According to this report from the California state government,

"The result is that each gallon of ethanol that is blended with gasoline by a gasoline distributor or retailer results in a $0.54 per gallon tax credit."

That's a pretty hefty subsidy. Sooner or later, any viable alternative energy source will have to be cost competitive with traditional sources or it will be unsustainable. It's one thing to subsidize a promising new technology in order to meet a strategic goal (reduced demand for foreign oil). It's another thing to permanently subsidize something in order to pay off certain politically powerful groups like farmers and ADM. Gasohol is nothing new. If after almost 3 decades it can't be made cost competitive, when will it be?

From a different source, the subsidies are a lot higher than 54 cents per gallon. There's even concern that gasohol is both energy inefficient and environmentally questionable. From this source:

Dan Becker, Sierra Club Energy Program Director, in interview with Jackie Calmes, New York Times, “How Cash, Caucuses Combined to Protect a Fuel on the Hill,” Aug. 18. 1997, A1.

“Environmentally, ethanol is very much a mixed bag. It takes more energy to make a gallon of ethanol than the energy you get when you burn it. It ain’t a renewable fuel.”

Doug Bandow, Senior Fellow at Cato Institute, This Just In op-ed, “Ethanol Keeps ADM Drunk on Tax Dollars,” Oct. 2, 1997. Originally appeared in Investor’s Business Daily.

“Nor is gasohol environmentally friendly. It often leads to vapor lock and is more explosive than gasoline. And while ethanol use might reduce carbon-monoxide emissions, it increases hydrocarbon and nitrogen oxide output.”