Saudi oil to make the fertilizers to grow the corn, to run the
tractors, to build the silos, to get the corn to a processing plant, and
to run the processing plant. Also, ethanol cannot be moved in
pipelines, because it degrades. This means using thousands of big diesel
sucking polluting trucks to move the ethanol – first as corn from the
fields to the processing plants, and then from the processing plants to
the coasts.

The current ethanol subsidy is a flat 45 cents per gallon of ethanol
usually paid to the an oil company, that blends ethanol with gasoline.
Some States add other incentives, all paid by the taxpayer. On top of
this waste of taxpayer funds, the free trade capitalists in Congress
slap a 54 cent tariff on all imported ethanol. Ronald R. Cooke, author
of Oil, Jihad & Destiny, created the chart below to estimate the true cost for a gallon of corn ethanol. Cooke describes a true taxpayer boondoggle:

It costs money to store, transport
and blend ethanol with gasoline. Since ethanol absorbs water, and water
is corrosive to pipeline components, it must be transported by tanker to
the distribution point where it is blended with gasoline for delivery
to your gas station. That’s expensive transportation. It costs more to
make a gasoline that can be blended with ethanol. Ethanol is lost
through vaporization and contamination during this process.
Gasoline/ethanol fuel blends that have been contaminated with water
degrade the efficiency of combustion. E-85 ethanol is corrosive to the
seals and fuel systems of most of our existing engines (including boats,
generators, lawn mowers, hand power tools, etc.), and can not be
dispensed through existing gas station pumps. And finally, ethanol has
about 30 percent less energy per gallon than gasoline. That means the
fuel economy of a vehicle running on E-85 will be about 25% less than a
comparable vehicle running on gasoline.

Real Cost For A Gallon Of Corn Ethanol
Corn Ethanol Futures Market quote for January 2011 Delivery	$2.46
Add cost of transporting, storing and blending corn ethanol	$0.28
Added cost of making gasoline that can be blended with corn ethanol	$0.09
Add cost of subsidies paid to blender	$0.45
Total Direct Costs per Gallon	$3.28
Added cost from waste	$0.40
Added cost from damage to infrastructure and user’s engine	$0.06
Total Indirect Costs per Gallon	$0.46
Added cost of lost energy	$1.27
Added cost of food (American family of four)	$1.79
Total Social Costs	$3.06
Total Cost of Corn Ethanol @ 85% Blend	$6.80

Multiple studies by independent non-partisan organizations have
concluded that mandating and subsidizing ethanol fuel production is a
terrible policy for Americans:

• In May 2007, the Center for Agricultural and Rural Development at Iowa State University released a report
  saying the ethanol mandates have increased the food bill for every
  American by about $47 per year due to grain price increases for corn,
  soybeans, wheat, and others. The Iowa State researchers concluded that
  American consumers face a “total cost of ethanol of about $14 billion.”
  And that figure does not include the cost of federal subsidies to corn
  growers or the $0.51 per gallon tax credit to ethanol producers.
• In May 2008, the Congressional Research Service blamed recent
  increases in global food prices on two factors: increased grain demand
  for meat production, and the bio-fuels mandates. The agency said
  that the recent “rapid, ‘permanent’ increase in corn demand has
  directly sparked substantially higher corn prices to bid available
  supplies away from other uses – primarily livestock feed. Higher corn
  prices, in turn, have forced soybean, wheat, and other grain prices
  higher in a bidding war for available crop land.”
• Mark W. Rosegrant of the International Food Policy Research
  Institute, testified before the U.S. Senate on bio-fuels and grain
  prices. Rosegrant said that the ethanol scam has caused the price of
  corn to increase by 29 percent, rice to increase by 21 percent and wheat
  by 22 percent. Rosegrant estimated
  that if the global bio-fuels mandates were eliminated altogether, corn
  prices would drop by 20 percent, while sugar and wheat prices would drop
  by 11 percent and 8 percent, respectively, by 2010. Rosegrant said that
  “If the current bio-fuel expansion continues, calorie availability in
  developing countries is expected to grow more slowly; and the number of
  malnourished children is projected to increase.” He continued, saying
  “It is therefore important to find ways to keep bio-fuels from worsening
  the food-price crisis. In the short run, removal of ethanol blending
  mandates and subsidies and ethanol import tariffs, in the United
  States—together with removal of policies in Europe promoting
  bio-fuels—would contribute to lower food prices.”

The true cost of the ethanol boondoggle is hidden from the public.
The mandates, subsidies and tariffs take place out of plain view.
 The reason blenders (and gas stations) will pay the same for ethanol is
because they can sell it at the same price as gasoline to consumers. A
consumer will pay the same for ten gallons of E10 as for ten gallons of
gasoline even though the E10 contains a gallon of ethanol. Consumers pay
the same for the gallon of ethanol for three reasons. (1) They don’t
know there’s ethanol in their gasoline. (2) There is often ethanol in
all the gasoline because of state requirements, so they have no choice.
(3) They never know the ethanol has only 67% the energy of gasoline and
gets them only 67% as far. The result is that drivers always pay much
more for ethanol energy than for gasoline energy, simply because they
pay the same amount per gallon. When gasoline prices are $3.00 per
gallon, Joe Six-pack pays $4.50 for the same amount of ethanol energy.

