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Talk about adding fuel to the fire amid heated discussions on Capitol Hill today about when and where to slash government spending.
Senator Tom Coburn proposed to eliminate two longstanding federal tax credits on ethanol.
The cost taxpayers six billion dollars a year and -- ready for this a dollar 78 each time they fill up their cars.
The proposal was narrowly defeated in the senate just one.
Votes short of passage.
And not all Republicans stuck together on this one.
Is that a bad sign for wasteful spending moving forward to my freedom fighters Fox Business anchor.
And my colleague Lori Rothman Montclair State University political science and law professor.
Richard Callahan Harrison an -- -- associate.
Doctor Harry bands would have been swine -- you first what businesses -- of the government.
To pick and.
And industry to pick a business and to decide -- subsidize it.
None but I would say this is not a subsidy this is a tax break -- thought it was a subsidy going in but looking -- it it turns out to be a tax break.
I want to have.
More tax breaks let's have a lots or tax breaks.
But to do that we have to cut spending that's the fundamental spending is the -- the government takes -- Wall Street like it -- and the government picks in the industry and says it'll pay less taxes than everybody else.
A Wall Street is just in a TV right now -- so much I Jesus were all the time uncertainty there's so much frustration because.
A -- overall tax code if there could be reform -- there could be consistency.
The overall energy industry whether you pick out ethanol or integrated oil or what have you.
Nobody knows where we're going from here.
Where we're going with with -- should the government be picking and -- should the free market determine these things I don't think that the government should be picking and choosing excuse me -- -- that I actually think that this -- subsidy and I think that the fact that it in the tax -- Is testament to the political prowess.
Of ethanol lobbying industry they spend ten million dollars last year lobbying members of congress of both parties Harry I think the -- -- is right and you -- Republicans split right down the middle senator Mitch McConnell was voted with his democratic colleagues.
He's the leader of the Republicans in the senate.
Senator Jon Kyl the number two Republican in the senate was -- in the Tom Colbern and most of the Republicans.
That wanted to get rid of this and of course for years it was the Republicans are represented the farmers who were -- -- did.
In these -- up a price supports which is basically what this is shouldn't we get rid of this picking and choosing.
I know you -- I like I do.
I want to get rid of the picking and choosing I want to level things down rather than taking the tax breaks away in raising taxes.
Lower the surrounding tax how.
And is the uncertainty -- something like this the removal of a subsidy or tax break whatever you want to call it.
Loses by one vote and this wasn't me.
Fifty fifteen to 49 this was 59.
Run the 41 -- -- it one more -- to overcome that filibuster.
Well tell you the only thing that's I don't when -- we're curing me and certainty but over writing it that might be better is the fact that we have this.
Huge -- running commodities prices soaring commodities prices.
Started largely by this over planting of corn for ethanol purposes and exploding middle class.
Spurring demand and driving up prices to the point where we've got inflation through the roof.
And what do we do about this inflation through the roof when the government price supports keep it up professor Harris I think that one of the things that we're saying is a recognition particularly in light of the debt crisis that this kind of of spending -- unsustainable whether -- a tax credit.
Or whether it is indeed the subsidy.
It cannot continue and it will be in place you think we're seeing this kind of a recognition on the part of the Democrats in the big government Republicans the people the congress that loved to borrow and spend.
Whatever they call themselves -- they recognize this you know -- judge I actually disagree with you I think this is about constituent politics.
-- people protecting their -- back home.
In Iowa in the corn belt and that's why we see the geographic division that we've seen to that all right we're gonna go.
101000 miles away because there's more trouble in -- European finance ministers met in Brussels to discuss how to handle Greece's mounting debt.
Just as Greece had its credit downgraded to the lowest possible rating.
Frank I country and now the industry and it must pay to issue debt is soaring out of control some ministers are pushing to make private bond holders.
Bear the burden in bailing out Greece.
Put that kind of government -- where it shouldn't happen here Harry.
It's going to happen here -- we can't sustain that debt that we have and there's no will to cut the spending required to avoid it.
So I don't see either we're going to inflate our way out of it right which is a default.
What is inflation it means that the bond -- don't get a hundred cents on the dollar they.
I -- -- a partnership between public and private investment is really key to solve a lot of what -- -- that presumes a voluntary partnerships are already plenty already I don't really wanna become venture capital this this program startup America I believe you've got a two billion dollar backing from the SBA and -- -- by venture capital -- to you you're spreading -- -- professor -- what happens -- Greece -- what happens we wake up tomorrow is a Greek government check every.
Increased defaults I think that we're going to see you bow out I mean and they're not going to allow this happened and I don't know allowed to happen in Ireland and on and they drag you -- down with -- principals probably better a better scenario than if they actually default but it's a different case in the United States.
Should should the I -- have.
Put aside -- -- problems of their former leader -- International Monetary Fund.
Be able to use its line of credit -- reach into the MT jurors of the treasury of the United States of America.
And pull out a hundred billion and send it to these spend thrift said they these people -- that spending and grace.
-- -- genius of capitalism.
Is that it -- success succeed and let's failure fail.
You've got to liquidate mistakes not grab people's wealth to subsidize and continue business to what what is the free market libertarian.
Hands off the economy view about Greece what should we do if anything what's not -- -- nothing absolutely nothing what might -- -- she.
We're doubts at all wrist problem there Sanford Bernstein analyst put that in at US banks have 200 billion dollars worth of exposure to European banks and we.
Why should -- why should taxpayers who haven't invested in those banks be forced to bail them out that's the hundred million dollar 64000 dollar -- -- crest -- the -- 100.
200 million -- If it's eight it says it's a problem do.
-- -- the argument professor that Americans want a bailout -- second -- all the checks they want.
To some company and increase that will deposit them rather than the American government taking taxpayer dollars.
Two to bail out the American banks that made poor business judgments by investing in Greece.
I think that we're talking about really apples and artists here I don't know that you can actually make a comparison between the two.
And I think that the reality is that the United States government and the -- are going to do exactly that.
More instability here Lori Rothman as a result of -- I was talking to -- -- -- -- currency analysts actually just a little while ago and the only reason my bond yields haven't really really come up in -- quick and dirty cash is because the situation in Europe.
He's so bad so it's sort of a flight to quality to US debt.
I'm kind of on -- -- says he know about whether how we raise the debt ceiling and -- it for now because what I had talked you into being -- -- so many other factors at play and if you take out the European inflation I really do think US rates will be higher.
Out of concern for what's going on our debt situation but I I'm not I'm not -- it went -- -- -- Not hang out the Greeks without anybody knowing it because of that printing press in the basement of the Federal Reserve I was carried -- -- necessary Harrison lost Lori -- it's a pleasure guys thanks for joining us back with a -- GLV.
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