On April 18, the credit-rating service Standard & Poor’s downgraded the U.S. credit outlook from stable to negative. The Dow Jones Industrial Average finished the day down 140 points.
Hopefully, it will put pressure on President Obama and the Congress to wake up and do something serious — not just the typical Washington watered-down approach — about our nation’s looming debt crisis.
It is definitely on the public’s mind. A story in the Yahoo! News section, reporting on the Standard & Poor’s action, drew 1,620 comments from readers in the first five hours it was posted. I scanned the comments, and here’s one of my favorites from “Iowa’s Rogue”:
“Finally, something in the news that may, just may, make the Government pay attention!!! We can only hope!
“It will be the same old, same old, though. Every item that might get a reduction will be touted as ‘only an extremely small amount’ that doesn’t really affect the overall deficit… Doesn’t anyone realize that if we start adding up the millions, one at a time, they eventually become billions, and then many saved billions become trillions, etc? If people ran their household budgets like the government, we’d all be in bankruptcy — opps, government is nearly there.”
I agree with “Iowa’s Rogue.” Let’s get started finding those millions and billions.
We can start with the ethanol tax credit. According to the Government Accountability Office, the tax credit cost the government $5.4 billion last year in foregone revenues. It’s not a huge amount by government standards, but enough of those $5 billion increments will eventually add up to a trillion.
The tax credit is a 45-cent-per-gallon subsidy for blending ethanol into gasoline. In other words, there is a 45-cent-per-gallon exemption from the Federal Motor Fuel Excise Tax for the people who blend ethanol with gasoline. It’s often referred to as a blender’s credit.
The tax credit will continue through at least the end of this year.
While it was once laudable to promote ethanol as a means of reducing our country’s reliance on foreign oil, the incentives, which began during the Bush Administration, have had unintended consequences.
The most obvious consequence on the livestock industry has been higher feed prices. The corn price has skyrocketed in recent years, and most other feed commodities have followed suit.