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Farmers Seek Tax Break on Ethanol

March 18, 1998

WASHINGTON (AP) _ Corn farmers are lobbying House members this week to keep a federal tax break for ethanol, but growers figure their best bet will be to avoid a fight in the House and hope that a Senate-passed extension of the subsidy becomes law.

The ethanol credit is set to expire in 2000, but the Senate last week approved a highway funding bill that would extend it until 2007.

Supporters believe they have little chance of getting approval for the tax break in the House, where urban lawmakers dominate, so they’re looking to the House-Senate conference committee to keep the extension alive when that panel writes the final version of the highway bill.

House Speaker Newt Gingrich, R-Ga., who pledged to farmers Tuesday to ``do all I can″ for the tax break, will be a key ally since he appoints the House members of conference committees.

``We have to live with the reality of an urban House,″ said Wally Hardie of Fairmount, N.D., chairman of the National Corn Growers Association. ``If we do our work here ... good things should happen in conference committee.″

Last year, Gingrich backed an effort to include the tax break extension as part of the balanced-budget agreement, but House Ways and Means Committee Chairman Bill Archer, R-Texas, succeeded in blocking it.

It has a better shot of passing this year as part of the highway bill because of the eagerness of lawmakers to finish the road-building legislation before federal highway funding runs out May 1, said Senate Minority Leader Tom Daschle, D-S.D.

``Generally, when you’re working against a deadline, there appears to be a propensity for working things out,″ Daschle said.

Another ethanol supporter, Rep. Jim Nussle, R-Iowa, said, ``Time is certainly on our side.″

Gingrich, appearing with a group of South Dakota farmers who presented him with 850 pro-ethanol letters, said the ethanol tax break is ``a good investment for the country. I’ll do all I can to make sure we have the best possible chance to extend it.″

Ethanol is a grain-based fuel additive. The tax credit costs the government $600 million a year.

Supporters say the tax break is needed to help give farmer-owned ethanol-producing cooperatives more time to become profitable.

But critics denounce the subsidy as corporate welfare that persists because of the lobbying clout of farmers and Archer Daniels Midland Co., the nation’s largest producer of ethanol and a major campaign contributor.

``It’s going to be an interesting and difficult matter for all concerned,″ said Ari Fleischer, spokesman for Archer, who will be on the highway bill’s conference committee. ``If they win, they’re only going to win by giving the (Republican) party an embarrassing black eye.″

The Senate voted 71-26 last week to preserve the tax credit.

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