Congress tills tough ground in trying to lower farm subsidies

By , Staff correspondent of The Christian Science Monitor

While widening rents continue to appear in the nation's "social safety net," Uncle Sam apparently will have little trouble providing a cushion for American farmers. The Senate's recently passed omnibus farm bill retains government support and subsidies for those who grow US crops.

Still, the bill was not approved without unusually rancorous quibbling within the farm coalition. The Reagan administration paid the political price for votes for its economic package by agreeing to a relatively intact sugar price-support program. But the White House worked its will in other areas, threatening a veto in the name of austerity. Dairy price supports, for example, will be reduced by some 45 percent in the coming year.

Now, the House of Representatives is about to take up the four-year farm bill , and here the horse trading could prove even more lively. The farm lobby is not as influential in the House, where a higher proportion of members come from urban areas. At $10.8 billion, the Senate bill is considerably less than the farm lobby wanted, but still nearly $2 billion more than the administration goal. The House could whittle the farm bill in coming days, forcing a compromise fight.

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One key indicator of how much the political climate has changed for farmers in Washington could come with that most sacred of agricultural cows, tobacco. The SEnate in May narrowly defeated a motion (56-42) to slash tobacco subsidies in 1982. The tobacco price-support program survived the recent Senate farm bill vote, but tobacco opponents will have another chance when specific appropriations are voted. Some 50 House members are sponsoring a bill that would eliminate it entirely.

Much of the opposition to tobacco is coming from Republicans, who argue that deregulation and the free market -- key points in the Reagan philosophy -- ought to be applied to a nonfood farm product that is acknowledged by the government to be harmful. If food stamps and school lunches are to be cut, they ask, why not tobacco subsidies?

"At the very time we pour hundreds of millions into tobacco subsidies, we are spending additional millions to try to persuade children and adults to avoid tobacco addiction," says Sen. Mark O. Hatfield (R) of Oregon, Senate Appropriations Committee chairman. "It's past time that this absurd and tragic paradox was ended -- permanently."

Even ardent tobacco supporter Rep. Larry Hopkins (R) of Kentucky acknowledges that "five years from now, tobacco growers will be operating under a totally different federal tobacco program, and they should prepare for some changes."

Leading the attack on tobacco in the House is Rep. Thomas E. Petri (R) of Wisconsin, author of the "Tobacco Deregulation Act of 1981."

That proposed legislation would repeal the allotment system that restricts tobacco farming, as well as eliminate the loan program under which the federal government buys tobacco that is not sold at commercial auction. It also would impose user fees for inspection and grading services now provided at government expense, and it would raise the federal excise tax on cigarettes by 2 cents a package.

Tobacco supporters say the government allotment and price-support program has cost Uncle Sam just $57 million (a small percentage of total losses on commodity loans) since it began in 1933 and argue it has helped protect small farmers.

Opponents say the allotment restrictions and price supports have kept tobacco prices artificially high, resulting in a threefold increase in foreign imports over the past 15 years and the holding of ever-larger stocks of unsold domestic tobacco by the government.

"The current program is rapidly becoming bogged down in very large surpluses, " says Mr. Petri. "The government is now warehousing about 630 million pounds of tobacco for which there is no demand. This amounts to about $1 billion of stored tobacco financed through government loans."

Many allotment holders are not small farmers but well-to-do absentee landowners -- banks and corporations who benefit from a government-imposed monopoly, say tobacco subsidy opponents. More than 80 percent of those who grow tobacco rent at least some of their land.

Congressman Petri estimates that the increased federal excise tax will generate $700 million a year in federal revenues and offset a production price decrease that might have encouraged more smoking. At the same time, he figures, the government will save $100 million a year in loan subsidies and administrative costs.

"It is time to return this industry to the free market and get the government out of the tobacco business," Petri says.

It is an argument that squares exactly with "Reaganomics" and -- in the case of many other federal programs -- might have proved immediately unresistible to the budget-cutters now running things in Washington.

But like the attacks on "pork barrel" water projects, attacks on tobacco have come and failed before. It remains to be seen whether the new mood or the old politics will prevail.

One sign of change may be that the American Medical Association for the first time this year reversed its traditional position and passed a resolution calling for an end to tobacco subsidies.

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