CEI Daily - Public-Private Partnerships, Microbreweries, and Ethanol


Public-Private Partnerships


Public-Private Partnerships (PPP) have become a defining feature of American politics.


CEI President Fred Smith discusses the problem with public-private partnerships.


"In most cases public-private partnerships are simply a means of using tax breaks, regulatory easing, taxpayer support and so forth to subsidize some private activity: stadia, light and heavy rail — mass transit generally, sometimes (for God’s sake) hotels and malls, downtown development districts. [...] Our challenge is to find ways to expand the private sector and only very rarely does the PPP concept do that.  It allows people to be sloppy — 'That would never pay for itself but it obviously has value, thus, we need some government help.  Let’s not make it an honest government function, let’s make it a Public-Private partnership and get the best of all possible outcomes!!'"





The Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010 is currently under consideration by Congress.


Policy Analyst Michelle Minton points out that the CARE Act will hurt sales for microbreweries, since it allows states to regulate the sale of out-of-state alcohol.


"Over the last 20 or 30 years, the United States has seen a massive increase in the number of microbreweries in the last decade. Your choices at a bar are no longer between the four or five most popular brews in the country (Bud, Busch, or Miller); many bars pride themselves on offering a wide variety of on-tap beers from smaller producers and stocking bottles from around the country. That could soon come to a grinding halt. Dogfish, Bells, Daschutes, Full Sail, Clipper City, Brooklyn Brewery, Stone, and Rogue are some of the brews that might have a harder time turning a profit and getting widespread distribution for their products if Congress passes a bill giving states the authority to discriminate against out-of-state producers of liquor, wine, and beer."






Washington Examiner columnist (and former Warren Brookes Fellow) Tim Carney had a column last week on what to expect from the new Congress on ethanol subsidies.


Research Associate Brian McGraw talks about the current benefits ethanol producers are receiving from the federal government.


"The current ethanol subsidy is a 45-cents-per-gallon federal tax credit, and payments since 2005 have exceeded $20 billion. This acts as a double benefit: Ethanol producers already are guaranteed income through legislation that requires gasoline to be blended with ethanol. These companies are provided guaranteed business and then a subsidy on top of it."