Former Minnesota Gov. Tim Pawlenty made a potentially risky move during his campaign launch speech in Iowa: he called for a phaseout of ethanol subsidies.
“The hard truth is that there are no longer any sacred programs,” said Pawlenty. “The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out. We need to do it gradually. We need to do it fairly. But we need to do it.”
Many political observers have long said that Iowa’s place at the kickoff for presidential nomination contests has ensured continuous support for ethanol by national politicians. As a counter-example, Sen. John McCain (R-AZ) has long opposed ethanol subsidies, and as a result he largely skipped the 2008 caucuses. McCain placed fourth in the caucuses, and in the 2008 general election he lost Iowa by just under ten points.
And as another example, Newt Gingrich earlier this year attacked “big city” critics of ethanol, and put forward his own idea of an alternative to subsidies — a federal mandate that all cars sold in America be made capable of running on ethanol. And Gingrich couched this regulation as a free-market measure, too: “If they’re prepared to insist on a flex-fuel vehicle and every car in America’s capable of buying ethanol, I think the industry can stand on its own.”
So Pawlenty is definitely taking a risk here, by simultaneously campaigning heavily in Iowa and taking this position. Will he come across as a straight-shooting believer in small government, who will use his background as the ex-governor of an ethanol state himself to build credibility on the subject of phasing out energy subsidies in an even-handed way? Or will even discussing the idea of ending subsidies just plain ruin him here?
Here is the full quote, from the prepared remarks of his speech:
America is facing a crushing debt crisis the likes of which we’ve never seen before. We need to cut spending, and we need to cut it…big time. The hard truth is that there are no longer any sacred programs.
The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out. We need to do it gradually. We need to do it fairly. But we need to do it.
Now, I’m not some out-of-touch politician. I served two terms as Governor of an ag state. I fully understand and respect the critical role farming plays in our economy and our society. I’ve strongly supported ethanol in various ways over the years, and I still believe in the promise of renewable fuels - both for our economy and our national security.
But even in Minnesota, when faced with fiscal challenges, we reduced ethanol subsidies. That’s where we are now in Washington, but on a much, much larger scale.
It’s not only ethanol. We need to change our approach to subsidies in all industries.
It can’t be done overnight. The industry has made large investments, and it wouldn’t be fair to pull the rug out from under it immediately. But we must face the truth that if we want to invite more competition, more investment, and more innovation into an industry - we need to get government out. We also need the government out of the business of handing out favors and special deals. The free market, not freebies from politicians, should decide a company’s success. So, as part of a larger reform, we need to phase out subsidies across all sources of energy and all industries, including ethanol. We simply can’t afford them anymore.
Some people will be upset by what I’m saying.
Conventional wisdom says you can’t talk about ethanol in Iowa or Social Security in Florida or financial reform on Wall Street.
But someone has to say it. Someone has to finally stand up and level with the American people. Someone has to lead.