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| House approves tobacco buyout8 October 2004 15 26 Source »»»Part of a massive corporate tax overhaul that passed by a vote of 280-141, the buyout would end the Depression-era federal tobacco price-support system and return farmers to a free market with no production limits. The measure would channel about $666 million into the hands of Virginia quota-holders and tobacco growers over a 10-year period, according to congressional officials. "Economically, this bill is a plus for Southside Virginia," said Rep. Virgil H. Goode Jr., the congressman for that tobacco-growing region. "Our loans will be paid off; notes at the bank will be paid off; equipment that has debt on it can be paid; and it gives some stability to those that want to continue in tobacco," said Goode, R-5th. The government has sharply cut farmers' tobacco quotas in the wake of increasing imports of discounter foreign tobacco and a decline in smoking. Quotas are licenses dictating how much leaf a farmer may grow. "Over seven years, quota have declined by more than 50 percent. That decline has directly resulted in a 50 percent loss of income for farmers," said Rep. Rick Boucher, D-9th, whose district is home to burley tobacco growers. "It's time to buy out the quota." Backers portrayed the overall bill as a stimulant for jobs at home and a means to end retaliatory tariffs imposed after the World Trade Organization found illegal a $5 billion U.S. tax break for exporters. The bill "will encourage further economic expansion and job creation by relieving sanctions and providing tax relief to America's job creators," said Rep. Bill Thomas, chairman of the House Ways and Means Committee. But Rep. Jim McGovern, D-Mass., countered by branding the bill "a legislative grab bag filled with goodies for special interests." He criticized the tobacco farmer "bailout" and said Republican leaders elected to scrap new federal controls on tobacco and "leave our children vulnerable . . . This is unconscionable." The buyout plan, to be funded by tobacco companies, would pay quota holders $7 per pound and tobacco growers $3 per pound. That is less than the $8 and $4 rates in a Senate-passed version, but more generous than some had expected. Tobacco farmers from Virginia, North Carolina and other tobacco states donned suits and got to know the road to Washington in their effort to build coalitions and political clout. Approaching election time, they saw political and economic factors converge after House lawmakers added the buyout proposal as a sweetener to the corporate tax package. Rep. Charles B. Rangel, D-N.Y., needled Republicans last night for that approach. "Now I get it," he said. "If you don't have enough votes to get a tax bill passed, reach out and get some farmers." Smoking foes pressed for broad new federal regulation of the tobacco industry by the Food and Drug Administration. But that plan, linked to a buyout by the Senate, did not survive a House-Senate conference this week. The conferees dropped the FDA controls against a political backdrop that included such prominent Democrats as presidential candidate John Kerry endorsing a buyout, with or without FDA regulation. Republican leaders calculated that Senate Democrats would not kill, in an election season, a popular corporate tax break package because of the omission of FDA regulation. That calculus remains to be tested. The Senate may take the bill up today; the Senate intends to adjourn soon. Republicans also appeared intent on pushing through a buyout to give a hand to their candidates in tobacco states. During debate last night, Thomas singled out Rep. Richard M. Burr of North Carolina as "the primary gentleman that worked with me" to have the buyout in the tax bill. Burr is in a close North Carolina race for the Senate against Democrat Erskine Bowles, who traveled to Washington on Wednesday to lobby Democratic senators to pass the buyout. Health advocates, meanwhile, have lamented what appeared to be a vanishing opportunity to enact new federal controls over tobacco. The House-Senate conferees "removed the linchpin in the passage of this legislation in a complete sellout to the tobacco companies," Sen. John McCain, R-Ariz, contended Wednesday. "Disgraceful." But the tobacco industry actually was divided. Richmond-based Philip Morris USA, the leading cigarette-maker, aggressively sought a buyout coupled with FDA legislation, saying the latter was important to ensure that small and big tobacco companies operate under the same standards. The tobacco industry gap was reflected when Steve Watson, an official with Lorillard Tobacco Co. applauded this week the scrapping of FDA regulation. "Which," he said, "means Philip Morris will have to get its monopoly the old-fashioned way" instead of benefiting from new federal restrictions on marketing and manufacturing. "We don't support this buyout," Watson added, saying "it was very bad public policy to make the companies absorb 100 percent of the cost." In Virginia, tobacco is the No. 1 cash crop; the value of tobacco production in 2003 was $72.5 million. The number of tobacco farms in Virginia was 4,184 in 2002, down from 6,067 in 1997, according to the U.S. Department of Agriculture's Census of Agriculture.
BY PETER HARDIN; TIMES-DISPATCH WASHINGTON CORRESPONDENT
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