Dead Tree Edition

US Republican Senators defend bogus black liquor accounting

By Dead Tree Edition Wed, Apr 07, 2010

The news media are finally realizing that ObamaCare's supposed savings from ending a black liquor tax credit are a mirage. It's making for some interesting reading.

USA, April 7, 2010 (RISI) -Todd Zwillich, Washington correspondent for The Takeaway radio show, had an enlightening and amusing piece recently basically confirming that Congress knew that there was no black-liquor loophole even though the healthcare-reform legislation claims savings of more than $23 billion from closing the loophole. Especially interesting is that he found two Republican senators who oppose the bill but said the Democrats's black-liquor shell game is nothing new on Capitol Hill.

"Republicans and Democrats have both put together bills like this," said South Carolina Sen. Lindsey Graham.

Zwillich said Iowa Sen. Charles Grassley was unfazed by the claim that the black liquor loophole was worth billions even though no paper companies are exploiting it.

"This is the way it works. They may not use it, but they could use it, okay?" Grassley said. "Even though somebody tells you it wouldn't happen, it could happen, and it could cost the Treasury."

Sorry, Charlie, it couldn't happen. Even without the healthcare legislation, a substance has to get EPA approval as a motor fuel or fuel additive to qualify for cellulosic biofuel producer credits. Black liquor, "a gooey wood pulp byproduct" in the words of BNET's Kirsten Korosec, doesn't belong in a gas tank.

Korosec gets credit for being the first on the black liquor story (other than a couple of obscure blogs) with last week's article Paying For Healthcare: How Democrats Closed an Energy Tax Loophole That Doesn't Exist.

Olga Pierce of ProPublica wins the honesty award for her item at the On The Hill blog today admitting that she previously got the black liquor story wrong. This time she nailed it: "Closing a tax loophole no one was planning to use doesn't actually save the government any money."

So far, no one in the news media has reported another Congressional goof: If indeed black liquor could qualify for cellulosic biofuel producer credits, the loophole would be worth $60 billion, not $24 billion. Even when it generates imaginary revenue, Congress can't get the math right!

For more information on how a once-obscure pulp byproduct became such a political football, please see: • ObamaCare's Black Liquor Tab: $23.6 Billion • How Google Could Help the Democrats By Buying a Pulp Mill • News Media and Congress Are Confused About Black Liquor Subsidies This article originally appeared at Dead Tree Edition (, which is written by a magazine-industry manager who goes by the pseudonym D. Eadward Tree. Comments made in this blog are the opinion of the author and do not necessarily reflect that of RISI, Inc., its parent company or sponsors.


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