If It Walks Like a Duck…

By Bob Dinneen | October 14, 2010
Washington is full of clever names to describe the dysfunctional way in which it sometimes operates. This year, we will be witness to one of my personal favorites—the Lame Duck.

After the elections, Congress will return to work to deal with all the issues that it failed to address before adjourning for the elections. Specifically, it must pass annual appropriations bills that will fund the federal government for the coming year—things such as the military, air traffic controllers, etc.

Also likely to see an up or down vote is legislation that would extend expiring tax cuts and incentives. Most prominent of these in the public eye are the so-called Bush tax cuts that expire at the end of the year. Political prognosticators in Washington will tell you that if this bill does make it to the floor of the House or Senate, it will be a straight up or down vote on whether to extend them for a short time. Essentially, this will be a punt from the current Congress turning the ball over to the incoming Congress and those newly elected members.

Such a dynamic provides America's ethanol industry an opportunity to extend important tax incentives critical to the continued growth of this industry. The reason is as simple as the tax incentive itself. And therein lies the secret to success.

With a lame duck Congress in chaos resulting from the retirements and new members-elect, it will not have an appetite for new legislation that requires committee hearings and markups. Rather, it will be looking to legislation and policies that are already vetted and, for lack of a better analogy, they can simply cut and paste.

The Volumetric Ethanol Excise Tax Credit, or VEETC, fits this bill to a tee. This is a policy that has been fully vetted, proven to be effective, and enjoys bipartisan support in both the House and the Senate. It can easily be included in tax legislation as is, requiring only a change to the expiration date that, frankly, is fixed with correction fluid and a pen.

In this space, I have repeatedly warned that expiration of VEETC comes with consequences. Hundreds of millions of gallons of capacity may idle, tens of thousands of Americans will lose their jobs, and America will import more oil. With concerns over the economy and job creation still dictating Congressional behavior, it is unlikely members want to see more Americans added to unemployment rolls.
Extending the tax incentive now will make discussions on how to enhance and improve the incentive more productive. Having to start over from scratch would add a new layer of challenges to those this industry already faces.

Let me be clear: This is not a guarantee. There is still work that must be done. The air of contradiction within the industry perceived by Congress over the importance of VEETC has hampered efforts to resolve this issue. It is critical that the industry say forcefully and in a united voice that extending VEETC is essential to the continued evolution of ethanol production in America. Despite the industry having multiple voices throughout its history, we have been able to unite behind policies important to the industry and I believe we will once again. There is simply too much at stake.

I encourage anyone interested in securing the future for biofuels in America to call their members of Congress—current and/or newly elected—and let them know these tax policies are important. Your voices will make the difference.

Bob Dinneen is president and CEO of the Renewable Fuels Association. Reach him at (202) 289-3835.