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The Ethanol Wedge

With the obvious, yawning gap between the deficit-reduction and corporate-lobby impulses of the GOP, it's equally obvious that progressives benefit from promoting deficit-reducing measures that are progressive but that threaten corporate interests.

It appears that the soon-to-expire batch of subsidies for the ethanol industry could meet those criteria handily.

The immediate impetus for this opportunity is actually coming from two right-wing Republican senators, Tom Coburn of OK and Jim DeMint of SC, who are arguing for letting the subsidies (mainly provided through a tax credit aimed at a few Big Dog suppliers) expire on deficit-reduction and market-neutrality grounds. The reason this idea has traction, of course, is that environmentalists have long disliked ethanol subsidies, creating the rare possibility of a left-right coalition.

The money we are talking about--$5 billion, or about a third of the amount involved in the appropriations earmarks that conservatives have been obsessing about for the last couple of years, if you take seriously the dubious idea that banning earmarks will reduce appropriations--is serious enough to make this of interest to Tea Party folk.

But the ethanol lobby spends some pretty serious money of its own backing Republican candidates. And its defenders include the likely incoming chairman of the tax-writing House Ways & Means Committee, Dave Camp (Coburn's OK colleague) and the ranking Republican on the tax-writing Senate Finance Committee, Chuck Grassley of IA.

Steve Benen was right to identify this issue earlier in the month as a potentially big deal:

If Dems play this right, the subsidies could be a carefully-applied wedge, driving divisions between the party's activists and the party's corporate benefactors.

Moreover, I'd add, ethanol is a particularly excrutiating issue for Republicans who want to run for president in 2012 and beyond, given the iconic status of the subsidy in First-in-the-Nation-Caucus-State Iowa.

It's no accident that George W. Bush's first policy statement upon officially running for president in 2000 was to pledge his support of ethanol subsidies. And it's no accident that John McCain, an unrepetetant ethanol subsidy detractor, skipped Iowa in 2000 and skirted it in 2008.

In pushing the issue now, progressives not only help expose some internal rifts in the GOP in the lame duck session of Congress, while showing that good environmental policies can be appealing to Tea Party Folk. They also create some very uncomfortable moments for Republicans who are facing the prospect of spending many months barnstorming amongst the corn stalks in Iowa.