Turning Corn Into Gold

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Agribusinesses hungry for ethanol subsidy dollars seem to have planted so much corn that now we’ve got a glut of the stuff people were still calling “yellow gold” only a few weeks ago. Nonetheless, lobbying for more government subsidized ethanol continues. What’s behind the enthusiasm for ethanol?
Tim Carney’s recent column in the Washington Examiner looks at who’s pushing for higher CAFE standards, one of the key programs driving up demand for corn.

While raising the CAFE requirements would be a stick in the eye of the Big Three (whose political action committees [PACs] in 2006 gave about $1.3 million to federal candidates), it would clearly be a gift to the ethanol industry, whose strong connections to lawmakers are legendary. Ethanol, an alcohol fuel made from grain, usually corn, benefits from special tax breaks, protective tariffs, and federal and state handouts, as well as government mandates.
In the 2006 election cycle, the PAC for Archer Daniels Midland (ADM), the nation’s top ethanol maker, gave $120,000 to federal candidates while fellow agribusiness giant Cargill, No. 2 in ethanol, gave $223,000 to House and Senate candidates.
Also pulling for ethanol — and thus benefiting from stricter CAFE standards — is Goldman Sachs, the Wall Street investment firm that has invested $30 million in a Canadian ethanol maker.
Silicon Valley billionaire Vinod Khosla, who recently penned a New York Times op-ed along with former Senate Majority Leader Tom Daschle, D-S.D., calling for even more ethanol mandates, is also heavily invested in ethanol.

(Tim Carney is the brother of DealBreaker's editor.)
Big Ethanol wins big on CAFE [Washington Examiner]

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