Senators back ending ethanol credit

Two senators from ethanol-producing states proposed Thursday to immediately end a tax credit for the corn-based fuel and agreeing to support shifting some of that money to debt reduction.

Sens. Amy Klobuchar, D-Minn., and John Thune, R-S.D., along with ethanol opponent Sen. Dianne Feinstein, D-Calif., have proposed diverting $1.3 billion of the money remaining for the tax break this year to pay for debt reduction. And $668 million would be used for incentives for the ethanol and biofuels industries.

If accepted by the House and the Obama administration, the compromise could provide a quick path to end the ethanol credit as part of budget negotiations between Congress and the White House. The Senate last month adopted an amendment to end the $5 billion subsidy, but the fate of the legislation to which it’s attached – a bill renewing a federal economic development program – is uncertain.

The White House signaled support for the deal.

Associated Press