Fact checker: Does Ted Cruz want to eliminate all subsidies or just those for ethanol?

Introduction

'Ethanol creates markets for farmers, strengthens rural communities and employs 73,000 Iowans. Politicians like Ted Cruz support subsidies for Big Oil but want to end support for ethanol ... Cruz has personal investments of up to $700,000 in oil and the Super PACs propping up his campaign have received over $25 million from oil interests ... '

Source of claim: a radio advertisement paid for by America's Renewable Future.

Analysis

Aides of the Cruz campaign demanded this ad, paid for by ethanol-friendly advocacy group America's Renewable Future, be removed from Iowa airwaves, calling claims that the presidential hopeful supports oil subsidies false. But how does this claim, and the many others in this ad, stand up?

• 'Ethanol creates markets for farmers, strengthens rural communities and employs 73,000 Iowans ...' As stated in a previous Fact Checker, claims that ethanol supports 70,000-plus jobs is overstated. Sourcing provided by the advocacy group shows it received this information from an analysis by pro-renewable fuel organization Fuels America. The analysis claims the renewable fuel industry supports 73,371 jobs in Iowa. As we've reported before, the more than 40 ethanol plants in Iowa support just under 6,000 jobs.

• 'Politicians like Ted Cruz support subsidies for Big Oil but want to end support for ethanol ...' Sen. Cruz represents Texas, a state where the economy relies on oil. The group claims Cruz wants to prop up the industry but end support for ethanol.

This is where Cruz's camp disputes the accuracy of the ad. Cruz says often he wants to end subsidies across the energy sector to avoid playing favorites: 'I don't think Washington should be picking winners and losers,' Cruz said in March, according to an article published by The Hill. He uses that same language when speaking out against the Renewable Fuel Standard, an ethanol subsidy that contributes significantly to Iowa's farming economy. However, Cruz does support letting oil companies expense intangible drilling costs. This allows oil and gas producers to deduct most of the costs of drilling new wells. Established in 1913, the rule acknowledged the risks of drilling wells that could turn up dry.

Cruz, in a YouTube video in which he's confronted on the issue at an event, said the practice is ' ... analogous to ordinary business expensing that every other industry gets, because that's essentially capital costs that you're putting in place.'

But there are differences in opinion whether these breaks qualify as subsidies.

The Committee for a Responsible Federal Budget, a non-profit organization that examines fiscal policy issues, says some argue technology advancements make locating wells cheaper and easier and the deduction is an unneeded subsidy while others say it is an important way to support the energy industry.

A report from the U.S. Department of the Treasury called the practice of expensing intangible drilling costs a subsidy and a 'tax preference to the oil and natural gas industry.' According to the Joint Committee on Taxation, a committee within Congress, eliminating this benefit would save U.S. taxpayers about $13.5 billion over 10 years.

• 'Cruz has personal investments of up to $700,000 in oil ...' U.S. senators must file financial disclosures, and Cruz's from 2014 shows he invested between $315,000 and $750,000 in oil and gas companies that year. Some highlights from the 2014 report: Cruz invested $50,001 to $100,000 in ONEOK Inc., a natural gas company, the same amount into the Chevron Corp. and between $100,001 and $250,000 into the Exxon Mobil Corp.

• ' ... and the Super PACs propping up his campaign have received over $25 million from oil interests ...' Super PACS are a type of committee that can raise unlimited amounts of money from corporations, unions, associations and individuals, then use that money to advocate for or against political candidates. Cruz has 10 Super PACS that support him that have raised $39 million in the 2016 election cycle, according to Federal Election Commission filings tracked by opensecrets.org, a non-profit organization.

Cruz's Super PAC Keep the Promise II has only one contribution: a $10 million gift from energy investor Toby Neugebauer. This is one of the largest amounts given by a single donor to a Super PAC so far this campaign cycle, according to the New York Times. Cruz's Super PAC Keep the Promise III received four donations, totaling $15 million, from four members of the Wilks family. Brothers Dan and Farris Wilks were listed on Forbes 400's Wealthiest Americans after founding the hydraulic fracturing and oil field services firm FRAC Tech in 2002.

Conclusion

Although Cruz demanded Iowa stations pull the ad from airwaves, most of its claims are largely true.

However, ethanol doesn't create as many Iowa jobs as the ad suggests.

The ad also claims Cruz wants to end subsidies for ethanol while supporting them for oil companies. He doesn't support the Renewable Fuel Standard, so the first portion of this claim is true. He does support allowing oil companies to expense intangible drilling costs, which has been called a subsidy by some, including the U.S. Department of the Treasury.

The ad's claims that Cruz invested 'up to' $700,000 in oil is accurate, but it should be noted that under the wide ranges allowed in the disclosure rules the amount could be far less — or even a little more. His 2014 financial disclosures show he invested between $315,000 and $750,000 in oil companies.

FEC filings also show Cruz's Super PACS received $25 million in donations from oil interests.

Overall, we rate the claims analyzed in the ad a B.

CRITERIA

The Fact Checker team checks statements made by an Iowa political candidate/office holder or a national candidate/office holder about Iowa, or in advertisements that appear in our market. Claims must be independently verifiable. We give statements grades from A to F based on accuracy and context. If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

• This Fact Checker was researched and written by Jessie Hellmann.