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Bipolar Hill Alert
Feds attack and rescue Big Tobacco.


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Deroy Murdock

Rep. Henry Waxman (D., Calif.), a big-government liberal, rarely concurs with Rep. Jeff Flake (R., Ariz.), a dedicated free-marketeer. But watching their colleagues in the GOP Congress recently exhibit the self-restraint of hounds in heat made them both recoil in full-blown, left-right disgust.

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”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 Rep. Bill Thomas’s (R., Calif.) brand-new boondoggle: $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 United States taxpayer.

“Under current law,” 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 three to four 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 Congress find $9.6 billion 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,” 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 largesse, equal to the GDP of Tanzania. According to the Campaign for Tobacco-Free Kids, 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 is preparing a $280 billion racketeering lawsuit against Philip Morris, Lorillard, and four other cigarette manufacturers. Says Justice spokesman Charles Miller: “We go to trial September 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 pick ax. 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.

This 424-page bill reduces taxes by $149.5 billion through 2014 while hiking levies by $115.1 billion. Sickened by the tobacco gratuities and lots more, 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,” Rep. 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, 251 to 178. It now will be reconciled with a Senate plan that cuts business taxes by $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-rate 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.



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