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US Senate Votes For Repeal of Ethanol Subsidies
T Murphy writes "Although the measure is not expected to become law, a Senate vote 73-27 in favor of repealing ethanol subsidies and tariffs means a lot for future legislation. The White House stands opposed to changes in the subsidies or tariffs, so they will likely go untouched before they expire at the end of the year. Even so, this is a strong indication that such government support for ethanol will be reduced if not eliminated. The response to the Senate vote has been mixed, from corn prices falling, to the World Bank encouraging lower food prices, to concerns over reduced funding for alternative energy, to supporters of such budget cuts."
Subsidies spur production and research, as well as making a product more competitive internationally. They can keep a threatened industry that is desirable to keep around (say, one that is expected to be useful later but which might die in the meantime and be hard to start back up, or one that needs a push to get off the ground but will provide lots of jobs and tax money once it's going, or one critical to defense, even in an indirect sense) from being lost to foreign competition or simple changing demand. They can also be used to keep staples in the reach of the poor (though that happens more often in other countries, I think). Those are just the uses/justifications I can think of off the top of my head at 7:30 in the morning local time.
They're not as nonsensical as you imply, though I happen not to support this particular one myself.
Corn-based ethanol is a joke. Ethanol from sugar cane has been in use in Brazil for 20+ years and it works great - cheaper than gas without the need of any subsidies. More than half of the Brazilian car fleet runs on ethanol on a daily basis. Don't dismiss ethanol completely just because the US has chosen a silly way to manufacture it.
Also, if we get rid of corn subsidies and sugar cane tariffs, then the USA will no longer be crippled by substandard Coca-Cola.
Big government is when the government helps someone else. Small government is when they only help you.