Ethanol lobbyist Newt Gingrich and us—and the future of the GOP
The last time these columns were lambasted by a presidential candidate in Iowa, he was Democrat Richard Gephardt and the year was 1988. The Missouri populist won the state caucuses in part on the rallying cry that "we've got to stop listening to the editorial writers and the establishment," especially about ethanol and trade. Imagine our amusement to find Republican Newt Gingrich joining such company.
The former Speaker blew through Des Moines last Tuesday for the Renewable Fuels Association summit, and his keynote speech to the ethanol lobby was as pious a tribute to the fuel made from corn and tax dollars as we've ever heard. Mr. Gingrich explained that "the big-city attacks" on ethanol subsidies are really attempts to deny prosperity to rural America, adding that "Obviously big urban newspapers want to kill it because it's working, and you wonder, 'What are their values?'"
Mr. Gingrich traced the roots of these supposed antipathies to the 1880s, an observation that he repeatedly tendered "as an historian." The Ph.D. and star pupil of futurist Alvin Toffler then singled out the Journal's long-held anti-ethanol views as "just plain flat intellectually wrong."
Mr. Gingrich is right that ethanol poses an intellectual problem, but it has nothing to do with a culture war between Des Moines and New York City. The real fight is between the House Republicans now trying to rationalize the federal fisc and the kind of corporate welfare that President Obama advanced in his State of the Union. We'll dwell on this problem not merely because Mr. Gingrich the historian brought it up, but because it and he illustrate so many of the snares facing the modern GOP.
Mr. Gingrich was particularly troubled by our January 22 editorial about food inflation, "Amber Waves of Ethanol," saying that we "at least ought to use facts that are accurate." For the record, we cited figures from the Agriculture Department showing that four of every 10 rows of corn now go to ethanol, up from about one of 10 a decade ago.
A Gingrich spokesman said that what his boss meant to say is that this redistribution has a "negligible" effect on global food costs, especially compared to "higher fuel and energy prices and rampant speculation in the commodities markets."
Here's how he put in Des Moines, with that special Gingrich nuance: "The morning that I see the folks who are worried about 'food versus fuel' worry about the cost of diesel fuel, worry about the cost of commodities on the world market, worry about the inflation the Federal Reserve is building into our system, all of which is going to show up as higher prices, worry about the inefficiencies of big corporations that manufacture and process food products—the morning they do that, I'll take them seriously."
The morning Mr. Gingrich read the offending editorial, if he did, he must have overlooked the part about precisely those concerns. He must have also missed our editorial last month raising the possibility that easy money was contributing to another asset bubble in the Farm Belt, especially in land prices. For that matter, he must have missed the dozens of pieces we've run in recent years critiquing Fed monetary policy.
Of course, the ethanol boom isn't due to the misallocation of resources that always stalks inflation. It is the result of decades of deliberate industrial policy, as Mr. Gingrich well knows. In 1998, then Ways and Means Chairman Bill Archer tried to kill ethanol's subsidies for good, only to land in the wet cement that Speaker Gingrich had poured.
Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up). An historian of Mr. Gingrich's distinction surely knows all that.
Given that Mr. Gingrich aspires to be President, his ethanol lobbying raises larger questions about his convictions and judgment. The Georgian has been campaigning in the tea party age as a fierce critic of spending and government, but his record on that score is, well, mixed.
As Speaker in 1995, he thought he could govern from Congress, refused to bargain with President Clinton and after a veto was forced to retreat in a way that hurt Bob Dole and nearly cost the House majority. In 1997, he did manage a balanced-budget deal with Mr. Clinton, but the price included phony Medicare cuts on doctors and a new entitlement for children's health care.
Mr. Gingrich stepped down after the GOP lost House seats in 1998, but he re-emerged in 2003 to campaign for George W. Bush's Medicare prescription drug benefit. His personal contribution was to promote the bill's modest market fillips as epic virtues that lesser minds couldn't grasp. Instead, the bill damaged the GOP's fiscal credibility, while Democrats have since rolled back medical savings accounts and private insurance options for seniors.
Now Republicans have another chance to reform government, and a limited window of opportunity in which to do it. The temptation will be to allow their first principles to be as elastic as many voters suspect they are, especially as Mr. Obama appropriates the language of "investments" and "incentives" to transfer capital to politically favored companies. Many Republicans have their own industry favorites, and such parochial interests could undercut their opposition to Mr. Obama's wider agenda.
So along comes Mr. Gingrich to offer his support for Mr. Obama's brand of green-energy welfare, undermining House Republicans in the process. In his Iowa speak-power-to-truth lecture, he even suggested that the government should mandate that all new cars in the U.S. be flex-fuel vehicles—meaning those that can run on an ethanol-gas mix as high as 85%—as if King Corn were in any danger of being deposed.
Yet there are currently dozens of flex-fuel models on the market, and auto makers already get a benefit if they sell them, via the prior fuel-economy mandates that did so much to devastate Detroit. The problem is consumers rarely want to pay more for flex-fuel cars when they get 25% to 30% fewer miles per gallon with E85, according to Energy Department data.
Some pandering is inevitable in presidential politics, but, befitting a college professor, Mr. Gingrich insists on portraying his low vote-buying as high "intellectual" policy. This doesn't bode well for his judgment as a president. Even Al Gore now admits that the only reason he supported ethanol in 2000 was to goose his presidential prospects, and the only difference now between Al and Newt is that Al admits he was wrong.