Press Releases

Feinstein, McCain: End Taxpayer Subsidies for Tobacco Insurance

Saves $333 million over next decade

Washington—Senators Dianne Feinstein (D-Calif.) and John McCain (R-Arizona) today introduced an amendment to the Senate farm bill to eliminate taxpayer subsidized crop insurance for tobacco production.

The amendment, which saves $333 million over the next decade, directs all savings to be used to reduce the federal budget deficit. On Monday, Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) indicated the amendment would receive a vote.

In 2004, The Fair and Equitable Tobacco Reform Act of 2004 (also known as the tobacco buyout program) ended most direct taxpayer support programs for tobacco production.

Despite the $10 billion buyout agreement between the federal government and tobacco growers, the U.S. Department of Agriculture continues to offer heavily subsidized crop insurance policies to tobacco farmers. Last year, USDA offered eight separate tobacco insurance products that cost $34.7 million in taxpayer subsidies. USDA data show that more than $276 million in taxpayer subsidies have been spent since 2004.

“It’s time for the American taxpayer to get out of the business of subsidizing tobacco—once and for all,” said Senator Feinstein. “Tobacco costs our economy $200 billion in health care costs and lost productivity each year. In this challenging budget environment, we simply can’t afford to spend hundreds of millions of dollar to incentivize farmers to grow this crop.”

“Despite efforts to end traditional farm subsidies for tobacco producers, government handouts for tobacco live on in the form of highly-subsidized crop insurance,” said Senator McCain. “It turns out Joe Camel’s nose has been under the tent all this time. Our amendment would eliminate taxpayer-subsidized crop insurance for tobacco and save taxpayers $333 million.”

According to the Centers for Disease Control and Prevention, cigarette smoking adds $96 billion to domestic healthcare expenses and costs the American economy $97 billion in lost productivity annually. Secondhand smoke adds another $10 billion in healthcare costs and lost productivity.

The Feinstein-McCain amendment will not affect the availability of insurance products for tobacco farmers who can continue to purchase policies from existing insurance providers at market rate. The Feinstein-McCain amendment is supported by the Environmental Working Group, Taxpayers for Common Sense and the American Cancer Society.