The MacNeil/Lehrer Report; Tobacco Hearings

ROBERT MacNEIL: Good evening. For years the so-called tobacco lobby representing tobacco growers and manufacturers has been one of the most potent political forces in Washington. But things are changing. Congress recently raised excise taxes on cigarettes, and it is now considering a tough new health warning on cigarette packages. There is also a move to abolish the growers' cherished price-support system, and the Reagan administration has weighed in with a new report blaming smoking for many health problems. But supporters of tobacco haven't given up. Today they counterattacked when members of the House tobacco subcommittee held a field hearing in rural South Carolina. The purpose was to hear from angry tobacco farmers who think their product and their industry are being unfairly singled out. Tonight we'll hear from those farmers and those who make the economic and health arguments as we examine the tobacco industry under fire. Jim?

JIM LEHRER: Robin, the government's tobacco support program was set up in 1933 by Franklin Roosevelt's New Deal as part of an effort to stabilize agricultural production. There are several parts to it, including guaranteed prices, rigid controls over the size of crops and a loan system to store surpluses. At the center of it is an allotment system that has a lot of past history and present criticism surrounding it. Fifty years ago the federal government issued what amounted to permits or licenses to specific farms or farmers to grow tobacco. There are 620,000 of them still in effect, and they are necessary tickets for anyone who wants to grow tobacco. Many of them have been handed down to family members, but others have been sold, or, more common now, leased by non-farmer-owners to others who actually do the farming. Critics say it's an archaic, feudal system that should be abolished. Supporters say it's what has kept the industry stable. It was what tobacco farmers in Merion, South Carolina, think of this and their entire support program that members of a House subcommittee went to hear today.

Rep. CHARLES ROSE, (D) North Carolina: The tobacco price support program is extremely important in places like North and South Carolina and Georgia and Virginia where we grow lots of quality tobacco, and to do away with this program would slash land values and would put literally hundreds of thousands of people in great economic binds.

LEHRER [voice-over]: Considered the star witness was long-time tobacco farmer Rufus Larrimore, who helped write the original New Deal legislation.

RUFUS LARRIMORE: We appreciate your interest in coming down to our good state of South Carolina, and we appreciate your interest in Washington in helping us tobacco farmers. And we feel real confident that our tobacco program is in good hands with people like you up there. I'm in favor of our present tobacco program. The tobacco program has been successful ever since 1934 when we first started it. Gentlemen and ladies, in those days, when you could not buy your wife and children a pair of shoes, it made you think about doing something about it.

LEHRER [voice-over]: At the tobacco hearings today, much of the testimony was technical, but it wasn't technical yesterday when a group of farmers got together to discuss proposals to do away with their support program.

1st FARMER: I'm really tired of having to fight from year to year for tobacco programs. And it seemed like to me that we thought we had it settled last year when we agreed to have a no-net-cost tobacco program, and it cost the federal government not one penny, and guaranteeing to them it wouldn't cost anything, and then to come back and aggravate us again, and we have to defend it all over again. It's just not right to keep antagonizing the tobacco farmers. We have a hard enough time getting out there working and keeping the suckers off and working, much less having to spend a big portion of our time trying to defend the program.

2nd FARMER: You know, farming is the only business I know that never priced anything. Everything we buy today -- we go and buy polyethylene and seed and fertilizer and chemicals and what have you, and the man tells us what he's got to have fot it. Well, we go to sell something, we say, "What'll you give me?" We don't -- we have nothing priced except we do have this little back-up support on the tobacco, and I sure hope we can keep it.

3rd FARMER: If we don't keep this tobacco program we're going to lose our farms. What our children and grandchildren are going to do I'd hate to say. I hope they don't all have to go on welfare. And that's what it looks like to me.

2nd FARMER: We can't compete with the corn belt on corn and the grain belt on wheat and we can't grow oranges like Florida and California, and grapes like other places. This tobacco means everything to us.

1st FARMER: You got people like Congressman Petri that for some reason he's just against tobacco farmers. I reckon probably he would like to see us all on welfare; I don't know of no other reason why he'd be doing what he's doing because he can't be truly informed on the tobacco to try to introduce a bill to kill the tobacco program.

MacNEIL: The man he was talking about, the target for much of the farmers' anger is a Republican congressman from Wisconsin, Thomas Petri. This month he introduced legislation to abolish the tobacco support program, and the bill now has 44 co-sponsors. Congressman, first of all, what precisely do you want to abolish?

