June 17, 2004
SMOKE & MIRRORS:
House Narrowly Passes Tax and Tobacco Bill (THE ASSOCIATED PRESS, June 17, 2004)
Democrats helped give Republicans the margin of victory Thursday as the House passed a $155 billion bill that would cut taxes for American producers and pay tobacco farmers to give up a federal program that shores up crop prices.The 251-178 vote saw an unusual number of Democrats cross party lines and back a GOP tax bill during an election year. A new federal deduction for state sales taxes and the tobacco program successfully attracted their votes.
The core of the bill aims to resolve a trade dispute with Europe that has slapped punishing tariffs on some American exports. The trade sanctions, now 8 percent, rise another 1 percent each month.
The tariffs retaliate for a U.S. tax break that world trade courts ruled an illegal export subsidy. The White House warned that unless lawmakers quickly change American tax laws, ``then the tariffs that were imposed by the EU on March 1st will inflict an increasing burden on American exporters, American workers and the overall economy.''
House Republicans said resolving the European standoff and infusing new tax cuts into the economy would mean better economic growth and more jobs.
"Tariffs is another word for taxes,'' said Rep. J.D. Hayworth, R-Ariz.
The bill is by all accounts a monstrosity and we should get out of the WTO rather than allow our sovereignty to be tampered with, but buying out farmers we've subsidized in the past could provide a template for getting rid of farm supports in the long run. Posted by Orrin Judd at June 17, 2004 5:10 PM
Bailing out is annoying, but if it actually ends the program, it will be an accomplishment.
Posted by: John Thacker at June 17, 2004 7:04 PMI seem to remember that there was an attempt to kill off the agricultural subsidies in 1995 that got reinstated a couple years later. Whatever happened to that, or am I just remembering an alternate history?
There was indeed an intent to end the subsidies and the massive "disaster" payments to farmers. The idea was for farmers to use Risk Management (essentially buying crop insurance and using the futures market to hedge losses.) I believe it was the next year that they passed disaster payments for drought related losses (and there have been similar "disasters" each year since.) However, the USDA now has lots of funding for Risk Management education programs.
Posted by: The Other Brother at June 17, 2004 8:26 PM"... and pay tobacco farmers to give up a federal program that shores up crop prices."
So they get less for their crops but get a payment from the government. I don't understand how this is any different - seems like sleight of hand to me.
Posted by: jd watson at June 17, 2004 10:02 PMJD -- It actually is different. It's cheaper, for one thing, and doesn't screw with the market as much, for another.
Posted by: David Cohen at June 17, 2004 11:35 PMAnything that ends farm/business subsidies makes sense to me. Either we believe in market forces or not.
Posted by: genecis at June 18, 2004 8:50 AM1) Militant anti-smoking has become America's new State Religion.
2) The same government pays tobacco farmers to grow more; in order for this part of the economy to prosper, smoking has to increase.
Ever want to put the UDSA tobacco-subsidy types in a Steel Cage Ring with the Health Dept anti-smoking activists and settle this once and for all with a Pay Per View Steel-Cage Smackdown Deathmatch?
Posted by: Ken at June 18, 2004 12:46 PMNever underestimate the cultural factors at work. "The small family farm is the backbone of America, blah, blah, blah..". Never mind how farmers on the government dole can possibly represent American independence and self-reliance, it represents a cultural tradition that both conservatives and liberals have an interest in preserving.
Posted by: Robert Duquette at June 18, 2004 1:03 PM