Energy

A Senate agreement brokered Thursday by a group including two Corn Belt lawmakers signals the likely end of longstanding federal support for the ethanol industry. The trio of California Democrat Dianne Feinstein, Democrat Amy Klobuchar of Minnesota and South Dakota Republican John Thune signed off on the immediate elimination of ethanol blending tax credits and import tariffs and uses savings to adjust three smaller tax credits for other alternative fuel production over several years (view CQ report). The agreement was the only substantial action by senators this week, which canceled its planned holiday recess to monitor deficit reduction and debt limit increase negotiations (view CQ report). The ethanol industry’s decreased clout was also exhibited Thursday in wrangling (view CQ report) over witness testimony at a House hearing on ethanol blending (view testimony and Wednesday’s Morning Take).

White House Deficit Talks

The ethanol agreement will be packaged as a part of a deficit reduction agreement, which was the primary focus for lawmakers this week. Congressional leaders met with President Obama on Thursday to work out a compromise deficit plan. CQ reported that the talks failed to advance the positions of either side. Obama announced (view transcript) that negotiations would continue through the weekend (view CQ report). The president insisted that any agreement reached must ensure that the debt ceiling is extended until after the 2012 elections (view Roll Call report). Heading into the negotiations, a Republican offer to close tax loopholes — coupled with offsetting taxes in other areas (view Roll Call report) — was rejected by Democrats, who oppose a revenue neutral tax arrangement. Obama held an online town hall session Wednesday in which he echoed his party’s position that oil and gas companies should assist in a deficit reduction plan (view Roll Call report and transcript).