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Senator Ayotte Supports Repeal of Wasteful Ethanol Subsidies

Press Release

Location: Washington, DC

U.S. Senator Kelly Ayotte (R-NH) today voted in support of an amendment she is cosponsoring that would repeal costly and wasteful federal subsidies for corn-based ethanol. The amendment was introduced by Senator Tom Coburn (R-OK) and has bipartisan support. The amendment, which required 60 votes for passage, failed by a vote of 40-59.

Senator Ayotte released the following statement:

"Congress should not be spending billions of dollars that we do not have on a policy that fails to achieve its intended goal - American energy independence. Our nation's energy policy mandates ethanol's use at the gas pump, subsidizes its blending with gasoline, and protects it from low-cost foreign imports. And according to the Congressional Budget Office, the diversion of corn crops for ethanol production has contributed to a 10 to 15 percent increase in food prices, through increased corn, feed grain, land, and other input costs.

"This distortion in the marketplace hurts American families at the grocery store check-out line and also has severe consequences for the global food supply. In addition, ethanol only has two-thirds the energy content of gasoline, reducing fuel economy, forcing Americans to fill their gas tanks more frequently to travel the same distances, and its corrosiveness could have a devastating impact on cars and small engines such as lawnmowers, chainsaws, and boats that are not approved for the use of such fuel blends. That is why I cosponsored the Volumetric Ethanol Excise Tax Credit Repeal Act, which would repeal the $6 billion annual ethanol tax credit, saving taxpayers' money and helping to reduce our deficit. We should also review federal subsidies for all industries as part of a comprehensive approach to reforming the tax code."

The Volumetric Ethanol Excise Tax Credit, known more commonly as the "blender's credit," which is set to expire at the end of 2011, will have cost taxpayers $30.5 billion since its inception in 2005. A Congressional Budget Office report found that consumers pay $1.78 in ethanol subsidies before they even pay a national average of $3.71 per gallon at the pump. In addition, a Government Accountability Office report on government duplication and waste found the ethanol tax credit and the renewable fuel standard are duplicative in stimulating domestic production and use of ethanol, and they result in $6 billion in annual losses of revenue to the Treasury.

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