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Wednesday, November 26, 2014
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Published: Sunday, 9/5/2004

Getting rich on tobacco

As Congress begins debate on the tobacco buyout bill this month, we can expect to hear emotional speeches claiming that the government payments will ease the burden of mom and pop growers whose cash crop is under assault by anti-smoking interests.

Don't believe it.

At least 80 percent of the people who would be entitled to $8 billion to $12 billion in government payments under this boondoggle aren't growers. Most of the beneficiaries would be absentee landowners who hold tobacco quotas, an official license to produce a certain amount of tobacco in 21 states.

Nationwide, according to a report in the Wall Street Journal, quota holders include a large number of millionaires, plus "country clubs, churches, colleges, universities, and high schools that bought or were bequeathed land" in tobacco-growing areas. The common thread is that few of them actually grow anything.

One quota holder identified by the Journal is Larry Flynt, the pornography king, who inherited it from his grandfather, a Kentucky tobacco farmer.

According to an analysis of the House version of the buyout bill, more than 16,000 Ohioans would receive $128.9 million from 2005 to 2009. More than 1,700 Michigan residents would get $5.8 million.

The top 10 percent of quota holders would get 67 percent of the money, which clearly tilts the measure toward already-wealthy interests.

If this were just a garden variety government bailout, we would suggest bagging the whole thing, but there's a bigger prize to be had: limited regulation of tobacco by the federal Food and Drug Administration. The Senate version of the bill, which would cost $12 billion, contains such a provision allowing regulation of the manufacture, production, sales, and advertising of tobacco products. The $8 billion House version does not.

As we have said before, the price of partial FDA regulation apparently is the bailout. That's not much of a trade-off, because tobacco would continue as a legal product not subject to a government growing ban. A better choice would be to regulate tobacco as a drug, which would help Toledo and thousands of cities and states that have, or are proposing, comprehensive bans on smoking in public places.

If Congress insists on pressing on with a halfway measure, lawmakers should spare us the economic disaster stories. We know they're just blowing smoke.



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