Senate Kills Cigarette Tax So That Budget Deal May Live

WASHINGTON — The Senate on Wednesday rejected an amendment to the balanced-budget agreement that called for nearly tripling the federal cigarette tax to expand health care for uninsured children and to trim the budget deficit.

The contentious issue arose as the Senate debated the five-year balanced-budget deal crafted by President Clinton and Republican leaders. That deal was approved, 333 to 99, by the House early Wednesday morning.

Responding to pleas from GOP leaders to leave the budget deal intact, the Senate voted, 55 to 45, to table the children’s health proposal offered by Sens. Edward M. Kennedy (D-Mass.) and Orrin G. Hatch (R-Utah).

The Kennedy-Hatch amendment would have extended health coverage to as many as half the estimated 10 million children who currently are uninsured because their families are not poor enough to qualify for Medicaid. It would also have raised an extra $20 billion to finance the coverage. The GOP-White House budget deal would provide $16 billion for children’s health insurance.

To generate the revenue, the proposal would have raised the 24-cents-a-pack federal cigarette tax by 43 cents, with two-thirds of the additional proceeds earmarked for children’s health insurance and the remaining third--$10 billion--for deficit reduction.

“A budget is about setting priorities,” Kennedy said in impassioned floor speech. “There is no more important priority than health care for our children.”

At one point, Kennedy thundered to his colleagues: “Are you for Joe Camel and the Marlboro Man, or millions of children who lack adequate health care?”

Hatch, a longtime tobacco opponent, said: “Smoking is dangerous for our public health and it is dangerous for our economy,” he said. “It hurts the kids we’re trying to help.”

Republicans, however, brushed aside emotional appeals centered on children and tobacco, arguing that any changes made to the budget agreement might ruin the bipartisan deal that took months to negotiate.

“I would be willing to submit to any three intelligent people you want to pick” that the Kennedy-Hatch amendment disrupts the budget deal, said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), one of the chief negotiators. “Mind you, what do you think we argued for three months over?”

But Democratic supporters disagreed, saying that the budget deal and the children’s health care proposal are not “inconsistent.”

Sen. Ron Wyden (D-Ore.) defended the amendment as a self-financing way to draw on tobacco-related illnesses to protect children’s health. “This is a program that pays for itself,” he said. Without the amendment, he said, “we’re going to have more sick children. They’re going to grow up sicker with health problems.”

The budget agreement calls for a mixture of tax cuts and spending reductions to balance the budget by the year 2002. The deal would cut more than $300 billion from planned federal spending over five years, while cutting taxes by a net of $85 billion.

In a day of confusing floor debate that revolved around arguments about protecting children, defending the tobacco industry and preserving the integrity of the budget deal, Republican and Democratic leaders expressed opposing views of the impact of the amendment--including contradictory claims of White House support.

Senate Majority Leader Trent Lott (R-Miss.) said that he called White House Chief of Staff Erskine Bowles to make sure Clinton was opposed to the Kennedy-Hatch amendment. “The White House indicates [it] will help defeat the Kennedy proposal,” he said.

White House Press Secretary Mike McCurry said that the president was “sympathetic” to the Kennedy-Hatch amendment but wanted to protect the budget agreement. “He is not going to let that agreement go down,” McCurry said.

Hatch blamed defeat of the proposal on the White House. “What really cost us today is the president of the United States,” he said after the vote. “The White House broke the logjam. We had the votes up to then.” An angry and frustrated Kennedy said that he called both Clinton and Vice President Al Gore but that neither man returned his call. It was not until Wednesday morning that a top Gore aide notified Kennedy of the vice president’s willingness to vote for the amendment, if needed. Kennedy said.

Asked if he found the contradictory signals from the White House “strange,” Kennedy smiled and replied: “Yes. Yes. Don’t ask me the next question.”

Times staff writer Edwin Chen contributed to this story.