Bipolar tactics on tobacco

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Rep. Henry Waxman, California Democrat and a big-government liberal, rarely concurs with Rep. Jeff Flake, Arizona Republican, a dedicated free-marketeer. But watching their colleagues in the Republican Congress recently exhibit the self-restraint of hounds in full cry caused them both recoil in full-blown, left-right disgust.

"We often disagree on issues," the two lawmakers admit in a June 9 joint "Dear Colleague" letter. "Today, we are writing to make you aware of one issue we agree on: the 'tobacco bailout' in the FSC bill is a bad deal for taxpayers."

They describe the brand-new boondoggle of Rep. Bill Thomas, California Republican: $9.6 billion in free money targeted at the tobacco industry. That's right, almost $10 billion for the hard-working, peace-loving folks who raise one of America's oldest and greatest crops -- courtesy of you, the U.S. taxpayer.

"Under current law," Reps. Waxman and Flake add, "tobacco can only be grown if the grower owns or rents a 'tobacco quota.' Under the bailout provision, the federal government would pay $7 per pound to quota owners and $3 per pound to tobacco growers (up to a total payment of $10 per pound for a quota owner who grows tobacco). The proposed compensation amounts to 3 to 4 times the market value of tobacco quotas."

Will America's general welfare benefit from this scheme -- maybe through more Earth-friendly farming techniques on Tobacco Row, or perhaps bioengineered plants that prevent mosquitoes from stinging?

No such luck. Quota holders and leaf growers can do what they please with the money.

"This is a no-strings-attached cash payment," the congressmen continue. "There is no requirement that either the quota owner or the tobacco grower stop growing tobacco."

Where exactly will $9.6 billion be found to blow on tobacco interests? "The bill purports to fund the bailout through the existing excise tax on cigarettes, which is currently used to fund children's health care," Messrs. Waxman and Flake explain.

So, nearly $10 billion will be pried from the fingers of cigarette smokers, diverted from medical treatment for boys and girls, and steered into the wallets of those who produce Marlboros and Chesterfields. What a Lucky Strike.

Of course, Washington is utterly bipolar about the beneficiaries of this largess, equal to the gross domestic product of Tanzania. According to the Campaign for Tobacco-Free Kids (tobaccofreekids.org), the current federal budget includes $100 million for the Office of Smoking and Health, plus at least $70 million for the National Cancer Institute's tobacco-related disease research. Meanwhile, the Justice Department prepares a $280 billion racketeering lawsuit against Philip Morris, Lorillard and four other cigarette makers. Says Justice spokesman Charles Miller: "We go to trial Sept. 13."

Uncle Sam simultaneously considers Big Tobacco a respected industry and a cabal of cancer merchants who should be shouted, regulated and litigated out of business. Which is it? In federal Fantasyland, both. Even worse, Big Tobacco's gift comes in a highly extravagant package.

H.R. 4520 -- the Foreign Sales Corporation/Extra Territorial Income bill -- simply was supposed to eliminate a $5 billion annual export subsidy (worth $50 billion through 2014) that triggered European Union sanctions. So far, Congress' handiwork resembles a harpsichord tuned with a pickax. This measure includes nonsense like a tax provision for "sonar devices suitable for finding fish," special language on aviation-grade kerosene and a new tax on hepatitis-A vaccines.

The 424-page bill cuts taxes $149.5 billion through 2014 while raising levies $115.1 billion. Sickened by tobacco gratuities and lots more, Mr. Flake and 22 other Republicans uncharacteristically opposed this net tax cut, grotesque though it was. "I'm convinced that Congress is bent on losing what little fiscal credibility we have left," Mr. Flake laments. "The addition of the tobacco buyout provision was the straw that broke Joe Camel's back."

Nevertheless, H.R. 4520 passed June 17, by a 251-to-178 vote. It now will be reconciled with a Senate plan to cut business taxes $180.5 billion before raising them $181.3 billion. That compromise should be defeated and replaced with a 10-year, $50 billion across-the-board corporate tax cut.

Whether this prosperous industry deserves America's constant applause or brand-new lawsuits, it's past time for Big Tobacco to harvest its crop on its own dime.

Deroy Murdock is a columnist with Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Fairfax, Va.