As far as traditional wedge issues go, ethanol subsidies aren’t usually the first to come to mind, but perhaps they should be.

Ethanol may not be polarizing enough to bring in the heavy hitters like Planned Parenthood and the National Right to Life folks, or the National Rifle Association and James Brady’s of the world. Yet, a close look reveals that that all the big names seeking the Republican presidential nomination have strong feelings about ethanol subsidies, and unlike many other campaign issues, ethanol is one area where the feelings from Republicans aren’t all the same. Add in the fact that corn rich Iowa could be a make-or-break state in the wide open 2012 Republican presidential nomination contest, and ethanol subsidies are suddenly an issue to be reckoned with.

First off, let’s take a look at Iowa. There’s a lot of corn there. The Hawkeye State led the nation in corn production in 2007, 2008, and 2009. In fact, after the 2008 Farm Bill was passed, and ethanol subsidies were rolled back to 45 cents per gallon of produced fuel, Iowa’s corn production increased to 2.4 billion bushels. Beyond the money handed out to farmers for growing corn that can be turned into ethanol, the subsidies provide farmers with something else: cost stability. In short, knowing that corn production is subsidized to such a high level by the federal government insulates many farmers from the risks and variables of working in the volatile agricultural industry. Floods will still happen, so too will droughts and tornados, but it sure is easier to breath with that extra help from inside the Beltway.

Needless to say, in a corn rich state like Iowa, subsidies are popular. And when your state holds the first in the nation presidential caucus, your popular local issues often turn into hard to explain national policies. “Ethanol exists because of the Iowa caucus,” wrote one writer from a Wisconsin political blog. “You run for President, you sell your economic common sense, your scientific know-how, and previous stances on AG policy to get the vote of Iowan corn farmers.”

So what’s the big deal? American politics certainly comes with a history of making unsavory deals for political purposes. But ethanol subsidies present a bit of a unique situation, because the fundamentals of the policy are a complete contradiction of the new libertarian base of the Republican party.

The Republican party of 2011 contains most of the same fervor from the Tea Party wing that led Republicans to historic gains in the 2010 midterm elections. The platform that led the party to victory was that government is too big, debt is bad and spending has gotten out of control. With this path to victory defined, many seeking to win the party’s nomination jumped off the ethanol bandwagon. Tim Pawlenty is against idea, though he was for ethanol subsidies back in 2008. Sarah Palin is on record saying she wants all subsidies for ethanol to be completely phased out. Former Senator Rick Santorum (R-Penn.), who officially announced his candidacy for the presidency on Monday, wants to first phase out ethanol subsidies and then have the government provide incentives for flex-fueling stations. This is a risky policy stance by these candidates, and when there’s risk on one side in politics, you known there will be risk on the other.

The other side of the ethanol debate has some serious rank and file Republicans on board. Former Massachusetts governor and presidential candidate Mitt Romney is not just for ethanol subsidies, but it is one of the few issues the presumptive front-runner has been consistent on since he first entered the political world in the mid 1990s.  Then there is Newt Gingrich. The former Speaker of the House has characterized those wanting to roll back ethanol subsidies as “big city” opponents.

It should be noted that in 2008 Sen. John McCain (R-Ari.) was publically against ethanol subsidies. The eventual Republican nominee decided to ignore Iowa that year, and came in fourth place in the Iowa caucuses that year. But for those planning to show up in Iowa in 2012, they will need to explain if they are for or against ethanol subsidies.

Republicans continue to do the ethanol dance
Ethanol is emerging as one of the biggest wedge issues for Republicans as they focus on the Iowa caucus.