The Cigarette, page 31
The tobacco belt bid good riddance to Butz—not because of his racism or sexism, but because he wanted to weaken the allotment system. Butz proposed to dramatically increase the amount of tobacco farmers could market and decrease the level of price support they therefore received. He was trying to force farmers to produce more, to embrace the world market as the ultimate determinant of price. And if a producer could not get by without the high price supports that attended acreage reduction, then that farmer should get out of farming altogether. Predictably, supporters of the tobacco program scorned this plan. James Graham, a relentless Democratic partisan and North Carolina’s commissioner of agriculture, described “Nixon-Ford-Butz” as pursuing feudal policies that only benefited “fat cats” and Midwestern farmers. “If the Washington boys had their way,” Graham said on the stump for Carter in 1976, farming would become a “plant and pray proposition with everyone producing as much as they could or wanted.”14
Carter’s election was a reprieve, but not a solution to the problems faced by the federal tobacco program. Throughout his tenure, Carter repeatedly assured farmers that as long as he was president, the federal tobacco program would be safe.15 But Health, Education, and Welfare (HEW) secretary Joseph Califano contradicted the president’s assurances. On the fourteenth anniversary of the 1964 Surgeon General’s Report, Califano announced a vigorous anti-tobacco program. Califano, who had been a four-pack-a-day smoker during his days as a White House aide in the Johnson administration, took on the industry with a convert’s zeal. He declared tobacco “Public Enemy No. 1,” and said that smokers were committing “slow motion suicide” in making a choice responsible for more than 300,000 preventable deaths a year. He proposed a ban on all smoking on commercial aircraft, a reinstatement of free airtime for anti-smoking commercials, and a ban on smoking in HEW buildings.16
Industry reaction was furious. In Kentucky, the legislature called for Califano’s impeachment. North Carolina’s popular Democratic governor James Hunt urged Carter to fire the HEW secretary. On the ground in tobacco country, bumper stickers began appearing on the side of pickup trucks: “Califano Is Dangerous to Your Health.” After the publication of the 1979 Surgeon General’s Report, the industry dubbed him “Ayatollah Califano.” House Speaker Tip O’Neill, a friend and confidant to Califano, urged him to resign, telling him that the industry might well put out a hit on him. In the end, the industry settled for Califano’s job rather than his life. Carter fired the secretary in the summer of 1979 as part of a broad Cabinet shakeup that revealed the administration’s concerns about the 1980 presidential campaign.17
In 1978, a survey by the Flue-Cured Tobacco Farmer magazine found both sympathy and skepticism for Carter’s position: a mix of emotions that reflected the administration’s muddled messaging. “I think Carter’s trying for the growers’ and the nonsmokers’ vote together,” said one critical North Carolina farmer. “He bends over backwards to try to keep from being accused of favoring the South,” groused another—though the farmer did indicate that he approved of the president’s performance. Carter, one tobacco farmer observed, had performed “very well considering both sides and outside sentiment.”18
Congress, once the unquestioned domain of the tobacco lobby, was even less predictable than the executive branch. Democrats newly elected in the wake of Watergate were publicly questioning the tobacco program. These “Watergate Babies” were less steeped in New Deal economic orthodoxies than their older Democratic colleagues, and more likely to embrace the public interest critique of regulated industries. Many of them won seats on promises to clean up government, and their arrival on Capitol Hill diminished the power of committee chairmen—positions historically dominated by conservative southern Democrats. The crop of Democrats elected in 1974 heightened the rift in the party’s coalition. “We are not a bunch of little Hubert Humphreys,” announced freshman Colorado senator Gary Hart, who would fight tobacco alongside Ted Kennedy in the Senate Subcommittee on Health in the 1970s and 1980s.19
This new generation of Democrats represented the material interests of their suburban constituents: environmental protection, anti-inflation, deficit reduction, civil liberties.20 Their districts were places without ties to organized labor or agriculture, places where government-fostered economic organization was understood as a source of corruption and cause of pollution. Henry Waxman was perhaps the most consequential of the Democrats elected to Congress in the wake of Watergate. By the late 1970s, the Los Angeles representative had already challenged—and bested—North Carolina Democrat L. Richardson Preyer for the chairmanship of the House Subcommittee on Health and the Environment. Leapfrogging over the more senior, moderate, and, most importantly, tobacco-representing Preyer, the liberal Waxman, whose affluent district included Beverley Hills, Santa Monica, Malibu, and parts of Hollywood, represented a changing of the party’s guard.21