Rep. THOMAS PETRI: Well, we want to abolish the tobacco allotment program. This is a program that was set up, as was pointed out at the beginning of the program, back in the 1930s, and it probably made sense then to stabilize the industry and to set some sort of a quota for people who were out growing tobacco. But it wasn't well designed at the beginning, and so it's drifted badly off course since it was set up, and now you have most people who have allotments not farming. About 84% of the allotment holders are people who rent their allotments to people who actually are commercial tobacco farmers.

MacNEIL: What's wrong with that?

Rep. PETRI: Well, why should one American, as a result of government legislation, have the right to charge another American money in order for that American to earn a living?

MacNEIL: It's just the ethical or moral principle there; is that all you're concerned about?

Rep. PETRI: Well, I think that that's one of the things that's just plain wrong. My ancestors came over from Europe some time ago, and one of the reasons they came to this country was to avoid having to pay someone for the right to work in a field. And we are drifting in that direction now. The allotment holders, many of them are perfectly good people -- their grandparents maybe worked real heard growing tobacco, but now a lot of them are living in New York or down in Florida or somewhere else, and they're getting $1,000 an acre or thereabouts from a person who is out working trying to grow tobacco. The result of this is to put a burden on the whole industry to raise the cost of American tobacco on the world market, and so we're seeing imports beginning to mushroom, coming into the United States because foreign producers don't have this allotment charge as a cost of their production. More tobacco is going into warehouses in -- I think in Kentucky, and there at Burley last year about 35% of the crop ended up going into warehouses rather than being sold.

MacNEIL: You also want to abolish the price support system? You want to stop the federal government from buying tobacco and maintaining the price? Is that -- do you also want to do that?

Rep. PETRI: Well, that's right. That's right. If the price were to come down I think you'd see farmers end up doing better because they could export a great deal more tobacco. We're seeing -- this country in a way was founded on tobacco. The Virginia colony discovered that one of the things they could do that wasn't being done over in Europe was grow tobacco and sell that to earn a living. Now we're seeing imports of tobacco not only of the sort of esoteric varieties that are needed for blends, but of the sorts that we produce here in the United States and have always used. We had two-thirds of the world market in tobacco a few years ago, and now it's down to about a third, and that means we're pricing ourselves out of world markets, losing exports we could have as a result of government legislation.

MacNEIL: You just heard one of those farmers say that the government support program doesn't cost the taxpayer anything, and they've made lots of concessions and you keep coming back and picking on them.

Rep. PETRI: Well, you can always assume that a program doesn't cost anything if you make proper assumptions. New York City claimed that it was operating with a balanced budget for years until suddenly it turned out -- a little careful reading of the books showed they were actually way in the hole and had to be bailed out. And we have a tobacco program. It's called no-net-cost, but it involves millions of pounds of tobacco in government warehouses, much of which is aging and probably can never be sold for what it's carried on the books, as there's a big loss there. The General Accounting Office, the government arm that kind of audits these programs, estimates that it's cost the taxpayer about $500 million in interest subsidies over the life of the program.

MacNEIL: And what is the total cost every year of the tobacco program, do you estimate?

Rep. PETRI: Well, it's very hard to estimate that exactly. We figure it's somewhere in the neighborhood of -- it'll depend on what they get for the tobacco that's now in warehouses, but it's certainly somewhere in the neighborhood of $15 to $60 million, despite the no-net cost fees that are being charged.

MacNEIL: Well, thank you. Jim?

LEHRER: When Congressman Petri introduced his legislation, a House colleague immediately labeled it a publicity-seeking stunt and declared himself to be smoking mad about it. That colleague was Congressman Larry Hopkins, Republican of Kentucky, the ranking minority member of the House tobacco subcommittee. Has your opinion of Congressman Petri and his proposal changed any, Congressman?

Rep. LARRY HOPKINS: No, Jim. As a matter of fact, I compliment him on that stunt because, after all, he is now on the MacNeil-Lehrer show, and that's a national --

LEHRER: So it's paid off, from your perspective?

Rep. HOPKINS: I'd say so, absolutely.

LEHRER: I see. Well, why is he wrong? Why should this tobacco subsidy or support program be continued, Congressman?

Rep. HOPKINS: I don't think that my friend Tom really understands the program, and let me make it very clear to you that we get along normally. But this is war, as far as I'm concerned, because what he is attempting to do is cause economic chaos all over the Southeast. I happen to be here tonight representing 600,000 good American people who want to make an honest living raising tobacco, and they want to be left alone. He wants to take them off the tobacco fields and put them on welfare. Basically, that's what --

LEHRER: And that's what would happen? Now, why would that be the result?

Rep. HOPKINS: Well, you take a guy, Jim, that goes out here, he wants to get started in life and he can buy a little farm. A lot of people, and Tom, I suppose, would have you believe that I'm talking about a 10,000-acre plantation. The average size farm in Kentucky -- tobacco farm -- is one-half acre. And that's in Burley tobacco. In flue-cured it's three acres.

