Washington --

The Senate refused Tuesday to end $6 billion in ethanol subsidies, defeating an amendment by Sens. Dianne Feinstein, D-Calif., and Tom Coburn, R-Okla., that crystallized a larger ideological split within the GOP over whether removing tax subsidies is a tax increase or is a legitimate way to trim the $1.5 trillion federal deficit.

The amendment became a test vote in this summer's struggle to raise the $14.3 trillion debt ceiling. Republicans insist a debt-limit increase be accompanied by trillions of dollars in spending cuts and no tax increases. Democrats say tax increases must be part of the equation.

The 40-59 vote split the GOP. Several prominent Republicans - John Cornyn of Texas, Tea Party-backed Rand Paul of Kentucky and Republican leader Mitch McConnell - voted to end the subsidies in defiance of anti-tax crusader Grover Norquist, president of Americans for Tax Reform. Norquist warned that eliminating the ethanol tax credit would violate his "Taxpayer Protection Pledge" and attacked Coburn as a tax-raiser.

Corn growers helped

The debate also pitted environmentalists and food activists against the corn ethanol industry, which benefits from tax subsidies, regulations and tariffs that cost taxpayers at least $6 billion a year.

More than 40 percent of the U.S. corn crop now goes to ethanol, an alcohol fuel made from corn and added by law to gasoline. The fuel puts upward pressure on corn prices, harming dairy, livestock and chicken farmers who feed corn to their animals and face record $8-a-bushel corn because of flooding in the Mississippi Basin.

Ethanol gets three levels of government support: a 45-cent-a-gallon tax credit paid to refiners set to expire this year; a 54-cent-a-gallon tariff that blocks cheaper and more energy-efficient, sugar-based ethanol imports; and a federal regulation that in effect required a 10 percent blend of ethanol into gasoline.

The Environmental Protection Agency this year approved blends of up to 15 percent ethanol for cars made in 2001 and later.

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Pollution concerns

Environmentalists blame ethanol for contributing to fertilizer runoff that has created an algae bloom in the Gulf of Mexico, and say ethanol requires nearly as much fossil fuel to make as it saves, doing little to reduce U.S. dependence on oil imports.

"What part of stupid are we?" Coburn asked. "This is a historic vote that is a signal to the American people: Either people in Washington get it and are going to stop wasting money and start acting in the best interests of the country, or ... they won't."

Feinstein said taxpayers have spent $22.6 billion on ethanol subsidies since 2005 and will spend $31 billion in the next three years. Feinstein said during a visit to the San Joaquin Valley last week that farmers told her they can no longer afford to feed their animals because ethanol is boosting corn prices.

Annual feed costs for Foster Farms, the largest poultry producer on the West Coast, tripled in the past year, she said, citing forecasts of record slaughter of dairy cattle and hogs this summer because "it is becoming cheaper to slaughter animals than to feed them."

In the end, Feinstein voted against her own amendment as did Sen. Barbara Boxer, D-Calif. Feinstein pleaded with Coburn to placate Democrats who were upset because Coburn forced a vote without the blessing of majority leader Harry Reid, D-Nev., who jealously guards the majority's control of the chamber.

Coburn refused to delay the vote, blocking a rear-guard action by Sens. John Thune, R-S.D. and Amy Kobuchar, D-Minn., to divert the savings from ending the tax credit to build ethanol pipelines and fuel tanks. Reid promised another ethanol vote within two weeks. Feinstein said she wanted to work out a deal with ethanol backers.

Ethanol tax credits are a classic "tax expenditure," a tax break that is equivalent to a direct subsidy because it provides a financial benefit to a specific group at a cost to the Treasury.

Such programs are wildly popular in both parties because they operate as spending programs disguised as tax cuts. Tax expenditures cost $1.2 trillion a year. The Bowles-Simpson deficit commission last year recommended eliminating them as way to raise revenue while reducing overall tax rates and making the tax code fairer.

Despite their defeat, Coburn and Feinstein's crusade has undermined bedrock political support for ethanol. For years, candidates from both parties trolled the bellwether Iowa presidential caucuses touting their ethanol support.

This year, GOP candidates Tim Pawlenty and Rick Santorum came out against ethanol subsidies. GOP front-runner Mitt Romney supports them.