This was the second telephone conversation between Grassley and President Bill Clinton to discuss plans to extend the ethanol program into the 21st century. Last August, the President called Grassley on his farm to discuss a bipartisan strategy to extend the ethanol program in the highway reauthorization bill.
Last night, Grassley asked the President to send a clear message to Capitol Hill. Grassley asked the President to let lawmakers know that he did not want to receive a highway bill from Congress that did not contain the bipartisan amendment to extend the ethanol tax incentive to the year 2007. The President agreed, and assured Grassley that he would get to work first thing in the morning. The President's cooperation is not surprising because the administration's road funding proposal last year included provisions to extend the ethanol tax incentive until 2005.
"Ethanol is good for the environment, it is good for U.S. energy independence from foreign sources of oil, and it is good for the economy of rural America," Grassley said. "Extension of this tax incentive is essential to continued investment in expanded ethanol production throughout the Midwest."
Members of the U.S. Senate have repeatedly expressed strong support for the Grassley/Moseley-Braun ethanol amendment. Just last week, senators rejected by a vote of 71 to 26 a move to strike the ethanol plan from the highway funding bill. A similar effort against ethanol was stymied by senators last June with a vote of 69 to 30. Last August, Grassley secured support for his ethanol amendment from President Clinton, Vice President Al Gore, House Speaker Newt Gingrich, and Senate Majority Leader Trent Lott.
The bill to provide $214.3 billion in funding over six years for the nation's highways passed the Senate last week. It included the Grassley/Moseley-Braun ethanol amendment. Under their plan,the ethanol tax exemption per gallon would remain at its current 5.4 cents through the year 2000.It would be reduced to 5.3 cents in the years 2001 and 2002, reduced to 5.2 cents for the years 2003 and 2004, and reduced to 5.1 cents for the years 2005, 2006 and 2007. Improving cost-efficiencies in ethanol production allows for outyear subsidy reductions.
The House of Representatives, which has not completed work on the highway spending bill, is running up against a May 1 deadline. If the highway bill isn't passed by Congress and signed by the President by then, another temporary extension must be put in place until the six-year package is completed. The current extension is for six months.
A study released in January by the Argonne National Laboratory found that use of ethanol instead of conventional gasoline sharply reduces both greenhouse gas emissions and fossil energy use. Experts estimate that ethanol has created 195,200 jobs, increased net farm income by $4.5 billion, improved the U.S. trade balance by $2 billion, and added more than $450 million to state tax receipts.