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Clinton Concessions Fail to Advance Tobacco Bill

Washington, June 10 (Bloomberg) -- President Bill Clinton's support for election-year tax cuts failed to boost prospects for Senate passage of a comprehensive tobacco bill as Democrats and Republicans disagreed anew over the size and scope of the tax relief.

Anticipated votes this afternoon on competing Republican a Democratic tax-cut amendments were put off indefinitely, keeping the bill locked in jeopardy as both sides struggled to find a viable compromise.

I hope we can work this out,'' said Senator Phil Gramm of Texas, chief sponsor of the Republican tax-cut amendment. Then he added, ``This may never be done.''      

This morning, Clinton, eager to sign into law a sweeping bill to reduce smoking, particularly among children, agreed to accept Republican amendments to use money from the tobacco bill to pay for tax cuts as well as anti-drug programs.

Republicans welcomed the policy shift from Clinton, who until now has insisted the more than $500 billion that would be collected over 25 years by boosting the federal tax on cigarettes be used for health and other spending programs. Still, the concession wasn't enough to produce a breakthrough.

Democrats said that Gramm's bill, estimated to cost $46 billion over the first 10 years, would explode beginning in the eleventh year and consume most of the cigarette price increase, taking away money planned for a variety of anti-smoking programs.

It stinks,'' said Senator Bob Kerrey, a Nebraska Democrat.

Gramm had problems in his own ranks, too. Some Republicans said the proposed tax relief was inadequate. Others still feared that if the amendment were approved it would increase chances of Senate passage of the bill, which they oppose as an unwarranted government intrusion into a legal business.

Assistant Senate Majority Leader Don Nickles said he and most fellow Republicans could support the Gramm amendment even though it was scaled back earlier this week. ``It is less than I would like but I can live with it,'' Nickles said.

Today's Senate logjam came as a Florida jury found B.A.T Industries' Brown & Williamson Tobacco Corp. negligent in the design and manufacture of Lucky Strike cigarettes. It ordered the company to pay more than $1 million in damages and costs to the estate of a dead smoker.

Tobacco stocks fell on the news. B.A.T's American depositary shares fell 5/8 to 19 9/16, and shares of Philip Morris Cos. fell 1 7/8 to close at 38 3/8.

Senators said the verdict was irrelevant to their debate.

I don't see how this verdict will affect what we're doing one way or another,'' said Senate Majority Leader Trent Lott.

Tax Cut Amendment     

Gramm's amendment would cost $46 billion over 10 years by eliminating the so-called marriage penalty for two-paycheck couples with an annual income of less than $50,000 and by providing 100 percent tax deductibility for health insurance for the self-employed. The marriage penalty forces many working couples to pay more income tax than they would if they were single.

Clinton's willingness to accept at least part of the Republicans' proposals came after negotiations designed to find common ground on the contentious tobacco measure. ``The tax cuts Republicans proposed have gone from expansive to a targeted approach,'' White House spokesman Mike McCurry said today.

Republicans also scaled back their drug-fighting program, he said.

Senator John Ashcroft of Missouri Republican took the lead among Republicans in denouncing the Gramm tax-cut amendment as inadequate. The measure would return to the public only about one- fourth of the money raised by proposed cigarette price increase, Ashcroft said.

Taking that small portion out for tax relief does not make it an acceptable bill,'' Ashcroft told a Capitol Hill news conference.

Senate Democratic Leader Tom Daschle proposed a smaller tax cut proposal as an alternative, but said he would vote to pass the tobacco bill if it contained the Gramm amendment.

A chief aim by Daschle and other proponents of the tobacco bill is to get the measure out of the Senate and to the House for concurrence.

Earlier today, Republicans, for the second time in 48 hours, rejected a Democratic motion to end almost three weeks of debate on the tobacco bill and move to a vote on passage.

House Opposition     

There is also strong opposition to comprehensive tobacco legislation in the House of Representatives. Speaker Newt Gingrich said today that regardless of the outcome of the Senate debate, the House would pass a less ambitious tobacco bill that included tax cuts to offset any tobacco tax increases, measures to reduce teen smoking that could include anti-smoking advertising, and a cap on attorneys' fees.

The House position will be to focus on a narrowly targeted teen smoking bill,'' Gingrich said. He criticized the McCain bill as a ``gravy train'' for Democratic spending priorities.

In addition to raising the price of cigarettes by at least $1.10 per pack over five years, the Senate bill, sponsored by Republican Senator John McCain of Arizona, would provide federal regulation of nicotine, curb tobacco advertising and marketing, create a bevy of anti-smoking programs, help tobacco farmers find new work and fine cigarette makers if underage smoking fails to decline to targeted levels. The tobacco industry maintains that the measure would drive many cigarette makers out of business.

18:52:01 06/10/1998


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