Conservative senators lined up with Coburn

Americans for Tax Reform wanted to sum up the debate about ethanol subsidies as a tax increase vs. the status quo. If you voted for Sen. Tom Coburn’s (R-OK) amendment to end the $5 billion a year subsidy for ethanol producers, you support higher taxes. Coburn’s amendment failed, but did garner support of 34 of 44 Republicans (as well as 6 Democrats). A breakdown of those Republicans shows that the most conservative, free market Republicans voted with Coburn.

Cornyn (TX)
DeMint (SC)
Heller (NV)
Inhofe (OK)
Kyl (AZ)
Lee (UT)
McCain (AZ)
McConnell (KY)
Paul (KY)
Rubio (FL)
Sessions (AL)
Toomey (PA)

Coburn’s right on ethanol subsidies

The lingering feud between Sen. Tom Coburn (R-OK) and Grover Norquist, head of Americans for Tax Reform, was punctuated last night when Coburn’s amendment to end ethanol subsidies failed to garner the necessary 60 votes in the Senate. Coburn says he won because 34 of 44 Republicans voted to end the subsidies. Norquist says he won because his amendment didn’t pass. Technically, Norquist is right, since for now the policy isn’t changing and ethanol producers can continue receiving $5 billion a year in government subsidies. But Coburn is right on the policy and the fact that 77% of his GOP colleagues voted to end the ethanol subsidies is a good sign for policy (and politically) minded Republicans.

It’s not that Norquist is a fan of ethanol, but he’s been insistent that if tax credits for ethanol are repealed, there must be a corresponding tax cut somewhere else, preferably across-the-board. Otherwise, he says, it’s simply a tax increase on ethanol producers, plain and simple, and tax hikes, no matter how they are defined, are bad public policy. Since Coburn’s amendment didn’t take the money that would have been raised by ending the ethanol subsidies and redirect it to across-the-board tax cuts, Norquist opposed the plan. Coburn simply wanted to use the ethanol subsidies to pay down the deficit.

Norquist’s opposition is unfortunate both in policy and politics. On the policy level, there should be very few, if any, tax expenditures (credits, subsidies) in the tax code. If government wants to subsidize something, it should do so through a line item in a spending bill. Had this been the case, then Coburn’s amendment simply would have been to strip funding for ethanol producers and Norquist would have happily agreed.

At a political level, there are few better places to begin demonstrating to voters the GOP’s commitment to cutting the budget than ending tax subsidies for ethanol. Unless you live in Iowa, Coburn’s amendment is probably supported by 70% of the electorate.

Norquist did support an amendment authored by Sen. Jim DeMint (R-SC) that would have ended the ethanol subsidy and the death tax (thereby making the complete package a net revenue reduction). That amendment didn’t go anywhere. And DeMint, often referred to as the Senate’s tea party leader, voted for the Coburn amendment anyway.

Democrats, taxes and the unemployed

I don’t mind spirited debates over whether varying kinds of tax cuts have an effect on economic growth, job growth, or any other kind of growth. It is a factual statement that high taxes impede growth while low taxes do not (would you work if the tax rate was 100 percent?).

State Republican lawmakers are reluctant to increase the length of time the unemployed are eligible for benefits. Democrats and Gov. Brewer want to increase unemployment insurance from 79 weeks to 99 weeks. Some Republicans, therefore, have decided that in order to garner their vote in favor of 20 more weeks of unemployment insurance, there must be some kind of corresponding tax reduction. Tax cuts (the right kind – not these), Republicans argue, will help the overall economy.

In today’s Arizona Republic story on unemployment insurance, however, the article closed with:

Democrats questioned how another tax break would translate into an immediate job for many of the long-term unemployed.

But nearly two years of unemployment insurance does? I’m still waiting for one Democrat to go on the record saying that 20 more weeks of unemployment insurance reduces Arizona’s unemployment rate.