LEHRER: Flue-cured? That's the kind that is mostly in cigarettes, right?

Rep. HOPKINS: Well, that's in North Carolina, South Carolina, yes, sir.

LEHRER: Right.

Rep. HOPKINS: But if a guy goes out here and he wants to earn a living -- he gets married and he just wants to earn a living. He goes down to see his banker and he says, "Look, I can buy this land out here if you'll loan me the money," and the guy says, "Well, what's your collateral?" He says, "Well, it has a tobacco base on it, and I can raise tobacco" because that's one of the few crops today that you can make a profit on. And now he wants to destroy that one. So he tells the banker that he can buy this land. If this bill goes through that banker is going to knock on that farmer's door and say, "Sir, I'm sorry, but Mr. Petri just removed your collateral, and you're going to have to come up with --

LEHRER: The collateral being the government guarantee of the price --

Rep. HOPKINS: That is correct.

LEHRER: What isthe point of keeping this allotment system, this thing that's been in business for 50 years, where people are able to lease these things? Because that little farmer you were talking about who goes to the bank, he better have an allotment or he can't do it, right?

Rep. HOPKINS: That's exactly right, Jim, and Tom would have you believe he's going to try and help the farmer. I submit to you that that would be like me going to a turkey farmer and saying I want to help turkeys by having more Thanksgivings. He's not going to help the tobacco farmer at all; make no mistake about that. Ninety-eight percent of the farmers in the Burley belt just last month voted to keep the program. So if they didn't like it --

LEHRER: But what is the basic rationale for that? Why does that make sense? I mean, the idea of the allotment system, that only 620,000 of these things are out and that means if you don't have one you cannot go and grow tobacco.

Rep. HOPKINS: It's a right, Jim, that goes with the land. It causes that land to be valuable or less valuable. It's a right that's been there since the 1930s, and the farmers like it that way. If a farmer breaks a leg he may not be able to raise tobacco this year, so he would lease that to one of his neighbors and let him raise it if he wants to. But he doesn't have to. The government doesn't say you have to lease it or you don't have to lease it. As a matter of fact, there's not too many people doing it on a poundage basis. Over 90% of the pounds grown in Kentucky were grown by the farmer on his own land last year.

LEHRER: You heard what Congressman Petri's estimate was on what this tobacco support program costs the federal government, the taxpayers, every year. What's your estimate?

Rep. HOPKINS: He'd have you believe that the government subsidizes tobacco. Let me make it clear nationally tonight. The government does not subsidize tobacco.Tobacco subsidizes this government. Since its inception -- it has got the best program of any commodity up here, bar none. Since its inception it has cost something like $48 million over a 50-year period. The taxes on that product in three days pay for any loss that might have been suffered by it --

LEHRER: But to administer the program, what? Is it $15, $16 million a year, is that what it is?

Rep. HOPKINS: Well, that's the price of doing business, just like it administers -- the government administers all commodities, and this one should be no exception.

LEHRER: Well, from your point of view, there's absolutely no merit to what Congressman Petri has in mind, and he's doing it just because it's easy to pick on tobacco, you think?

Rep. HOPKINS: I'm just telling you that in my position, and I'm the ranking member on the tobacco subcommittee -- as a matter of fact, I'm on the dairy subcommittee. Now, if he wants to save money, he ought to look at dairy. That's where he has his expertise in Wisconsin. Dairy? You know what that cost the public last year: $2.23 billion? Tobacco's not going to cost the public anything because we have a no-net-cost program.

LEHRER: We'll get back to that one in a minute. Thank you. Robin?

MacNEIL: In addition to its political problems, the tobacco industry has been feeling the heat from the health community.The Federal Office of Smoking and Health recently released this report using the strongest language the government has yet employed about smoking. It said cigarette smoking is the most widespread example of drug dependence in our country, and it blames smoking for causing more illness and death than all other drugs. Those farmers in South Carolina also had something to say about the health issue.

FARMER: Personally I don't believe from the bottom of my heart that they know what causes cancer because cancer is in some cities much more than it is other cities; where they have a lot of pollution it's shown that to have a greater bunch of cancer. So I don't believe that is the answer. What they're doing, though, they're using the word cancer to try to scare people, and I don't appreciate them always picking on tobacco.

MacNEIL: One of the leading campaigners against smoking is the American Lung Association. James Swomley is the Association's managing director. Mr. Swomley, are you in favor of getting the federal government out of the tobacco support business?

