Do Not Resuscitate: Renewable Fuel Standard Cannot Be Saved

Some government programs are so ingrained that reform is the only option – even if it would be substantial reform (e.g., tax reform and Social Security reform). However, there are some programs that have proved so ineffective, detrimental even, that talking about reform is a step in the wrong direction. One such program is the Renewable Fuel Standard (RFS), which mandates that gasoline and diesel fuel contain an increasing amount of biofuels – namely Ethanol.

The RFS is little more than a handout to the powerful agriculture lobby, which is particularly active in a number of the early primary states. But despite the benefits that these few farmers get by way of artificially higher demand, the entire country pays for with higher prices. Separate studies have suggested that corn prices are at least 30 percent higher (University of California Davis) and as much as 68 percent higher (Heritage Foundation) as a result of the RFS.

Beyond the corn you buy at the store, those higher prices result in higher prices at the pump. That trickles down to the entire economy – from the cost of the tank that gets us to work to the food we buy that was trucked in from out of state. That seemingly singular cost is coming back manifold.

And as the U.S. sputters to achieve job and economic growth, these price increases and inefficiencies are undoubtedly holding us back.

Earlier this month, Bloomberg reported that House Majority Leader Eric Cantor (R-VA) might look to reform the RFS in the upcoming debate on the debt ceiling. Now is certainly the proper time for the Congress to refocus its attention on jobs and the economy – with just 169,000 jobs created in August. But if that sounds like a good month, keep in mind that it is likely to be revised lower; the most recent read on the June and July reports showed 74,000 less jobs were created than was previously thought.

Simultaneously, the labor participation rate is the lowest since 1978, meaning more people are giving up hope and quitting their jobless search – much in the same way that Congress has gave up hope for its economic agenda. How else would you explain the fact that, nearly five years into Obama’s presidency, jobs keep falling off the radar.

As we approach the 2014 midterm elections, the upcoming fiscal and debt ceiling debates are the perfect time for Congressional leaders to rededicate themselves to a simple mission: removing barriers to job creation. No matter how you amended it, the Renewable Fuel Standard will always be just that – a barrier to jobs.

There’s no sense in Congress trying to save it. “Reform” presents a false choice. Pull the plug and move on. The economy will be better off for it.