The Senate voted, 73-27, June 16 to approve Senator Dianne Feinstein’s (D-CA) amendment (S. Amdt. No. 476) eliminating the 45 cent per gallon tax credit for ethanol refiners and remove the 54 cent per gallon import tariff on the alternative fuel. The vote on the Volumetric Ethanol Excise Tax Credit may have ramifications on future votes to reduce the deficit, as many Republican Senators supported the bill even though it does not include another tax break to offset the elimination of the tax credit. An identical measure introduced by Senators Feinstein and Tom Coburn (R-OK) failed two days prior on procedural grounds. A second amendment, offered by Senator John McCain (R-AZ) to prevent federal funds from being used to build ethanol blender pumps or storage facilities, failed.

Senators Feinstein and Coburn will continue to negotiate with Senators Amy Klobuchar (D-MN) and John Thune (R-SD) on a compromise measure. The two farm state senators introduced legislation to phase out the ethanol subsidies more gradually, and hope to reform, but not eliminate, federal support for ethanol.  

Following a week of intense Congressional meetings on the issue, Vice President Joe Biden will meet with congressional leaders for at least three three-hour sessions this week to finalize a deficit reduction plan by July 1.  

The Senate ethanol votes and House budget votes of last week signal a shift in negotiations that could result in the curtailment of energy subsidies across the board. Democrats are telling their Republican colleagues that if they are willing to vote to repeal ethanol subsidies, they should also be ready to end oil and gas subsidies as part of the overall budget negotiations. Senators will spend much of this week considering the Economic Development Revitalization Act of 2011 (S. 782), which authorizes EDA programs for five years.  

In the House, representatives will consider the America Invents Act, drilling legislation, and possibly the Department of Defense budget prior to adjourning for the Fourth of July recess.