U.S. Senator John McCain (R-AZ) today delivered the following remarks introducing the Feinstein-McCain Tobacco Amendment #923 that would eliminate taxpayer-subsidized crop insurance for tobacco:
“Mr. President, I ask unanimous consent to call up Feinstein-McCain Amendment #923 and make it pending.
“Mr. President, this amendment filed by Senator Feinstein and myself would eliminate taxpayer-subsidized crop insurance for tobacco. The Congressional Budget Office estimates this amendment will save taxpayers $333 million.
“It might surprise Americans to know that despite efforts to end traditional farm subsidies for tobacco producers, government handouts for tobacco lives-on in the form of highly-subsidized crop insurance. Since 2004, we’ve spent more than $276 million on insurance subsidies for tobacco. This is in addition to the $10 billion financed under the tobacco buyout law that Congress passed a decade ago. That law – paid for by assessments on cigarette manufacturers – was meant to wean tobacco growers from farm subsidies by buying-out their growing quotas. Well, it turns out Joe Camel’s nose has been under the tent all this time in the form of these hidden crop insurance subsidies.
“As my colleagues know, crop insurance in general has a dubious reputation as a ‘safety net’ for farmers because it largely insures against revenue loss instead of crop loss due to weather or pests. According to the Congressional Research Service,, taxpayers spend about $14 billion a year to subsidize about 60% of the cost of crop insurance premiums. The federal government also reimburses private crop insurance companies for about 24% of their ‘administrative and operating’ costs.
“We’ve identified 8 types of tobacco that are eligible for crop insurance: Tobacco Maryland, Tobacco Flue Cured, Tobacco Fire Cured, Tobacco Dark Air, Tobacco Cigar Wrapper, Tobacco Cigar Filler, Tobacco Cigar Binder, and Tobacco Burley. All of these crops remain extremely profitable even without their old farm subsidies. According to reports by the Wall Street Journaland CNBC, tobacco is 10 times more profitable than corn and most American tobacco is exported. In fact, the value of American tobacco is at a 10-year high since Congress ended traditional tobacco subsidies. It makes no sense to subsidize tobacco insurance considering how well the free market system is working for tobacco producers.
“I urge my colleagues to support this amendment.”