News Release - Republicans Float Buyout that Cheats Farmers, Allotment Holders

News Release
Congressman Bob Etheridge
North Carolina

October 4, 2004

Contact: Sara Lang
Phone: (202) 225-4531

Republicans Float Buyout that Cheats Farmers, Allotment Holders, Etheridge Responds

WASHINGTON - With Congress preparing to adjourn this week, Republican leadership in the U.S. House of Representatives is floating a buyout proposal that would shortchange farmers by as much as $6 billion. In negotiations in the conference committee that will write the final legislation, House Ways and Means Chairman Bill Thomas (R-California) is proposing a buyout plan that would cut payments to farmers from the $13 billion passed by the Senate and the $10 billion passed by the House to $7 billion. The Republican plan would be paid for by tobacco companies, eliminating $3 billion in phase II payments that were protected in the House bill.

"This new Republican buyout plan cheats North Carolina's farmers, and it is absolutely unacceptable," Etheridge said. "After years of waiting and with a 30 percent quota cut hanging over their heads, our farm families are caught in the middle of the Republican leadership's misguided election year politics. Time is running out, and last-minute political gamesmanship by Republican Party bosses should not be allowed to kill the buyout for North Carolina's farm families."

In addition to cutting payments to farmers, the Republican plan excludes FDA regulation of tobacco. The debate over FDA regulation has surrounded buyout legislation for some time. In a Washington Post story today, Republican Senator Mike Dewine said: "FDA regulation of tobacco is the most important public health bill to come up in quite a few years, and the way to pass it is by twinning it with the tobacco buyout. A de-linking of the two is simply intolerable and will occur over my dead body." To read more of what Republican Senators are saying about FDA and the buyout, please click here.

An article in today's CQ Today reports on the latest developments on the buyout.

Thomas Floats New Tobacco Buyout Structure in Tax Bill

By Jill Barshay and Mary Clare Jalonick, CQ Staff

The top tax writer in the House is considering changes to a proposed federal buyout of tobacco farmers in order to complete legislation that would lift European trade sanctions against U.S. companies.

The tobacco buyout has been attached to corporate tax overhaul legislation (HR 4520) since June and is now proving to be the most serious impediment to completing a conference agreement before Congress is set to recess on Oct. 8.

At the end of last week, the House Ways and Means Committee was searching for ways to create a corporate tax bill that would appeal to House members from tobacco districts as well as most senators.

The problem is that a majority of senators are insisting that a federal buyout of tobacco farmers be coupled with federal regulation of tobacco as a drug. But House Majority Leader Tom DeLay, R-Texas, among other House lawmakers, opposes Food and Drug Administration (FDA) regulation of cigarettes.

The latest idea being considered by Bill Thomas, R-Calif., the chairman of the Ways and Means Committee, is to exclude FDA regulation of tobacco from the bill, but reduce payments to tobacco farmers to $7 billion from about $10 billion or more.

Instead of taxpayers, the tobacco companies would be asked to pay for the buyout, as the Senate had included in its version of the bill. The House-passed version of the corporate tax measure proposed that the buyout be financed by the federal government.

Scott Ballin, a steering committee member of the Alliance for Health, Economic and Agriculture Development, a coalition of tobacco growers and public health groups, circulated an e-mail Oct. 1 criticizing the new proposal, saying he was concerned that payments to farmers would suffer a "substantial" decrease, that certain tobacco companies would shoulder a disproportionate share of the bailout, and that "there may be attempts to knock out the FDA provisions or significantly water them down."

A House aide familiar with the negotiations said the new proposal was a risky strategy. Even if a majority of conferees were to approve it, failure to include FDA regulation of tobacco could provoke a Senate filibuster, and the entire bill could die.

Senate Finance Chairman Charles E. Grassley, R-Iowa, has said the Senate would not accept a buyout without regulation.

The House bill did not include FDA regulation, but the Senate bill did, passing 78-15. Republican House leadership, including Majority Leader Tom DeLay (R-Texas), has expressed opposition to FDA regulation and has threatened to strip it. In a conference call last week, Etheridge, along with U.S. Reps. Brad Miller (D-Raleigh), G.K. Butterfield (D-Wilson), David Price (D-Chapel Hill) and John Spratt (D-South Carolina) laid out the possible scenario that the House Republican leadership and conferees could insist on leaving FDA out of the conference report. This scenario could fatally endanger the report's passage in the Senate, resulting in the buyout being removed from the legislation.

U.S. Rep. Richard Burr (R-Winston Salem) is the only North Carolina member of the conference committee. For a full list of members, please visit http://waysandmeans.house.gov/Links.asp?section=1571.

The conference committee on H.R. 4520 is working out differences in the versions of buyout legislation and the underlying corporate tax legislation passed by the House and Senate. The Senate version would cost $13 billion and would make payments of $8 for quota holders and $4 for growers based on 2002 quota levels. It would be funded by an annual assessment on tobacco companies based on their volume of domestic sales. The Senate version includes regulation of tobacco products by the Food and Drug Administration (FDA).

The version passed by the House would cost $9.6 billion and would make payments of $7 for quota holders and $3 for growers based on 2002. It would be funded through current tobacco excise taxes. The House version does not include FDA regulation, and it would preserve Phase II payments.