Branstad wakes Trump to danger in Iowa

EDITOR'S NOTEBOOK

BY ART CULLEN

Ambassador Terry Branstad walked into the White House on Aug. 19 to brief President Trump on the trade war with China, but the two-hour conversation was consumed almost entirely about losing Iowa in 2020 over ethanol, according to a fascinating story by Reuters posted Friday.

Branstad warned Trump that the administration infuriated rural voters in Iowa and Wisconsin by issuing waivers of ethanol blending requirements to 31 gasoline refiners. The Iowa Corn Growers said they were “fed up” with the administration.

Trump ordered up a phone call to the EPA and USDA chiefs with Branstad in the room. “Let’s fix this now,” he commanded them, according to Reuters.

Trump then issued a tweet promising a “giant package” to make farmers “so happy.”

The giant package likely to be announced this week is a one-billion-gallon increase in the 15-billion-gallon annual ethanol requirement. American corn ethanol plants, including 42 in Iowa, are cranking out about 16 billion gallons of ethanol per year.

Trump also has promised another aid package for farmers hurt by the trade wars with China, Canada and Mexico. It will be an election year, after all.

What’s interesting is that Branstad obviously is a side player in the China trade embroglio. He is supposed to be a big pal of President Xi. Instead, the former Republican governor is coaching Trump on how to quiet corn growers. It’s too late for that.

“Most of these ethanol plants, especially the older ones, have been underwater for more than a year,” said Iowa State University trade analyst and research economist Dave Swenson. “They’re producing like crazy at the lowest possible cost and they’re still losing. It’s all because of low commodity prices.”

That is, too much oil, too much natural gas, too much fracking and too much corn make for too-cheap energy. And China doesn’t want it even at that price.

Corn growers would like to see ethanol blends raised from 10% to 15% in gasoline — a 50% increase. “Oil is not going to give that up without a fight,” Swenson said. Note who President Trump appointed as his first Secretary of State: Rex Tillerson, CEO of Exxon Mobil, who left in exasperation. Big Ag’s plum was an ambassador appointment to China with a trade war in the works.

But when Branstad showed Trump the map of Iowa counties he will lose because of the ethanol burn, the President started listening for once. The ambassador became relevant because Iowa is a swing state, not because he had dinner once with Xi in China.

The ethanol industry tells Reuters that a one-billion bump in the blend wall isn’t enough. They want more. Trump cannot cure the essential ills of the ethanol industry, and Branstad knows it. He is the one who called for an increase in the Iowa gasoline tax because hybrid and electric cars were causing a serious shortage in the road use tax fund. He knew six years ago — the Iowa Department of Transportation had all the facts and figures — to show that corn-based ethanol will have a hard time in the nation’s energy future. Asia is going electric, not to the Chevy 327 V8. That’s why IDOT was studying a wheel tax for electric cars or road tolls to pay for maintenance — because fuel sales were declining.

Corn ethanol still has a net negative environmental impact, according to Trump’s EPA. It also has been a big contributor to America not relying as much on Middle East and Venezuelan oil. It is an important part of the Iowa economy. But its troubles are endemic. They did not start with President Trump and will not end with him. Ethanol has not bailed out corn farmers from chronically low prices because they simply produce more and more corn.

Trump’s stumble on ethanol blending waivers added insult to deep injuries inflicted to pork, ethanol, soy and beef interests with the trade war that has no end in sight. Democrats are making hay. Congressional candidate JD Scholten is tweeting every day about how Trump is selling Iowa down the river. Joe Biden is all over it. Sen. Joni Ernst is hearing about it in spades. Neither Trump nor Branstad can do anything about China as Xi enjoys seeing Trump twist in the wind.

For Branstad to confront Trump, and for Trump to take it, tells everyone that he is scared to death of losing in 2020. And so might be Joni Ernst and Steve King. That’s what the former governor must be hearing.

Articles Section: