Ethanol Is Holy in Iowa. So Why Is Cruz Going After It?
Corn ethanol is Iowa's golden goose. But days before the state's pivotal caucus, the senator is gambling that he can bash it — and still win the vote.
Sen. Ted Cruz, the maverick Texas Republican at or near the top of the crowded GOP presidential field, has a seemingly odd strategy for winning next week’s Iowa caucus. He is frontally attacking ethanol in a state where King Corn has for decades reigned and where national office-seekers have dutifully paid their obeisance to the corn-fed fuel.
Yet Cruz’s strategy is not as crazy as it appears. Rather, it illustrates the dramatic shifts that have reshaped the worlds of both energy and politics in just a few short years. Ethanol is not as important to the nation or to Iowa as it once was, and Iowa’s kingmakers seem to be ceding their role as gatekeepers of the GOP nomination.
That makes it politically possible to attack ethanol, survive or even thrive in Iowa, and still be well positioned for the overall nomination. Most polls show Cruz’s biggest rival, businessman Donald Trump, still leading in Iowa, but since their spat over government-backed ethanol broke out, the race has actually tightened. According to the latest Quinnipiac University poll, they’re now neck and neck, with Trump ahead 31 to 29 percent, but well within the margin of error. And Cruz has gained more ground in New Hampshire, which holds its primaries just over a week after the Feb. 1 Iowa caucus.
“There should be no mandates, no subsidies whatsoever for any energy source, whether ethanol or oil and gas or anything else,” Cruz said last week at a town hall meeting in New Hampshire, according to Politico. Cruz said the ethanol mandate, which requires that 10 percent of gasoline sold at pumps nationwide be cut with ethanol, represents crony capitalism at its worst.
Trump quickly pounced. He trumpeted his love for ethanol and the government mandates that support it, and trotted out key establishment figures like Iowa’s senior senator, Chuck Grassley, to bolster his Hawkeye credentials. While not a formal endorsement, Grassley’s appearance on the stump was widely seen as the Republican establishment warming to Trump. “Sen. Grassley does support ethanol and recognizes its importance to Iowa and the country’s energy independence,” Grassley spokeswoman Jill Gerber told Foreign Policy.
Even Iowa’s Republican governor, Terry Branstad, broke with his long-standing tradition of steering clear of endorsing or attacking any particular candidate and leaped into the fray, lambasting Cruz for his attacks on ethanol. Branstad said he hoped that Cruz’s “anti-renewable fuel stand” makes him lose the Iowa caucus.
That may be wishful thinking, with Iowa’s kingmakers losing some of their luster in a rapidly evolving political and media landscape. The last two GOP candidates who touted ethanol and won Iowa, former Arkansas Gov. Mike Huckabee and former Pennsylvania Sen. Rick Santorum, went on to lose the nomination; Arizona Sen. John McCain and former Massachusetts Gov. Mitt Romney both lost Iowa but won the Republican nomination.
Cruz’s views of ethanol are also more nuanced than critics like Branstad allege. The Texas senator says he is not opposed to ethanol as a fuel — just the government mandates that prop it up. Citing his conservative, free-market approach to economic policy, he says he wants to do away with government support for all kinds of energy, including oil and gas and renewables like wind and solar. Ethanol, he says, could and should have an even bigger role in the nation’s energy mix, because it makes gasoline more potent and cleaner.
“I’m not sure I’d characterize [Cruz] as hostile to ethanol. He’s hostile to the Renewable Fuel Standard [RFS], but he’s also noted that ethanol is a great fuel,” said Bob Dinneen, the president of the Renewable Fuels Association, the industry trade group. But “since the industry’s No. 1 priority is the RFS, he’s clearly not as good on the issue as 12 of the other 14 candidates.”
Bucking ethanol was indeed a brave stance in the past. Every candidate from either party who has won the Iowa caucus since 1980 has been a supporter of the grainy fuel and the government programs that prop it up. George W. Bush, a former oil man from an oil state, kicked off his 2000 presidential run in Iowa with a paean to the fuel. Even Hillary Clinton, a tireless opponent of ethanol during her years in the Senate, had a “road to Des Moines” moment just in time for the 2008 campaign. This time around, she is again a vocal supporter of ethanol and other biofuels.
But Cruz believes he can go after ethanol’s special place and still score big with voters in Iowa. That might be because ethanol no longer appears to be a make-or-break issue there. Half the voters, according to one recent poll, don’t care about the issue, and almost 60 percent don’t even want to hear politicians talk about it. Only one-quarter of Iowans care more about ethanol and the government programs that support it than they did five or 10 years ago.
