- The Washington Times - Monday, August 2, 2004

Congress is finalizing plans to pay tobacco producers nearly $10 billion to end a decades-old subsidy program — and in the process will give millions of dollars to “farmers” who dwell in major U.S. cities or even overseas.

“The House buyout plan is an incredible rip-off of the taxpayer, mostly to benefit a handful of large tobacco interests and tobacco companies,” said Ken Cook, president of the Environmental Working Group (EWG), a nonprofit organization that has compiled a database of every individual payout that would be made to farmers under the proposal and posted it on the Internet.

Under the plans approved by the House and Senate — which must still be finalized — farmers, corporations and estates will be paid over a five-year period with tobacco-tax proceeds that currently go into the general fund.

Among the recipients, 462 will become millionaires from their government windfall, according to EWG calculations. The names of recipients are listed at the organization’s Web site, www.ewg.org.

Ninety-one “farmers” abroad — including two Frenchmen, 11 Germans and 15 Canadians — will split $981,000. The 712 recipients living in the District who will divvy up $3.98 million are among thousands of urban “farmers” across the country who will collect more than $3 billion in payments.

Though the plan has been approved overwhelming by the House and the Senate, legislators supporting the program don’t agree on the purpose of the payout.

Rep. Mike McIntyre, North Carolina Democrat and longtime backer of a tobacco buyout, said the government money is “reparations for past years’ losses” incurred by tobacco farmers.

“People have suffered too long,” he said.

Republican Sen. Elizabeth Dole, also from North Carolina, disagreed.

Though she agrees that tobacco farmers have suffered, she said the payment is compensation for the quota certificates owned by each farmer — and rendered useless under the buyout — that govern how much tobacco a farmer can produce and market each year.

“The government created this asset, allowing it to be bought and sold,” Mrs. Dole said. “As a result, the value of the quota makes up a substantial portion of many farmers’ balance sheets.”

Blake Brown, a professor of agricultural economics at North Carolina State University, said the buyout is “for the future stream of income for the quota [farmers] give up.”

The issue has been a political no-brainer for lawmakers from tobacco-growing states.

“The day I ran for Congress, I stood with tobacco farmers,” said Mr. McIntyre, noting that the amount of tobacco per quota the government allows farmers to market has been cut in half in recent years.

“That chops their income by half,” he said. “We’re talking about generations of farmers who are working to put food on their tables and put their kids through college.”

Mrs. Dole calls the situation facing tobacco farmers and their communities nothing short of “devastation.”

“To put this in layman’s language,” she said, “this type of cut in quota is equivalent to cutting your paycheck by more than half while you’re still paying the bank for an asset you no longer own.”

Mr. Brown said the amount of tobacco permitted to be grown has dropped by about half in recent years, but the resulting restriction has driven up the price to a little less than $2 per pound. However, that price increase has not kept pace with inflation.

Under the buyout, which pays roughly $10 per quota pound, farmers will be given about five years’ worth of gross revenue from their land, without having to raise a single plant of tobacco.

The plan has become a major issue in Senate campaigns across the South.

Democrat Erskine Bowles, the former Clinton chief of staff who is running to replace Sen. John Edwards of North Carolina, has criticized his Republican opponent, Rep. Richard M. Burr, for not doing enough to get the plan approved sooner. Republicans have gone out of their way to praise Mr. Burr’s efforts.

Democrats, meanwhile, have praised Mr. Bowles, even though he is not in the legislature.

“Erskine Bowles has personally called scores of my colleagues to let them know how important a buyout is and how important it was to get this done,” Senate Minority Leader Tom Daschle, South Dakota Democrat, said on the Senate floor after the buyout was approved. “In large part, his efforts to educate members about the effects the quota cuts have on farmers and communities helped ensure passage of the buyout today.”

Even conservatives who say they are opposed to big government spending won’t quibble with the massive expenditure.

Sen. George Allen, Virginia Republican, said tobacco farmers will be better off without the interference of the federal government. By removing the price supports — which artificially inflate the price of leaf — they will be better able to compete with foreign tobacco growers.

“Now some will grouse about the cost of this buyout,” he said. “I believe it is fair compensation to end this government program.”

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