Preyer was a former federal judge whose decade of experience in Congress earned him the endorsement of the Washington Post for the chairmanship. But Waxman’s contribution of surplus campaign money to the coffers of ten committee members who were to vote on the seat swung the chairmanship to the Californian.22 The seniority system that had helped ensure tobacco’s privileged status in Washington was waning, even as Waxman’s particularly transactional acquisition of the seat made his win less than a moral victory.23 Waxman used his chairmanship as a bully pulpit, and by the early 1980s, he was recognized as the industry’s most formidable foe on Capitol Hill—“something special,” in the words of Ralph Nader, and “a very dangerous adversary,” in those of a Philip Morris attorney.24
Republicans had traditionally posed more of a threat to the interests of tobacco growers than Democrats. With its general aversion to taxes, skepticism if not contempt for the new breed of public interest crusader, and an openness toward the prerogatives of big business, the Republican Party had been favored by cigarette manufacturers since the era of James Duke.25 The tobacco program offered Republicans a new opportunity to opine against big government hypocrisy. But this time, they enjoyed the support of anti-tobacco Democrats. In the Senate, Orrin Hatch and Jake Garn—Utah’s duo of Mormon Republicans—represented the anti-tobacco sentiments of their constituents. In 1977, Garn joined Democrats Ted Kennedy and Gary Hart to co-sponsor a major cigarette tax hike, while Hatch would enjoy a decades-long partnership with Henry Waxman focused on tobacco and drug regulation. Having jointly shepherded a 1984 bill requiring a stiffer warning label on the cigarette pack and, for the first time, the disclosure of cigarette additives, Waxman and Hatch garnered a reputation as “the capital’s Odd Couple.”26
Some Republicans seized upon tobacco exports under international aid programs. In 1977, Colorado representative James Johnson led the House effort to eliminate tobacco exports under the Food for Peace program. Mark Hatfield, an Oregon Republican who had introduced a Senate version of Father Robert Drinan’s Nonsmoker Protection Act in 1975, spearheaded the Senate effort. The tobacco state delegations still had a few punches left, though. In one of his final legislative acts, Hubert Humphrey submitted a substitute amendment on behalf of tobacco state representatives. The “Humphrey Amendment” stipulated that food and fiber would be given priority over tobacco in PL-480 sales, which was how the program already worked in practice.27 The tobacco program thus remained untouched. And when Johnson launched another attack on tobacco that year, threatening to introduce a bill to defund the tobacco program, he was met with a warning by North Carolina Democrat Charlie Rose. If Johnson tried to take down tobacco, the House Committee on Agriculture would have to consider the cost and efficacy of subsidies to Colorado sugar beet growers. “We sweetened the pot,” Rose told the Washington Post. “We wanted help on tobacco. We convinced him to modify his position.”28 As long as the agricultural committee held leverage through subsidies, the politics of government largess required moral compromise. This momentary battle won, tobacco’s representatives were well aware that the program was out of step with the winds of Washington. Hubert Humphrey died of cancer in January 1978. The nationalist, pro-producer liberalism that he represented was also ailing in the face of bipartisan opposition.
In 1981, a duo of legislative attacks on the tobacco program forced tobacco farmers to rewrite their program. In June, Wisconsin Republican Thomas Petri introduced the “Tobacco Deregulation Act”—a framing its author hoped would resonate in Reagan’s Washington. Meanwhile, Ohio Democrat Robert Shamansky introduced an amendment to the pending Farm Bill that would have abolished the tobacco program. By the time this amendment came for a floor vote, the House had already voted to dramatically restructure the sugar and peanut programs. Shamansky derided the tobacco program as a “monstrosity” out of step with the current vogue for “getting the Government out of the market economy.” His plan to terminate the program was thwarted only with a promise written into the Farm Bill that, in accordance with “the intent of Congress,” the program would be revised the following year, in a piece of stand-alone legislation.29 This was a pyrrhic victory—a final cigarette before the execution: tobacco was the only commodity program in the 1981 Farm Bill not to come under the budgetary buzz saw. The following year, the No Net Cost Tobacco Act of 1982 was passed.