And that seems to reflect the fact that ethanol’s role in Iowa’s economy is relatively less important than it was in years past. Other industries have become hugely important for both job creation and GDP growth. Wind power, in particular, has become an economic motor in western Iowa, while the state’s embrace of renewable energy has helped it attract investment from technology titans like Microsoft and Facebook. Iowa is third behind only Texas and California in the amount of wind turbines it has installed, and thousands of wind-industry jobs pump money into blood-red districts across the state. Romney made an energy policy stumble in Iowa in 2012 — but it wasn’t about ethanol. It was his call to end wind power subsidies that even conservative Iowans have come to love.
When America turned to ethanol as an answer to its energy woes, during the oil shocks of the 1970s, it was seen as a way to reduce U.S. reliance on foreign oil. That held true for decades, through Republican and Democratic administrations, with hefty subsidies and guaranteed markets meant to push farmers into growing more corn for fuel.
George W. Bush, while decrying the nation’s “addiction to oil” in 2006, touted the ability of ethanol and other biofuels to bolster the country’s energy independence. Barack Obama, himself hailing from a corn state, was an unabashed champion of ethanol and other biofuels during both his presidential runs.
Then came the U.S. energy boom, a gusher of new oil and natural gas production unleashed by hydraulic fracturing. The United States pumps about 4.5 million barrels more of oil every day than it did in 2008 — essentially adding half the output of Saudi Arabia from those newly drilled wells in Texas and North Dakota. Crude oil imports have gone down dramatically and, with them, the perceived need to find an antidote to OPEC in the cornfields of the Midwest. Tellingly, Congress killed ethanol’s direct subsidies back in 2011.
And ethanol simply isn’t a cheaper alternative to oil, either. Back in 2008 when oil prices broke records, hearty support for ethanol seemed a way to insulate the economy from another price shock. But today, a gallon of gasoline costs less than a gallon of corn ethanol. Ethanol’s use actually raises the price at the pump for consumers. (That could change if oil prices spike again.)
If ethanol isn’t as crucial to Iowa’s or the nation’s energy health as it once was, it loses some of its political potency. Cruz’s competitive bid for Iowa is based in part on the senator’s ability to tap into an anxiety-fueled, anti-establishment fervor among the state’s more staunch conservatives — and the public at large. Whether from terrorist attacks or seismic social change, plenty of people feel vulnerable. Hence the one-two punch of Cruz’s call to allow only Christian refugees from the war in Syria to settle in the United States.
“There is no meaningful risk of Christians committing acts of terror,” he said in November. Days later, Branstad moved to block them. A candidate having “true conservative values” has vaulted to the top of the list of voter concerns in Iowa, according to a Fox poll. Railing against big-government mandates like ethanol fits that bill nicely, while the political groundswell seems to be against longtime political institutions such as Branstad or Grassley, making it less imperative for candidates to grovel in hopes of an establishment endorsement.
The importance of the Iowa caucus itself has been diluted both by demographic and technological shifts. As the first opportunity for voters to weigh in on the election, Iowa still can have a dramatic impact on a campaign’s momentum and a candidate’s name recognition. But it’s rarely predictive of who eventually becomes president. In the GOP race, the last two winners in Iowa went nowhere, while two candidates who lost in Iowa — McCain and Romney — secured the nomination. Turnout is chronically low, and the state looks increasingly less like the rest of the country; Iowa is roughly 87 percent white, whereas the nation as a whole is about 62 percent.
And in a 24-hour media cycle fueled by cable news and social media, even retail campaigning in snowy Iowa (or New Hampshire) has become national, meaning politicians are under less pressure to cater to the state’s special interest. Cruz took his biggest shots against ethanol while at a town hall in New Hampshire, for example. Despite his ethanol hug last week, most of Trump’s Iowa campaign stops are laden with the exact same fare he offers around the country.
It’s a new day in politics when a presidential hopeful can hope to win Iowa by taking aim at the very gravy train that has so enriched the local economy. “America wants a leader who walks tall and stands up against the lobbyist thugs and the politicians they own,” the Cruz-backing Courageous Conservatives PAC said in a new ad that started airing this week across the state. On Monday, we’ll learn if that day has indeed come.
Photo credit: JOE RAEDLE/Getty Images
Keith Johnson is Foreign Policy’s global geoeconomics correspondent. @KFJ_FP
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