- The Washington Times - Monday, October 4, 2004

Senate and House leaders last night fought over new health regulations for tobacco, a dispute that threatens to derail a broader bill designed to end a trade war with Europe and dole out billions in new corporate tax breaks.

Some senators, when faced with the House’s reluctance to include a provision to give the Food and Drug Administration the power to regulate tobacco, said the bill was dead otherwise.

“This airplane lost a wing” and may well crash, said Sen. Tom Harkin, Iowa Democrat and a proponent of the FDA tobacco regulation, while conferring with lawmakers from both chambers on the whole corporate tax-bill proposal.

The bill has its roots in a 2002 World Trade Organization ruling that U.S. export subsidies worth $4 billion a year, on products other than tobacco, are illegal and authorized the European Union to retaliate with trade sanctions, which it did starting in March.

Congress responded this year with legislation to repeal the subsidies and replace them with corporate tax cuts in a bill called the American Jobs Creation Act.

But instead of a simple swap — repealing subsidies worth $50 billion over 10 years and replacing them with an equally valuable tax break — lawmakers added a variety of narrowly targeted breaks, payouts and special provisions.

Those provisions included a program to pay tobacco farmers and landowners for production quotas created in 1938 and since bought or inherited similar stock shares. The Senate version ended the quotas with a $12 billion buyout, but coupled the payment with new authority for the Food and Drug Administration to regulate tobacco manufacturing and marketing.

House lawmakers offered about $10 billion but did not attach the FDA rules.

In last night’s meeting, Rep. Bill Thomas, California Republican and Ways and Means Committee chairman, proposed a tobacco buyout worth about $7 billion and with no FDA regulatory power. The meeting was advisory and no formal action was undertaken.

Senators have threatened to kill the bill without FDA rules.

“The bill is in jeopardy in the Senate unless it gives the authority to regulate tobacco and tobacco products,” said Jim Manley, spokesman for Sen. Edward M. Kennedy, Massachusetts Democrat.

Mr. Kennedy and Sen. Mike DeWine, Ohio Republican, ushered the tobacco-regulation provision into the Senate bill.

But giving the FDA power to regulate tobacco is less popular in the House, and Republican leaders want them kept out of the legislation.

Lawmakers also are trying to work out dozens of smaller differences. Mr. Thomas last week drafted one version of the tax bill for discussion and legislators responded with 340 proposed amendments.

Mr. Thomas over the weekend considered the modifications in a new draft circulated last night, and he said he hopes to move the legislation to a House vote this week.

But time is running short.

“They just don’t have a lot of time,” said Bill Baker, spokesman for the Coalition for Fair International Taxation, a business group created to press for international provisions in the bill.

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