JAMES SWOMLEY: Very definitely. We would like to see the federal government out of the tobacco business. We're talking about an industry, a product that kills 340,000 Americans each year, and we think it is wrong for the government to subsidize and to give the protection to that industry which it does in so many ways.

MacNEIL: What would it accomplish in terms of affecting the health of Americans to abolish the federal program?

Mr. SWOMLEY: Well, one of the problems with the federal program is the allotment system, and the 500,000 people who have the allotments. And this provides a tremendous political force that has brought protection to the cigarette industry that is afforded no other industry in America. And it's somewhat hypocritical for our federal government to spend $2 million to finance the Office on Smoking and Health to let people know about the health risks of smoking, and then spend $15 million to administer a program to help grow tobacco.

MacNEIL: Why is it different, in terms of the political support and political pressure that's able to be brought, from people who own shares in other industries and might want to bring pressure on the Congress to -- or in Washington to affect those industries favorably?

Mr. SWOMLEY: Well, certainly there are parallels with other industries, but 500,000 people working, in effect, politically for the tobacco industry does create a force, and they have been successful beyond that of any other industry. For example, when you talk about food you have the Food and Drug Administration, and if somebody adds something to food that is harmful to that food, the government can stop it. If a toy manufacturer puts out a product that is dangerous to children, the Consumers' Product Safety Commission can stop it. There are checks and balances on all types of industry and food production. But the tobacco industry is virtually alone in being exempt from any type of control. And this is because of the political force that has been mustered for the tobacco industry.

MacNEIL: What do you say to that farmer who you just heard say, "Oh, they're just trying to scare us, using the cancer scare?"

Mr. SWOMLEY: Well, what I would say is this, that the original Sugeon General's report came out 19 years ago. Virtually every country in the world has, through their medical societies, their government health programs, come to the same conclusion. It's been a good many years since the federal government did a tabulation which indicated there were 10,000 research studies, all of which led to the same conclusion, that smoking is hazardous to your health. There have been thousands more since then. It's probably been studied more and better documented than any health problem that we know of in the world today.

MacNEIL: Does therecent smoking and health report issued by that section of the Health and Human Services Department, which I quoted briefly, indicate that you feel the Reagan administration is on your side for a tougher campaign against smoking?

Mr. SWOMLEY: I think it indicates that the Reagan administration or the Department of Health and Human Services -- the Surgeon General of the United States and the Office of Smoking and Health -- are giving a realistic assessment to the evidence on the problem, and I applaud the report that came out because I think it is based on scientific merit. Some of the references in there relate, on the drug dependency part, to the American Psychiatric Association and the World Health Organization classifications on drugs, and the criteria used there. So I think it's a scientific document that's been put in laymen's language.

MacNEIL: Thank you. Jim?

LEHRER: Congressman Hopkins, do you see a hypocrisy in the federal government with one hand running a tobacco support program and then with the other hand warning the American people not to smoke because of the health hazards?

Rep. HOPKINS: No. As a matter of fact, I think they have an obligation to do that, Jim.

LEHRER: Do both?

Rep. HOPKINS: I go before the Appropriations Committee every year and ask for appropriations for research to make things as safe as possible, you know. They've got this bill floating around up here on the Hill now where they're going to rotate more labels on cigarette packages. It really isn't going to do any good. The federal government doesn't require that you put a label on skiis. If you go skiing it doesn't say on the bottom of the skiis, "If you go skiing you may break your leg." No, the federal government doesn't do that, and I submit to you that more labels are not going to do any good at all. People already know that. It's been extremely well advertised.

LEHRER: But you don't see any problem with the government doing that at the same time it's also supporting --

Rep. HOPKINS: Absolutely not.

LEHRER: What about you, Congressman Petri?

Rep. PETRI: Well, I do think it's inconsistent for the government to on the one hand tell people a product is dangerous and on the other hand to subsidize the industry and to give a kind of a franchise to people whose grandparents happened to be tobacco farmers.

LEHRER: All right, Congressman Hopkins, to the other point that Mr. Swomley made, which is, with these 500,000 allotment holders, they constitute a tremendous political force.

Rep. HOPKINS: And somebody ought to be up there representing them, I'll tell you that, because they've been catching the brunt of the load for years up here, and they're getting a little tired of it, and I don't blame them. They have the best commodity record up here, and again I can only compare dairy with --

LEHRER: You mean, when you say commodity record you mean in terms of --

Rep. HOPKINS: Of a loss economically. It has not cost the government any money over a 50-year period. And the stocks of tobacco that's in there now, we passed a no-net-cost program which we were going to get into which simply says that the producers of tobacco will pay for any losses that that product might cost.