Tobacco Deregulation
Years of public debate from the time of Nader’s indictment of the “tobacco subsidy” to the passage of the No Net Cost Tobacco Act revealed the economically and politically fraught nature of tobacco associationalism, and the inability of tobacco policymakers to shut out the demands of a public that extended beyond program beneficiaries. During the flush and smoky 1950s and 1960s, the farm press and tobacco industry urged the “tobacco family” to come together in defense of their shared investment in smoking. In 1981, the Tobacco Institute commissioned a study of the attitudes held by members of the tobacco family—company employees, growers, retailers, and wholesalers. Finding the “tobacco family … solidly behind the industry,” the study recommended that the Tobacco Institute intensify outreach activities to tobacco farmers.30
Much as it did with unionized tobacco workers, the tobacco industry eagerly held up the family tobacco farmer as an emblem of the industry’s virtues: hard-working, modest, patriotic.31 But amid public hostility, a solid scientific consensus against smoking, and increasing intolerance of “big government” programs, the siege mentality exacerbated tensions within the tobacco supply chain. The bumper stickers that farmers affixed to their pickup trucks—“Thanks 4 Smoking,” “Califano Is Dangerous to My Health”—did little to conceal the dissent within tobacco’s ranks.32 Spilling onto public display in congressional hearings, intramural fights bruised the image of the family tobacco farmer—a commodity that had been cultivated nearly as tenderly as the prized leaf itself. By the early 1980s, the tobacco family looked more like All in the Family than Ozzie and Harriet.
The twin pillars of the tobacco program itself rived the tobacco family asunder: production rights and the price of tobacco. These problems had both a local and a global dimension. Within tobacco-producing communities, active growers—frequently younger and managing larger, multifarm operations—resented inactive allotment holders, who lived off the rental income generated by leasing their allotment. Meanwhile, cigarette manufacturers began to import an increasing amount of cheaper, foreign leaf. The federal price support—a price floor for American growers, a ceiling for leaf produced in countries with low labor costs—had become an incubator for the development of foreign tobacco production. In agriculture as in auto manufacturing, the unforeseen consequences of postwar domestic welfare-state investments and foreign development aid were coming home to roost for American producers.33 Japanese cars and Brazilian flue-cured eroded the paradigm of producer-centered supply management that had well served organized labor and agriculture in the postwar decades.
Growers had reason to suspect the motives of the cigarette manufacturers—the rich, overbearing patriarch of the tobacco family. Through an act of bureaucratic subterfuge, manufacturers had for years been importing increasing amounts of cheap, lower-quality tobacco, displacing American-grown leaf inside the cigarette. The authors of the Agricultural Adjustment Act understood that imports would wreck the entire price support scheme; price supports, after all, were by definition higher than prevailing world prices. For this reason, the Act contained a provision that authorized the president to impose import limitations on articles that “render or tend to render ineffective, or materially interfere with, certain agricultural programs.”34
Domestic supply restriction could only be effective with a commitment to agricultural protectionism. This state-centric agriculture policy withstood early Cold War efforts to promote international trade. The 1947 General Agreement on Tariffs and Trade (GATT) not only exempted agriculture—the only economic sector so excluded—but also permitted export subsidies for American commodities, essentially giving farmers a leg up in world markets while making sure world prices did not interfere with domestic programs.35
Cigarette manufacturers subverted import limitations by altering their product—cheapening it and reducing the content of unadulterated tobacco leaf. Manufacturers increased their purchases of tobacco classified as “scrap,” which was subject to lower import duties because it had not been considered a substitute and competitor for flue-cured leaf. Beginning in 1975, farm organizations sounded alarm bells to members of Congress and trade representatives, warning of the “strangulation of our tobacco farmers” by “ ‘so-called’ developing countries.”36 Between 1972 and 1979, scrap imports rose from 27,000 to 72,200 tons. On a percentage basis, scrap increased from 25 percent to 42 percent of total tobacco imports. “Imported tobacco continues to cost around one-half to two-thirds that of comparable domestic tobacco,” noted a 1981 North Carolina Farm Bureau report on the problem. American tobacco constituted a decreasing share of American cigarettes—despite a supposed industry-wide reverence for the superior quality of American leaf. By 1981, scrap constituted 30 percent of American manufacturers’ tobacco use in cigarettes.37
The impact of imports upon U.S. tobacco producers was the subject of several investigations under the Carter and Reagan administrations. That is to say, no investigation led to the passage of legislation that satisfied growers. Two days before leaving office, Carter ordered an International Trade Commission (ITC) investigation of the tobacco import situation—a political move intended to help North Carolina’s Democratic governor Jim Hunt shore up farmer support against Jesse Helms, whom Hunt planned to challenge for the Senate in 1984.
