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Correction to This Article
An Oct. 8 article on congressional action to reorganize the nation's intelligence operations incorrectly reported a House roll-call vote rejecting a bill similar to one approved by the Senate. The vote against the proposal was 213 to 203, not 280 to 141.

House Passes Corporate Tax Bill

Measure Would Provide Breaks to Businesses, Tobacco Quota Buyouts

By Dan Morgan
Washington Post Staff Writer
Friday, October 8, 2004; Page A05

The House, by a vote of 280 to 141, gave final approval last night to a far-reaching tax bill that would provide a rich array of breaks to manufacturing companies, energy producers and small businesses and would underwrite a $10 billion buyout of American tobacco farmers over the next decade.

The bill is aimed at ending a transatlantic trade war by scrapping certain tax subsidies for U.S. exporters that have brought on retaliatory action by Europe. But in the version approved last night by the House, that modest goal is largely overwhelmed in a preelection package of benefits for dozens of constituencies, including NASCAR track owners and mall builders.

The measure, which would provide nearly $150 billion in concessions but claims to offset nearly half that amount with new revenue, goes to the Senate. Speedy approval there is considered likely.

The bipartisan momentum, however, masked the bitter disappointment of health advocates and labor organizations, which saw their hopes for major legislative gains evaporate during final House-Senate negotiations in which pro-business House Republicans were able to assert their will.

The compromise measure approved last night does not include a Senate-approved plan that, for the first time, would have given the Food and Drug Administration authority to regulate the cigarette industry. Also deleted was a provision in the Senate-passed version of the tax bill that would have blocked a portion of the Bush administration's controversial new overtime pay eligibility rules.

Democrats charged that the bill would do little to create jobs or enhance the competitiveness of U.S. industry, as Republicans claim.

Senate backers of the FDA regulation of cigarettes indicated last night that they had not abandoned hope of defeating the gigantic tax bill.

Sen. Mike DeWine (R-Ohio) said earlier this week that a bill without the FDA regulation of cigarettes would pass "over my dead body." A spokesman for Sen. Edward M. Kennedy (D-Mass.), another strong supporter of FDA regulation, said last night that the senator was "considering all the parliamentary tools available to him to defeat the bill."

But the sheer diversity of the bill's benefits -- which would go to economically strapped manufacturing companies, timber operations, oil and gas wildcatters, and new industries that make diesel fuel from soybeans -- will make it difficult for opponents to muster the 60 votes in the Senate needed to block action.

Senate Minority Leader Thomas A. Daschle (D-S.D.), who is in a tight race to retain his seat in November, has indicated that he supports the compromise bill. Daschle lobbied for new tax breaks for small producers of ethanol fuel, a budding business in his state.

Both parties are hoping to exploit the tobacco buyout provisions.

On Wednesday, Democrat Erskine B. Bowles, who is in a fierce battle for one of North Carolina's Senate seats, canceled his campaigning and rushed to Washington to urge senators to vote for the tax bill even without the FDA regulation of tobacco.

The bill would channel about $4 billion to North Carolina tobacco farmers over 10 years. It would phase out the New Deal-era system of government quotas that is threatening to bankrupt tobacco farmers faced with slackening demand and falling prices.

Under the buyout provisions, farmers would get a transitional payment, enabling them to retire, switch to new crops or modernize their tobacco production to meet the demands of a competitive market.

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