Senate Republicans are drawing a line in the sand in their efforts to ensure that federal money from national tobacco legislation will flow only into the Medicare system.
That stand has set up a potential fight with the White House and congressional Democrats who want to use tobacco cash for education and child development, as well as Medicare. Such a dispute could sink the entire settlement, worth about $368.5 billion over 25 years.
The argument is separate from one between the federal government and the states that filed the original lawsuits that were settled with cigarette manufacturers last year. The states want all the cash to wind up in the hands of state Medicaid programs (March 9, p. 28).
Last week, the Senate Budget Committee approved by a 12-10 party-line vote a budget blueprint for the 1999 federal fiscal year that calls for federally derived tobacco money-whether through a new cigarette tax or other levy on the industry-to be placed in a new trust fund.
Money in that reserve will be used to extend the life of the Medicare Hospital Insurance Trust Fund-now projected to be exhausted in 2010-as a bipartisan commission wrangles over how to reform it for the long term.
That is a departure from President Clinton's budget proposal and a number of bills sponsored by congressional Democrats.
Those bills, many of which have been introduced in the past month, propose the use of tobacco industry revenues for financing child care, education, research into smoking-related illnesses, smoking cessation and other purposes (See chart).
But the idea of new federal spending on social problems not directly related to tobacco use is anathema to many in the GOP.
The public health costs of smoking were the justification for the original state lawsuits, which led to the national tobacco settlement. So that money should be used for public health programs, some Republican leaders reason.
"The overwhelming portion of any recovery from the tobacco settlement or cigarette tax hike (should finance) a new, reformed and financially viable Medicare system," said Sen. Spencer Abraham (R-Mich.), a member of the Senate Budget Committee.
Sen. Phil Gramm (R-Texas) agrees. He objects even to the idea of spending money to encourage smokers to quit and to discourage youths from starting, saying a $1.50 increase in the price of cigarettes is enough.
Senate Budget Committee Chairman Pete Domenici (R-N.M.) continued the refrain, saying tobacco will be responsible for $30 billion in Medicare costs this year. Smoking-related illness "is one of the major causes of Medicare being in a bankrupt state," he said.
Budget Committee Democrats objected, saying a comprehensive approach to reducing the social costs of smoking demands that tobacco revenues be used for research and smoking-cessation programs.
"When I look at your handling of the tobacco money, I say you're endangering the tobacco settlement," said Sen. Kent Conrad (D-N.D.), the leader of a Democratic task force on tobacco.
Republicans stressed, however, that their budget plan provides for a substantial increase in the budget of the National Institutes of Health, which conducts federal research on smoking-related illnesses. The plan also would fund an anti-smoking initiative worth $600 million over five years targeted at teen-agers.
Under the Republican plan, the budgets for those programs would need to be authorized each year through appropriations legislation, which could cause the programs to become targets of congressional budget cutters.
Beyond that interparty dispute is another on how to spend the tobacco lucre.
In a letter sent days before the Senate Budget Committee was scheduled to start work on its blueprint, Senate Finance Committee Chairman William Roth (R-Del.) told Domenici and Sen. Frank Lautenberg (D-N.J.), the Budget Committee's senior Democrat, that the money should be used for tax relief.
Democrats, meanwhile, see a vital negotiating chip with Republicans in the $27 billion they propose to funnel to the states for child care, education and children's health over five years. Those funds would be over and above the $15.7 billion President Clinton proposes for the same purposes. Demo-crats would trade the added funds for support for another, unnamed budget item, according to Steven Maviglio, executive director of the House Democratic Caucus. "We're going to play poker, and that will be in our hand."