“Truth” is the theme of Tim Pawlenty’s campaign kickoff this week, and while much of his message isn’t taboo shattering–the former Minnesota governor’s warnings about the debt and so-far-vague talk of reforming entitlements aren’t particularly audacious–his challenge to the politically sacrosanct $7 billiion in annual federal subsidies for ethanol production was a surprise. “The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out,” Pawlenty said in Des Moines on Monday. “We need to do it gradually. We need to do it fairly. But we need to do it.”
Iowa is one of the main beneficiaries of federal ethanol subsidies. Pawlenty probably needs to win Iowa to win the Republican presidential nomination. By calling for an end to ethanol subsidies, has Pawlenty committed political suicide? Maybe not.
First, some context. Most budget analysts will tell you that Pawlenty is right on the substance. As the nonpartisan Government Accountability Office recently noted, ethanol subsidies are wasteful and not justified by market considerations or the goal of energy independence. They also put upward pressure on gas prices nationwide. But the subsidies have long been politically bulletproof in large part because of Iowa’s huge role in the presidential nominating process. Every four years lead presidential candidates of both parties to drop their objections to the subsidies in the name of pandering for caucus votes.
But there are distinct political upsides to Pawlenty’s stance. It’ll be a hit with the coastal conservative establishment–as illustrated by the Wall Street Journal‘s response today (“downright amazing… Mr. Pawlenty has passed an early test of fortitude”). It will win him credibility and, presumably, rhetorical support from Tea Party heroes like Tom Coburn, who has been fighting to kill the subsidy in Congress.
And even in Iowa, the politics of ethanol are shifting, as the Des Moines Register explains:
[T]he landscape has changed on the ethanol issue since [the 2008 election] as public alarm has grown about the deficit, and key ethanol industry groups now support the idea of a subsidy phaseout.
One data point to that effect: Iowa Republican Senator Chuck Grassley, long one of the subsidies key defenders, is now sponsoring a bill that would gradually reduce the ethanol subsidy from its current 45-cents per gallon credit, though it stops short of a total phaseout. The Iowa Renewable Fuels Association, which supports the Grassley plan, said in a statement that Pawlenty’s position “appear[s] to be in line” with Grassley’s, and that it “welcome[s] his support.” (The group added a bit of snark, however: “We agree the massive amount of federally funded petroleum incentives must be a part of any reform discussion,” IRAF president Walt Wendland said in the statement. “Iowans look forward to Gov. Pawlenty further detailing his plans to ‘phase out’ petroleum subsidies, perhaps in a speech in Houston, Texas.”)
Indeed, Pawlenty isn’t calling for a cold-turkey cutoff of the subsidy, but a gradual phaseout. “The industry has made large investments and it wouldnt be fair to pull the rug out from under them immediately,” he said yesterday. Ultimately, then, it’s possible that any damage Pawlenty suffers will be outweighed by the points he scores for taking on a sacred budget cow at a time when those cows are looking more and more fit to be slaughtered for deficit reduction.
For its part, the Pawlenty camp says politics have nothing to do with it. “The truth is that it’s what the Governor really believes,” says Pawlenty spokesman Alex Conant. “There’s really not more to the political strategy then that. He wants to run a campaign that is honest with voters about the problems facing our nation and the changes needed to get things right. We realize a lot of people may not like his position, but he trusts that people know are country is in big trouble and are ready for the truth.”
I’ll leave it to you to decide whether that’s the whole truth.
Update, 1:25pm: I see that Pawlenty fought to cut ethanol subsidies in Minnesota as early as 2003, before he was thinking seriously about the White House (although that timing remains unclear). A cynical interpretation–which doesn’t make it a wrong one–is that, as he plotted his presidential campaign, Pawlenty knew ethanol would be a problem for him based on his prior record and figured he may as well try to turn that liability into a bold “truth”-telling advantage…
This item has also been revised for clarity.