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The flaw is in partisanship

By Staff | May 8, 2019

I have been surprised at how many times that IA Senator Chuck Grassley’s name comes up in my report. He is very much engaged in the legislative/political process in Washington. He is the President of the Senate and Chairman of the Finance Committee which gives him much power in Congress. He has been in the Senate since 1981 and is 85 years old. He is called a farmer but I doubt that he has driven a tractor with auto-steer. He has held state or federal elected office since 1959, so has been around a lot of blocks. He does represent Iowa values, independent ag producers and has been a fighter for the U.S. Ag/Renewable fuels sectors. That doesn’t mean that he always wins.

As for disclosure, my son Matthew, who often participates in this report, served Grassley’s DC office in an intern summer communications capacity years ago while Matthew was in college. He was impressed by Grassley’s work ethic and determination. When I hear arguments for term limits, I always think of Grassley as the example of why sometimes that would not be good. I, frankly, was surprised that he ran for re-election last time. He had had a distinguished career in Washington and I thought at his age he had earned some time at home watching the sun set. I have to say that I am now glad that he stayed on as there have been many instances where had Grassley not been there for us, we would have been screwed much worse than we have been. He has not always been able to protect our backs but who else would be able to do what he has? Joni Ernst and John Thune are rising as proteges but need more time to mature. Age comes before beauty in Senate seniority, a contest that Grassley can win.

Grassley comments on almost everything going on in Washington and most of the time I agree with it. He is trying to grow support for limiting presidential power over Section 232 tariffs. As to the Commerce Department review that EU autos are a threat to our national security, Grassley commented that he “doubted the report’s intellectual honesty”. No kidding. He is Iowa nice which doesn’t fit well in Trump world.

I noted that Grassley doesn’t always win. One example is his long running fight against concentration in the ag sector. He fought to bar meat-packers from owning livestock and he has fought mergers of large agribusiness seed, chemical and fertilizer companies. He frankly hasn’t got much to show for any of it. Even when Dow-Dupont or Bayer-Monsanto mergers produced high HHI industry concentration numbers, Grassley cannot get the Feds to intercede.

He has pushed back against Trump with little success as well. He told him to declare a win, drop steel/aluminum tariffs on Canada and Mexico and finish the USMCA. Trump hasn’t listened.

Grassley has worked with the top officials at the Homeland Security Department and declared that they were good public servants and that Trump should not purge them. Trump did not listen. The reason that they are being fired is that they were good public servants. When given an immoral/illegal order they would not follow it, so had to go. You know what that will eventually leave us with in charge at Homeland Security?

Grassley is a strong proponent of renewable energy. He is the father of the wind energy industry, authoring the federal wind energy tax credit. Trump’s recent denigration of wind energy was more than Grassley could take prompting a “he is an idiot” comment, referring to the president. Grassley has joined a long line of government servants who have uttered that comment about Trump. Again, noting that while a fighter, Grassley doesn’t always win…you have to define what is winning in Washington.

He went head to head over RFS RIN waivers with Ted Cruz and lost the argument as Trump allowed them to be approved, significantly damaging the enforcement mechanism of the RFS. This resulted in a collapse of RIN values making it easier for petroleum interests to buy a RIN rather than blend ethanol. Petroleum prices have gone up while ethanol prices diverged by falling. Ethanol margins turned bad despite cheap corn and USDA has revised the corn crush for ethanol lower in three supply/demand reports inflating the corn carryover. That carried right through to corn farmers bottom lines.

Trump’s buddy, Carl Icahn’s refinery, saved $189 million in RIN costs which means they didn’t blend ethanol. The approval of E-15 may have long term potential but the way they have drug out the regulatory process it will be of long-term benefit rather than immediate.

So, Grassley and ethanol interests lost right? The easy answerer is ‘yes’ but Ted Cruz was also pushing to tack RINs on to ethanol exports which would have enlarged the supply of RINs further making them even less incentive to blend biofuel. Grassley pushed back hard enough to at least stop that. Without Grassley, the push to attach RINs to ethanol exports would resurface quickly.

The $1-gallon biodiesel tax credit is always off and on but it would be off permanently without the persistent push from Grassley to reinstate it. Chairmen of the Finance committee can wield great power over such things.

If Grassley has a flaw, I think it would be that he takes losing too well. He appears to show his displeasure with farm bills by never voting for them (while knowing they would pass).

When he lost on the RIN waivers, which was a really big thing, he protected Trump by blaming it on Scott Pruitt. That way Trump did not get the attribution and retribution for damaging the ethanol industry that was deserved. He continued to play along by voting to confirm Andrew Wheeler to head EPA without any commitment that the RIN waivers would stop.

One could say that Grassley is playing the long game, but if they kill the RFS short term, there is no long term. The flaw is in his partisanship.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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