Showdown Over Tobacco Buyout Continues

By DAVID ROGERS

The newest political storm of this election-year summer is a House tobacco bill worth millions to farmers and engineered by the irascible Ways and Means Committee Chairman Bill Thomas. Mr. Thomas is promoting a $9.6 billion phaseout of tobacco's Depression-era quota system -- a plan he has attached to a larger corporate-tax bill that Republican business allies want moved through Congress this year.

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The political payback was immediate last week, as the House voted 251-178 for the tax bill, with lawmakers from six Southeast tobacco-growing states voting 49-7 with the chairman. "I was born in a log cabin and my father paid the midwife with part of his tobacco money," says Rep. Ron Lewis (R., Ky.) wistfully. "The stars are all aligned at the right time for this to move."

The Senate won't respond until after the July 4th recess, and no one knows what will happen next. But Mr. Thomas, a Republican from California's Central Valley who cut his teeth on federal farm programs as a junior member of the Agriculture Committee, clearly has elevated an issue that almost certainly will influence power in Congress -- and quite possibly the White House.

The current tobacco quota system was designed to keep supplies stable while guaranteeing a profit to farmers by allocating how much each qualified grower could raise. As fewer people smoke and cigarette companies buy more imported leaf, however, quota holders have seen their equity plummet like a 401(k) turned sour. The House-passed bill would effectively replace this system with one allowing freer production after compensating quota holders by means of a five-year buyout. Farms in 21 states will be affected, but more than 90% of the payments will go to tobacco growers in the politically volatile Southeast. The cost to the Treasury -- and the fact that millions will go to some individuals who stopped farming years ago -- is already sparking criticism.

The public-health lobby is up in arms because ending production controls could lead to cheaper tobacco for cigarettes, without any promise of regulation by the Food and Drug Administration. And newspaper editorials in tobacco states express worry that the plan is tilted too much against the small grower.

But Mr. Thomas dismisses as "total hogwash" any notion that he will quickly retreat after achieving his goal of moving the corporate-tax bill out of the House. In an interview, he suggested that he and fellow Republicans are on the hook to deliver some relief for tobacco states and that Washington has a "moral responsibility" to find an orderly way to end an archaic production system the government helped create decades ago.

The Senate is ground zero in this political war. The chamber's top two Republicans, Majority Leader Bill Frist of Tennessee and Majority Whip Mitch McConnell of Kentucky, who is a major force behind the scenes, represent tobacco states. Moreover, Republicans could lose their slim 51-49 majority in November depending on the outcome of a pair of open-seat Senate contests in North and South Carolina.

President Bush isn't immune either. A statewide poll published this week in North Carolina showed him with a surprisingly narrow 47-42 lead over Massachusetts Sen. John Kerry, the presumptive Democratic nominee. The president stumbled badly last month when he told a reporter in Cincinnati -- across the river from tobacco country -- that he saw no reason to change the quota system, despite all its troubles.

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