You know a politician, government bureaucrat or central banker is
lying when they open their mouths. Whenever evaluating a policy or plan
put forth by those in control, always seek out who will benefit and who
will suffer. Who benefits from corn based ethanol mandates and
subsidies? The beneficiaries are huge corporations like Archer Daniels
Midland and Monsanto, along with corporate farming operations (80% of
all US farm production), and Big Oil. The mandated ethanol levels are
set in law. By providing tax subsidies we are bribing oil companies with
taxpayer dollars to do something they are legally required to do,
resulting in a $6 billion windfall profit to oil companies.  The other
beneficiaries are the Senators and Representatives from the farming
states who are bankrolled by the corporate ethanol beneficiaries and
their constituents who will re-elect them. The environment does not
benefit, as many studies have concluded that it requires more fossil
fuel energy (oil & coal) to produce a gallon of ethanol than the
energy created. The jobs created in the farm belt at artificially
profitable ethanol plants are more than offset by job losses due to the
added costs in the rest of the economy. When subsidies are removed or
oil prices drop, the ethanol plant jobs disappear, resulting in a
massive capital mal-investment. 

Our supposedly wise PhD and MBA leaders have created a perfect storm.
The unintended consequences of government intervention in the
markets are causing havoc, food riots, starvation and intense suffering
for the poor and middle class. Brazil produces sugar cane ethanol in
vast quantities and can export it to the U.S. much cheaper than we can
produce corn ethanol. Fuel prices would be lower without tariffs on
Brazilian ethanol imports. The average cost of food as a percentage of
disposable income for an American is 10%. Averages obscure the truth
that the cost is probably .0001% for Lloyd Blankfein, Ben Bernanke and
Chuck Grassley, while it is 30% for a poor family in Harlem. America’s
horribly misguided ethanol policy combined with Ben Bernanke’s Wall
Street banker subsidy program are resulting in soaring fuel and food
prices across the globe. Poor people around the world suffer greatly
from these policies. Below are two assessments of ethanol.     

 “Everything about ethanol is good, good, good.” – Senator Chuck Grassley, Iowa

“This is not just hype — it’s
dangerous, delusional bullshit. Ethanol doesn’t burn cleaner than
gasoline, nor is it cheaper. Our current ethanol production represents
only 3.5 percent of our gasoline consumption — yet it consumes twenty
percent of the entire U.S. corn crop, causing the price of corn to
double in the last two years and raising the threat of hunger in the
Third World.” – Jeff Goodell

Who do you believe?

Comments

[fastishplastic]

perhaps i'm assuming too much here. first things first. someone explain to chuck that ethanol is inedible. there i go again, ok ok, someone first define inedible to him, perhaps damnation animation would help to communicate.  

[Nobody]

The line of reasoning that farmers are so stupid that the government made them go into debt so that they would end up defaulting on their loans is beyond conspiracist.

In the early 70's, because Nixon disconnected the dollar from gold, the dollar fell in relation to other currencies and Sec. Earl Butz (agriculture) dropped the set aside program for corn, cotton, wheat, and rice.  The race was on, until Volcher came in and raised Fed interest rates, which in turn strengthen the dollar and destroyed the foreign market for grains and fibers.  Farmers were no different than home or mall purchasers in the early 2000.  Many speculated on the market, and lost.  the difference was that back in the 1980's there was no compassionate government to spare them the agony of defeat.  The marketplace adapted and survived, a lot more than I can say for today.

And BTW, DDT does not have a scent, and has yet to be proven scientifically to cause any deleterious effects.  Rachel Carson's hysteria has caused millions of deaths and dibilitating illnesses from malaria and other insect carrying diseases, and persists to this day.  Let's try to stay on topic, and many of us farmers still to this day grow and sell nonGMO corn, soy, rice, and cotton.

[Payable on Death]

I am in the gas station business--a supplier, thereto. I watched a presentation in Jan 09 by the head lobbyist for the National Assoc. of Convenience Stores where he discussed Bush's ethanol mandate. In addition to all of the problems discussed above, there exists a "blend wall". In short, the mandate is that 25% of fuel eventually be ethanol (35B gallons vs. 140B). However, such a level is physically impossible in our delivery and consumption infrastructure because ethanol is corrosive (it attracts and holds water).

Here’s the insight from NACS: when the farm lobby is presented with the physical facts and asked for relief from the mandate, the response is, no reductions--we expect increases (i.e., more than 35B, more tariff, more subsidy). The farm lobby believes they are the most effective in Washington. It’s beyond agribusiness (ADM, etc.) to include the individual farmers.

Perhaps farmers could start living up to the image of independence that they cultivate.

[cityguyusa]

As far as I'm aware there is no oil used in the production of fertilizer only natural gas.  But regardless perhaps we ought to put these jokers in jail for murder.  I bet they'd not one more bill would be brought to the floor of any legislators that could even potentially result in a human death.

I really think we need to start thinking like this if we're going to allow our existing government, which refuses to follow the constituion, in operation.