What Carter viewed as an easy political favor turned into something altogether dangerous for the program. “Are you confident that public hearings would not result in legislative reaction that would be adverse to the interests of tobacco producers in your and other states?” Reagan’s secretary of agriculture, John Block, asked Hunt.38 After all, an attempt to defund the tobacco program had already garnered forty-two votes in the Senate. What might be the result of a full public airing of the program? The problem of cheap, imported tobacco was created by the price-raising features of the program itself. When the investigation concluded in the summer of 1981, the ITC found that tobacco imports did not, in fact, interfere with the domestic tobacco program, despite testimony to the contrary. And by a 3–1 vote, it recommended against import quotas.39 Farmers would not be able to tariff their way back to solvency. The import issue reemerged a few years later. Facing what was considered to be a tough reelection race—polls in the spring of 1984 forecast a dead heat between Helms and Hunt—Helms loudly called for another ITC investigation into surging scrap imports, whose rise intensified with the strengthening of the dollar.
In 1984, Reagan was not particularly popular among farmers as a result of his administration’s antipathy toward and mismanagement of farm programs. Office of Management and Budget director David Stockman—whom one agricultural economist described as possessed of a “tightfistedness” that was “penny-wise and not merely pound-foolish, but billion-dollars foolish”—was an object of special antipathy in tobacco-growing regions.40 As an article in the 1984 Progressive Farmer proclaimed, “You may need a job if David Stockman gets his way.”41 In September of 1984, gearing up for a reelection campaign, the Reagan administration was thus particularly willing to inquire on the tobacco farmer’s behalf, touting the North Carolina Farm Bureau’s support for the request. Reagan and Helms both won reelection—the president by a landslide 62 percent in North Carolina, Helms by 4 points after what veteran political reporter Tom Wicker called “the ugliest and costliest race in the nation.”42 In February 1985, months after the campaign’s tensions subsided, the ITC issued its recommendation: imports did not interfere with the domestic tobacco program. Restrictions on foreign leaf imports were once again rejected.43 The inquiry had been election year theater.
Farmers felt these distant, global forces in their own backyards. For while the domestic price support system insulated them from global price fluctuations, it tethered them to the overall tobacco market via the quota system. As expensive American tobacco lost international market share, quota was slashed: in 1975 total quota for flue-cured tobacco stood at 1,491.4 million pounds. By 1981 that figure had fallen to 1,012.6 million pounds.44
By the late 1970s, not everybody who possessed production rights to tobacco was actively engaged in farming; in fact, most were not. A 1981 Government Accountability Office study found that 57 percent of flue-cured quota owners leased their rights to active growers.45 Nonproducing quota holders were, essentially, rentiers who enjoyed high monthly rental payments for leasing their tobacco acreage and poundage. With less quota to go around overall, the cost of renting production rights went up. In the late 1970s, rental costs ate into more than a third of the profits from tobacco sales, at a time when input costs were already increasing due to inflation. Even the program’s most stalwart champions conceded that “the cost of lease is a problem, a serious one,” as Stabilization’s longtime general manager put it to the Flue Cured Tobacco Grower in 1978.46
