Until now, conventional wisdom held that candidates of both major parties had to back ethanol welfare to win the Iowa caucuses. Like cotton was in the antebellum South, corn–in the form of ethanol–is king in Iowa.
Most of today’s candidates have fallen into line. However, Sen. Ted Cruz has broken ranks to criticize farmers’ welfare. He holds a narrow polling lead over Donald Trump leading up to the upcoming caucuses. (Sen. Rand Paul also rejects the conventional wisdom, but he remains far back in the race.)
Cruz’s political strength has dismayed ethanol makers. The group America’s Renewable Future, whose state director is the governor’s son, is deploying 22 staffers in the presidential campaign. The lobby doesn’t want to look like a paper tiger.
Ethanol subsidies once included a high tariff and generous tax credits, both of which expired at the end of 2011. However, the Renewable Fuel Standard, which requires blending ethanol with gasoline, operates as a huge industry subsidy. Robert Bryce of the Manhattan Institute figured the requirement cost drivers more than $10 billion since 2007.