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Obama Speech Misfired on Ethanol, Ag Policy

For Immediate Release: 
Wednesday, January 26, 2011

Washington, D.C. – President Barak Obama’s call to “stop subsidizing yesterday’s energy” in his State of the Union speech last night was welcome, but the President missed an opportunity to focus attention on the misguided federal subsidies that prop up the corn ethanol industry and the equally expensive and wasteful subsidies paid to farmers.

“While we heartily back the president’s call to roll back fossil fuel subsidies, ethanol is every bit yesterday’s biofuel,” said Environmental Working Group Senior Vice-President Craig Cox. “That’s true whether it’s ethanol from corn, corn-stover or the mythical “next-generation” ethanol that always seems to be around the corner but never here. With that in mind, we should make the $5.5 billion a year in corn ethanol tax credits part of history too.”

President Obama emphasized his desire to promote greater innovation and more investment in clean energy technologies, specifically urging an end to tax credits and other subsidies for fossil fuels. Rather than furthering his goal to make America “the first country to have a million electric vehicles on the road by 2015,” however, Obama’s focus on biofuels as the way “to break our dependence on oil” would have the opposite effect if it means sending billions more taxpayers dollars to corn country to finance ethanol infrastructure, Cox said.

“Building an ethanol infrastructure at taxpayer’s expense will just lock us further into the past rather than lead us to tomorrow’s energy future,” added Cox, who heads EWG’s Ames, Iowa, office. Also absent from the President’s remarks or the Republican response, Cox noted, was any mention of protecting the environment or fundamental reform of food and farm policies that currently throw money at the largest producers of commodity crops and the wealthiest landowners while encouraging practices that promote soil erosion and contaminate rivers, streams and once-bountiful waters.

Farm households making more than $210,000 are year – three times US average household income – harvest more than $30,000 a year in government subsidies. So-called direct payments go out to them every year in good times or bad, and times have been very good on the farm recently even in the face of a severe recession.

Farm income in 2010 is projected to be up 31 percent from 2009 and to be 21 percent higher than the 10-year average. “We heard a lot from the Republicans, the Tea Party and the President himself that we don’t have the money to do many of things we would like to do,” said Cox. “But we do have the money in the food and agriculture budget ¬– it’s just going to the wrong places. There is no better example of misdirected priorities than the Republican Study Committee’s ‘bold’ plan to cut spending, which proposes to cut a $56 million program to encourage organic food production while giving a pass to $5 billion a year in direct payments.”

EWG analysis shows that cutting the lavish direct payments to the largest growers by 14 percent would generate enough money to purchase all the fresh fruits and vegetables needed to improve school lunches under the recently enacted Healthy, Hunger Free Kids Act. A mere 7 percent cut in direct payments would fill the shortfalls in funding for conservation programs that are critical to protecting water and soil.

“The President’s call for 80 percent of our energy from clean energy is laudable, but we urge the President and Congress to make sure that energy is truly clean. Lawmakers need to hear from citizens whose drinking water has been polluted by natural gas drilling. And those who make their living in waters choked by agricultural runoff that pollutes Chesapeake Bay and the Mississippi River Basin,” Cox concluded.

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The Environmental Working Group is a nonprofit research organization based in Washington, DC that uses the power of information to protect human health and the environment. www.ewg.org.

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