August 3, 1997 in Nation/World

Clinton Not Easing Up On Tobacco Opposes Provision Of Tax Bill Softening Terms Of Settlement

David Hess And Charles Pope Knight-Ridder
 

The White House says that President Clinton will oppose a provision in the new tax bill that allows the tobacco industry to cut its payments to victims of smoking-related diseases.

A last-minute addition to the bill, which Clinton plans to sign into law on Tuesday, gave tobacco companies the right to subtract up to $2.5 billion a year from the $10 billion they agreed to pay smoking victims in a settlement reached in June.

Over 25 years, the savings to the industry could exceed $50 billion.

Both the White House and Congress are reviewing the June settlement, which calls for the industry to pay states and individuals some $368 billion over 25 years for the compensation fund and programs to curb smoking.

The provision easing the compensation burden on the tobacco companies stirred a last-minute tempest Thursday as antismoking senators mounted a futile attempt to strip it from the tax bill.

The provision says that tobacco companies can reduce their annual payment to the compensation fund by the amount raised from higher federal taxes on cigarettes.

In an effort to calm the controversy, White House spokesman Mike McCurry said Friday that the administration “is taking the position that the industry’s liability, or what they should pay into a total settlement, won’t be reduced as a practical matter by the provision in the tax bill.”

But McCurry also indicated that the administration is banking on Congress to undo this action.

Since the president is not going to veto the tax bill - and the tobacco provision is not subject to his new line-item veto power - the issue is being shunted back to Congress.

“There have been indications on Capitol Hill that there will be an effort to repeal that particular provision,” McCurry said.

Sens. Frank Lautenberg, D-N.J., Dick Durbin, D-Ill., and Edward Kennedy, D-Mass., already have signaled their intention to quash the provision in new legislation, now in Congress, that would legitimize the settlement.

There remained some unease among the opponents, however, because of the tobacco industry’s legendary influence in Congress. Tobacco companies have pumped millions of dollars into members’ election campaigns.

“Joe Camel still prowls the halls of Congress,” Kennedy complained. “When tobacco issues are discussed in the light of day, the American people win. When the debate moves into the back rooms, the industry’s interests come first, and the public interest comes last.”

White House spokesman Barry Toiv said Friday the president will insist that any legislation putting the tobacco settlement in place will neutralize, or supersede, the industry-favored provision in the tax bill.

As for the tobacco industry, it is remaining mostly mum about the controversy.

The administration has played a rather ambivalent role in the tobacco affair.

In several interviews with congressional staff and budget negotiators, there was general agreement that the White House bargainers at first resisted the inclusion of the tobacco favor in the tax bill.

But persistent lobbying by tobacco companies induced House Republican leaders to stick the provision in the bill as part of a deal with the White House to phase in a 15-cent-a-pack hike in the 24-cent cigarette tax. Revenue from that tax hike will help pay for a new health care program for uninsured children.


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