Tuesday, June 14, 2011

Are The Koch Brothers Really That Principled When It Comes To Subsidies?

From an article by Ryan Grim for The Huffington Post:
Sen. Tom Coburn (R-Okla.) is pushing a vote on an amendment Tuesday that would end ethanol subsidies and eliminate tariffs on foreign supplies of the biofuel. That would allow companies to use sugar-based Brazilian ethanol, which is both cheaper and less environmentally damaging than the domestic corn-based variety.

The issue has split the Republican Party, with free market advocates and deficits hawks pushing for elimination of the subsidies and corn-state politicians fighting back. The power broker Grover Norquist has battled Coburn, arguing that ending the handouts is equivalent to increasing taxes, meaning that candidates who signed a no-new-taxes pledge would be breaking their word.
This debate has prompted Koch industries - the corporate backing of numerous right-wing outfits - to write a letter to the Republican senator explaining about how principled they are and how even though they won't benefit from the end of subsidies - they support them, but is that entirely true?

"Koch Industries has opposed federal mandates and subsidies for decades," the letter from Koch reads. "Our aim is to create a free market where consumers decide winners and losers based on which products they decide to buy, instead of government picking winners and losers based on which friends or products it chooses to subsidize. One such government intervention is the tax credit that provides about $6 billion each year to blenders of ethanol."

"We hold this position despite the fact that we benefit from these tax credits," the letter states.

Let's look at Koch Industries primary business interest - oil.

John Aloysius Farrell wrote the following for Alternet:
The money that Koch (pronounced “coke”) has spent on lobbying in Washington has soared in recent years, from $857,000 in 2004 to $20 million in 2008. The Kochs then spent another $20.5 million over the next two years to influence federal policy, as the company’s lobbyists and officials sought to mold, gut or kill more than 100 prospective bills or regulations.

Oil is the core of the Koch business empire, and the company’s lobbyists and officials have successfully fought to preserve the industry’s tax breaks and credits, and to defeat attempts by Congress to regulate greenhouse gases.
"Koch will continue to lobby for the repeal of energy subsidies and mandates," wrote the company in their letter. 

It makes you wonder if there is something else going on.  Here are some more pieces of the puzzle - Koch Industries has been gobbling up ethanol plants in America and they currently buy and market about one-tenth of all the ethanol produced in the United States, they have been lobbying to increase ethanol mixture in American fuel, and in a strange twist, there has been an ethanol shortage in Brazil (a country where Koch Industries is heavily involved in petroleum and natural gas exploration), causing the country to import American ethanol.

How would Koch Industries - Koch brothers - benefit?

Well, since Brazil is currently in demand of ethanol, which has caused the prices of ethanol down there to skyrocket (rising just 65 percent in one month), the Koch's, which admitted in their letter they will continue to exploit subsidies to avoid a competitive disadvantage, will produce subsidized ethanol in America and sell it to Brazil at a premium, and guess who manufactures some oil down there to mix with the ethanol?  That's right!  The Koch's will be selling Brazil their ethanol subsidized by American tax payers and mixing it with their oil!

Now, let's consider the possibilities that these subsidies for ethanol will end (which they probably won't because too many Republicans and Democrats are in the corporate pocket).  What would that mean?

Well, the Koch's company is one of the richest and largest out there.  Considering their note, in which they stated they would "not place our company... at a competitive disadvantage in the mixed-market economy in which we compete," then it would be safe to assume that their "principled" push to end subsidies is motivated by something else.  Since we know the Koch's have pushed for subsidies for their industry in the past, despite publicly crying against them, then we must assume that there are substantial profits to be gained from such a move.  Considering the Koch's produce and mix ten percent of the nation's ethanol, should subsidies end it would probably place the Koch's competitors at a disadvantage, leaving the Koch's to pick up the pieces.  

Makes sense? 

Now ask yourself this question: "Are The Koch Brothers Really That Principled When It Comes To Subsidies?"

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