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Favoritism abounds in new federal budget

Taxes on a bottle of wine will go up when the new federal budget plan is signed into law, unless the wine was produced in Oregon. A provision of the tax bill passed by Congress exempts small wineries from the increase, and the definition of small happens to fit all 85 wineries in Oregon, the home state of Bob Packwood, top Republican on the Senate tax-writing panel and sponsor of the exemption.

Along similar lines, Lehigh University has spent three years looking for money to build a naval research center. Its ship came in last weekend as Congress voted to give the Pennsylvania college $24-million for the facility.

The public, and most members of Congress, would have a hard time explaining what the $24-million was all about. It was buried under an obscure amendment that did not even mention Lehigh. Instead, the money is earmarked for Competitive Technologies Inc., which a congressional staffer called "nothing more than a paper, dummy organization."

Similar breaks that were slipped through Congress in the waning hours of last week's session benefit everything from makers of large cigars to wealthy art patrons.

Despite the contention by some lawmakers that they kept the special breaks to a minimum this time around, the new budget is rife with examples of favoritism that appear to counter the spirit of the deficit-reduction package.

Sen. Sam Nunn, D-Ga., chairman of the Senate Armed Services Committee, already has vowed to investigate actions by lawmakers that added tens of millions of dollars worth of special projects to the defense appropriation bill.

Rep. Curt Weldon, R-Pa., has even offered to buy lunch at a Capitol Hill restaurant for any of his colleagues who spot new examples of this dubious but time-honored practice.

The special breaks were passed despite the pressure on Congress this year to come up with a budget that slashed the deficit by $500-billion, and despite the insistence of congressional tax-writers that the new bill was free of the sort of breaks that the 1986 tax act contained.

Even in the current atmosphere, however, the 13 appropriations bills and other legislation approved by Congress in the waning hours of the session last weekend contain hundreds of millions of dollars worth of special-interest measures, such as the small-winery exemption.

When the final package was approved, the tax on a bottle of table wine shot up to 21 cents, from 3 cents. But wineries producing less than 150,000 gallons a year were exempted from the increase entirely, and those producing 150,000 to 250,000 gallons got a partial exemption.

The staff of the Joint Committee on Taxation estimates the exemption will save the wineries $500-million over the five years of the bill.

Tobacco taxes were another revenue-raiser _ and another area where a key congressional tax writer protected a home-state industry.

Rep. Sam Gibbons, D-Fla., a longtime member of the House Ways and Means Committee, ushered a provision through the negotiations that will reduce taxes on tobacco manufacturers who produce "large" cigars _ those weighing more than three pounds per 1,000, or .04 ounces each.

The cigar manufacturers in Gibbons' district, all of whom fall into this category, are expected to save more than $100-million over the next five years as a result of his efforts.

And Sen. Daniel P. Moynihan, D-N.Y., another member of the Senate Finance Committee, fought a long battle to preserve a tax break for wealthy people who donate art to museums and other non-profit organizations.