Wall Street Journal - May 27, 1999
Clinton Aide Urges Congress to Boost Tobacco Tax to Avoid Deep Budget Cuts
By DAVID ROGERS Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The White House stepped up pressure on Congress to rethink the Republican budget plan and consider tobacco tax increases as an alternative to the deep cuts forecast in domestic programs, including education and health spending.
In what was billed as a major speech, White House Budget Director Jack Lew accused the GOP of creating a "false choice" between stalemate in the appropriations process or abandonment of the spending caps, which were put in place under the 1997 balanced-budget plan. "The Appropriations Committees are now implementing an untenable budget resolution, which is a blueprint for chaos," he warned. "It is a risky way to govern."
Instead, Mr. Lew urged lawmakers to take a second look at a list of new revenues and user fees proposed by the president, including boosting cigarette taxes by almost $8 billion in the fiscal year that begins Oct. 1. "The federal government spends $8 billion a year on veterans, military and Indian health programs to treat tobacco-related illness," Mr. Lew said. "Transferring $8 billion from tobacco revenues to programs that will save lives ... is good public policy. It is good fiscal policy."
Mr. Lew's remarks are significant both because of the renewed emphasis on raising tobacco taxes and his hard-line posture on the spending caps themselves. Early this year, Speaker Dennis Hastert (R., Ill.) signaled a willingness to work with the administration to raise the caps, but the overture died in the bitter aftermath of impeachment. Since then, the House and Senate Appropriations Committees have waited anxiously for their party leadership and the White House to take up the issue again.
Mr. Lew showed no give on this point, and instead lectured the GOP on the sanctity of the caps as a symbol of fiscal discipline -- and the need to protect surpluses owed to Social Security. He clearly intended to try to tighten the vise on Republicans. But unless the two sides reach out to one another soon, they could both pay a price for the turmoil that lies ahead.
Under the GOP budget, the Appropriations Committees must cut as much as $30 billion from nondefense programs in the president's budget to stay within the caps. The numbers are so large that few believe the targets can be met. Instead, all sides are gaming the situation by loading their first bills with extra money and saving the worst cases for late summer or fall.
Peppered With Amendments
This provoked a backlash among House conservatives, and for a second day, a $60.8 billion agriculture spending bill was peppered with amendments intended to slow its progress and deny even a $253 million funding increase for next year. Only one cut, valued at just $500,000, had passed by Wednesday evening, but the leadership then pulled the bill to take up a more politically symbolic Social Security "lock box" measure promising to make it harder for Congress to spend the surplus. That passed 416-12.
"It's another example of how this Republican Congress is living up to its commitment to protect seniors," said Speaker Hastert. But Democrats ridiculed the measure as a "lock box without a lock." "It's just wonderful what Congress can do with its time when it's not passing serious legislation," said Wisconsin Rep. David Obey, the ranking Democrat on House Appropriations.
Ironically, the agriculture bill had been one of the few to get extra money in hopes of quick passage. But Rep. Tom Coburn (R., Okla.) said any increase undercuts the caps and warned he would keep filing amendments until the allocations are changed to better reflect "what's going to happen at the end of the game." His preference: an across-the-board freeze. But even that isn't enough to stay within the caps next year, and his aggressive stand clearly angered farm state Republicans who want the bill passed before Memorial Day. "My farmers don't want to steal from Social Security," snapped Rep. Tom Latham (R., Iowa). And Rep. Terry Everett (R., Ala.) angrily denounced the "self-righteous indulgence" of a few people stalling the House.
Reservoir of Funds
The continued impasse in the House makes Senate Appropriations Committee Chairman Ted Stevens (R., Alaska) the most important player in the drama. By force of his personality and willingness to bargain, he has begun to cobble together a reservoir of funds to be spread among nondefense bills to buy political peace.
As a longtime member of the Senate Commerce Committee, the Alaskan has a background in high-technology frontiers from the Internet to telecommunications that still could be sources of revenues or asset sales to fund spending bills. "We're going to give him revenues but they won't be his," Mr. Stevens said referring to Mr. Lew's address.
To date, Mr. Stevens has accumulated between $4.6 billion to $5.7 billion in extra funds, and he has surprised fellow Republicans by his willingness to shift money from military to nondefense accounts. Some of these decisions are driven by concessions won by Sen. Robert Byrd of West Virginia, the ranking Democrat on the panel. Mr. Stevens and Mr. Byrd so far have maintained a level of bipartisan unity not seen in the House.
As much as Mr. Lew focused on new revenues, the trade-offs between defense and nondefense spending are very much part of the debate. Republicans want to add about $8.3 billion to the president's military request, adding to the cuts needed from the remaining domestic programs to meet the budget caps.
To help pay for the difference, Defense Secretary William Cohen, a former Republican senator, has asked for the authority to begin another round of base closings -- a step he says will improve efficiency and save $1.5 billion annually. But on a 60-40 vote Wednesday, the Senate rejected even a proposal to allow base closings in 2001, well after Mr. Clinton leaves office.