New Tobacco Buyout Proposed

Source from:  The Courier-Journal By JAMES R. CARROLL  06/07/2004

Plan ends price supports, rejects FDA regulation House Republicans proposed a measure yesterday that would end federal price supports for tobacco and pay farmers $9.6 billion over five years to stop growing their crop. The buyout would not be linked to giving the federal Food and Drug Administration the power to regulate tobacco products — a key difference from Senate and House bills jointly introduced last month. The latest buyout move brought praise from tobacco farmers, strong criticism from public health groups and charges of opportunism from the campaign of Democratic presidential hopeful John Kerry. Congressional observers warned that victory could prove elusive, despite powerful backing of the bill. The legislation must still pass the Senate, where key Democrats have sought FDA regulations on tobacco. "It's a phenomenal day for tobacco growers," said Daniel Green, agricultural economist with the Burley Tobacco Growers Cooperative Association in Lexington. "It's the best shot we've had." Burley is the dominant tobacco type on Kentucky's estimated 45,000 tobacco farms. "It looks like we have a tobacco buyout for our farmers in Kentucky and other tobacco-producing states," said Rep. Ron Lewis, R-2nd District, a key House backer of the buyout. But William Corr, executive director of the Campaign for Tobacco-Free Kids, an anti-smoking group, called the buyout "a sweetheart deal for the tobacco companies." "It costs them nothing, has the American taxpayers pick up the bill, and it produces cheap tobacco," he said. "The bill does nothing to protect the public health, days after the U.S. surgeon general told us that smoking is even more harmful than we thought." Senate proponents of tobacco regulation promised a fight with the House over a buyout-only bill. "There are a number of senators that will oppose a buyout without a link to the bill designed to give FDA authority to regulate tobacco products," said James Manley, spokesman for Sen. Edward Kennedy, D-Mass., one of the sponsors of a bipartisan measure with just such linkage. The House tobacco buyout is part of a broader corporate tax bill filed yesterday by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee. The focus of the legislation is repeal of an export tax break that was ruled a violation by the World Trade Organization and sparked trade sanctions by the European Union. New corporation tax provisions would offset the repeal of the old tax break. The Senate last month passed a version of the measure, but without a tobacco buyout section. Under the new House measure, the tobacco quota program would be ended. Instead, tobacco would be subject to the vagaries of the free market. In exchange for ending the program, those owning quota would be paid $7 per pound, based on what they were allowed to grow in 2002. Growers would receive $3 per pound. The buyout would be paid for by using 10 cents from the current 39 cents-per-pack federal excise tax on cigarettes. The buyout cost would be offset by other increases in revenues provided for in the bill. In a conference committee, senators could insist that their House counterparts take out the buyout provision, change it to include FDA provisions, or they could agree to keep the buyout without the FDA provisions. If the conference committee can forge an accord on the bill, it would then go to both houses for final approval. Numerous legislative maneuvers still could change the fortunes of a buyout. Bill tied to tax measure Some supporters of the new plan said the White House supported it, but the Bush administration withheld public comment yesterday. Lewis, also on the ways and means panel, said the White House was "very involved" in helping to craft the grower provisions. Rep. Richard Burr, R-N.C., told The Associated Press that the Bush administration "communicated very clearly" that it would back a buyout that ends the tobacco program without boosting federal deficits. Burr said the administration did not want to give the FDA authority over tobacco. White House spokesman Taylor Gross declined to discuss the buyout proposal late yesterday. "We are reserving comment until we have fully reviewed the contents (of the bill)," he said. Last month, Bush said he did not see a need to change the Depression-era tobacco quota system, under which the government sets limits on how much tobacco farmers may grow each year. Kerry campaign spokesman Anthony Coley criticized the buyout plan as a political calculation by Republicans and Bush. While Bush's political support is considered strong in tobacco states, some industry officials and farmer groups have said failing to back a buyout could hurt him in November. Rep. Henry Waxman of California, ranking Democrat on the House Government Reform Committee and an advocate of FDA control over tobacco, attacked the new buyout, saying it "sells out public health to enrich the tobacco companies." "It is a terrible bill for children's health and fails to provide real help to tobacco farmers," he said in a statement. "Instead, it will mean billions more in profits for tobacco companies." History of failed efforts The new House buyout measure clearly signals the GOP leadership's intention to push relief for tobacco growers and gain more support for the tax measure. Action on a buyout was promised last year by House Speaker Dennis Hastert, R-Ill., when he campaigned in Kentucky's special 6th District House race. At that time, buyout measures were stalled in the House. The Senate has been deadlocked since late last fall over legislation that would provide for a buyout but also give the FDA authority over the manufacture and sale of tobacco products. New twin buyout-FDA measures with bipartisan support were introduced last month, an effort to break the stalemate that so far hasn't produced results. Thomas' tax measure itself has been bogged down by disagreements, some within his own party, since last fall. The tobacco buyout is one of the steps the leadership took to draw more backers to the overall bill, said Rep. Mike McIntyre, D-N.C., one of the chief buyout sponsors. Rep. Ed Whitfield, R-1st District, who was undecided about some provisions that might send more American jobs overseas, has agreed to support the bill because of the buyout, said spokesman Jeff Miles. Gary Huddleston, spokesman for the Kentucky Farm Bureau, said, "You don't want to get too optimistic because we've been that way before." Sen. Mitch McConnell, R-Ky., who backs a buyout for farmers, has said he would accept FDA regulation if that was the only way to get the buyout. "It's too early to be breaking out the champagne, celebrating, but it would be an important step in the right direction if the buyout were to clear either house of Congress," he said. "It is still going to be an uphill struggle to get it enacted into law, but I am cautiously optimistic about this latest proposal and we are going to keep working on it until we get something done," said Sen. Jim Bunning, R-Ky. A view from the fields The Philip Morris Cos., the nation's largest cigarette maker, stood firm that a tobacco buyout should be connected to giving FDA regulatory authority over tobacco. "Whether the tax bill is the appropriate legislative vehicle to do this remains to be seen," said Mark Berlind , legislative counsel for Altria Group, the parent company of Philip Morris. No other company takes that position. Mark Smith, spokesman for Brown & Williamson Tobacco Corp. in Louisville, declined to comment on whether his company supports the bill. David Howard, spokesman for R.J. Reynolds Tobacco Co. in Winston-Salem, N.C., said the House proposal fits what his firm and most of the other companies have supported in the past. For 82-year-old tobacco farmer Homer Best, of Glendale, Ky., the House plan sounds like another effort to force him and other leaf growers out of business. "The way they're setting it up, we're just selling ourselves out of a job. ... Somebody else is going to come along and ... grow it cheaper," he said. Enditem