LEHRER: Congressman Petri, do you think that the -- is one of your problems with the allotment system also the political force Mr. Swomley says that it constitutes?

Rep. PETRI: Well, that's one of the problems, but it's interesting. There's a split that's been gradually developing, and people try to confuse the allotment holders with the tobacco farmers. In fact, naturally the allotment holders have a huge economic stake that's been created artificially by this government legislation. The farmers, on the other hand -- it's kind of a mixed bag. Most of them do have allotments, but in order to farm, particularly with the flue-cured types of tobacco, they have to have certain economies of scale and they therefore have to rent additional acres to do that, and they -- many of them would like to see this government let them do it without giving the money to another --

LEHRER: In other words, you're suggesting that neither Congressman Hopkins nor those folks in South Carolina speak for all the tobacco farmers on this issue?

Rep. PETRI: No, I don't think so. The tobacco -- we introduced this legislation in the last session of Congress and we were told we were, you know, anathema from all the tobacco farmers. After the publicity we got in North Carolina and other parts of the country, why, tobacco farmer organizations organized to support our legislation -- 50 of them at their own expense came all the way up from North Carolina to do it, and they wanted the bill introduced early because they have to be out there working. They can't hire lobbyists. They have to be out there working in the fields themselves. They're not absentee owners, the way many of the allotment people are.

LEHRER: Congressman Hopkins?

Rep. HOPKINS: With all due respect, Jim, let me tell you what we're talking about. We've got 600,000 tobacco families in 22 states. So he just said he's got an organization of 50. Does that sound like that they're really splitting off? Certainly it doesn't to me. You can take 600,000 of anything, and I'll find 50 people that are unhappy with it.

LEHRER: Is Congressman Petri's bill going to go anywhere?

Rep. HOPKINS: I think his bill has got about as much chance of passing as Hitler would have driving through Jerusalem in a convertible. It is going nowhere.

LEHRER: Congressman Petri?

Rep. PETRI: I think you're going to see the tobacco program modified this session of Congress, as it was last session of Congress as a result of pressure that's been brought on the industry. The fact of the matter is --

LEHRER: Pressure being brought by the industry, you say?

Rep. PETRI: No, pressure being brought on the industry --

LEHRER: On the industry.

Rep. PETRI: -- as a result of -- you know, this came within one vote in the Senate last session, within 34 votes in the House of Representatives. And last session it was opposed by the Speaker, by the President of the United States, and by organized labor and other groups, and we still came within 34 votes of passing an amendment to the agriculture bill to abolish the tobacco program. So I think the pressure of economic events alone is going to require that this basically failed no-net-cost program be substantially revised because it's not working, and I think you're going to see that as time goes on more and more people pass these allotments on to non-tobacco farmers, that the people are going to just say this is -- enough's enough, and we're going to have to abolish this absentee allotment program.

LEHRER: Mr. Swomley, from the health point of view, do you see any change in the attitude of the people you talk to in terms of making the connection between the health concern having to do with tobacco and this support program?

Mr. SWOMLEY: Yes, I think there has been a growing concern. There is much more interest today in the total approach to the smoking problem -- not just the subsidy part of it, the money that goes into the administration of the program, the allotment system, but the various other protections that the cigarette industry is getting in Washington. More and more people are stopping smoking; we have 33 million ex-smokers in the United States. Nonsmokers' rights is a growing force in this country. And the whole concern with the problem is growing.

LEHRER: Are you fighting the tide, Congressman Hopkins?

Rep. HOPKINS: Oh, absolutely not. You know, we plant tobacco in the spring, and I guess I'd be disappointed if Tom or some of his type people wouldn't introduce bills to do away with it. You get used to that, I think, up here, and he has a right to do that. But if he really wants to save money, I have to emphasize this again, and what could ultimately happen, Jim, if by some stretch of the imagination that his bill should pass and you do away with price supports on tobacco, which is the best record of any commodity up here, then it seems reasonable to me that somebody's going to say, "Then maybe we ought to go after the worst record up here," that being the dairy industry, which he's very familiar with.

LEHRER: I have a hunch --

Rep. HOPKINS: And I think I could make a strong case about that, because it cost the government last year $2.23 billion.

LEHRER: I think you've just been threatened, Congressman.

Rep. PETRI: I think Larry represents an awful lot of dairy farmers. They in fact do both, and he's not going to do anything to hurt his constituents who are out there producing healthy milk.

LEHRER: All right, we have to go. Robin?

MacNEIL: Congressman Petri, Congressman Hopkins, thank you; Mr. Swomley, thank you. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: That's all for tonight. We will be back on Monday night. I'm Robert MacNeil. Good night.