Obama joins in on the Black Liquor two-step

By Dead Tree Edition

USA, Feb. 23, 2010 (RISI) - The Obama Administration announced today that it wants to close the non-existent "Son of Black Liquor" loophole to help "pay" for new healthcare legislation.

A few hours later, Senate Democrats won a key vote on a jobs bill that would be paid for partly with the "savings" from closing the same mythical loophole.

Meanwhile, the watchdogs of the news media acted more like lapdogs, taking Administration and Congressional statements at face value without bothering to check the facts. For example, a New York Times article on Obama's proposal states flatly, and falsely,: "Rescinding the 'black liquor' tax credit could generate as much as $24 billion in revenue over 10 years, helping to pay for a chunk of the health care legislation."

The Hill went further astray by saying the Obama proposal "rescinds the 'black liquor' tax break abused by paper companies that claim undeserved alternative fuel tax credits."

"Current law provides a tax credit for the production of cellulosic biofuels," notes the Obama Administration's summary of its new healthcare bill. "The credit was designed to promote the production and use of renewable fuels. Certain liquid byproducts derived from processing paper or pulp (known as 'black liquor' when derived from the kraft process) were not intended to be covered by this credit. The President's Proposal adopts the House bill's policy to clarify that they are not eligible for the tax credit."

As Dead Tree Edition has explained previously, black liquor is already ineligible for the Cellulosic Biofuel Producer Credit program, so there is no loophole to close. No money has been budgeted to provide such credits for black liquor, so there is no savings to be budgeted for healthcare, creating jobs, or anything else.

Only in Washington would people try to use the same fake money to pay for two different programs.

For further reading, see:

• Heroic Senators Rush to Close Non-Existent 'Son of Black Liquor' Loophole explains that Cellulosic Biofuel Producer Credits can only be issued for motor-vehicle fuels, which excludes black liquor.
• News Media and Congress Are Confused About Black Liquor Subsidies describes how major news outlets have confused the original black liquor credits, which expired Dec. 31, with the mythical Son of Black Liquor (CPBC) credits and blindly accepted statements about projected savings from closing the non-existent tax loophole.
• Did Black Liquor Credits Pave the Way for Healthcare Legislation? This isn't the first time black liquor has been mixed up in healthcare reform. Congress knowingly allowed pulp and paper companies to receive billions of dollars in original black liquor credits, apparently to help get a healthcare bill out of committee.

This article originally appeared at Dead Tree Edition (http://deadtreeedition.blogspot.com/), 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.